Strata scheme, formerly known as “building strata” is a building or collection of buildings where owner’s has their small portion which is called a lot. Strata schemes are small communities where the actions and approach of people can have a major impact on the happiness and satisfaction of others. It is important for people to be aware of the responsibilities; rules and regulation when owning a property in this scheme. Many owner corporation hire strata management company to assist them to run their strata schemes. Some Small schemes usually hire a professional strata manager for full time.
There are 3 types of strata schemes:
• Small strata scheme which is consisting of 2 lots
• Large strata scheme which is consisting of 101 lots or more
• Other strata scheme which is consisting of between 3 and 100 lots
Provisions for Small schemes
• Executive Committee which is an agent of the owner corporation can be formed automatically by two owners.There is no need of election for executive Committee.
• In Small scheme a quorum occurs in meetings only when both the lot owners are there.
• The two buildings are separated from each other so there is no need of insurance, both owners can decide to relinquish insurance cover by a mutual decision at a meeting.
• Each owner may insure their building individually.
• The owners can decide not to have a sinking fund since there is no common property. No buildings are situated outside the lots in this scheme.
• There is no need for audit of financial accounts and statements. In case owners of two lots want to audit their account, then it’s not necessary to meet the Australian auditing standard.
Provisions for Large schemes
• Financial accounts must be audited each year.
• Audit of financial accounts must be done each year.
• An amount which is expected to be used up on specific things must be listed for annual budgets.
• The owner corporation must obtain at least two quotations for items of expenditure over the official amount $30,000.
• Executive Committee of these schemes is not allowed to spend more than 10% over the budget amount except emergencies.
• A detailed notice of all upcoming “executive committee meetings” must be provided to all lot owners.such notice via scheme’s Notice board are not acceptable.
The Need of Special Provision
It’s necessary to have a special provision for different type of schemes as those are not comprises of same structure and size.it will be easy manage in terms of both financial and people handling. There are many things like Owner Corporation, Executive committee, sinking funds, insurance levies, disputes etc involved with the strata scheme which cannot be considered when there are only two owners involved.
A large scheme which containing more lots will require to handle all above things quite differently as compared to small scheme having 2 owners only. If there are more owners in one place there is a chance of conflict between them and so there must be some special terms and policy drawn up to wrap the issues that happen when there are only 2 owners.