In Australia, the term strata refers to a model of property ownership where an individual purchases a singular unit within a development while sharing ownership of the common property with other owners.
Once the sale of a unit is completed, the owner receives a legal document noting their possession. This document is known as a strata title, and the unit is also referred to as a strata lot. Once the strata titles are established, the lots are taken as one entity and labelled as a strata scheme. In addition to the lots, a strata scheme also constitutes all common property.
Strata schemes are prevalent in the residential branch of real estate, although they are also present in commercial buildings, retail districts and industrial complexes.
As soon as a strata scheme forms, each strata lot owner automatically becomes a member of the scheme’s body corporate.
What is a Body Corporate?
The Government’s description of a body corporate states that a body corporate is a legal entity whose creation stems from the subdivision of a piece of land. It is then registered under the Land Title Act 1994 to establish a community titles scheme. Additionally, it mandates that this collective automatically includes all lot owners upon unit purchase.
Therefore, the formation of a body corporate is mandatory under the law. Consequently, its existence is intrinsic to the effective running of a strata.
What is the Body Corporate’s Purpose?
The primary role of a body corporate is to oversee the care of all common property and other assets associated with the entity for the owners’ benefit. It is also handed the legal authority to carry out a number of duties, including:
- Creating and enforcing a set of rules and regulations ( known as by-laws) which govern daily living within the scheme.
- Managing, maintaining and controlling the scheme’s common property on the owners’ behalf.
- Managing all the body corporate’s assets.
- Determining the fees to be levied on the owners based on the amounts required to ensure that the body corporate remains operational.
- Performs a search, compares, negotiates, then takes out insurance cover for the strata on the owners’ behalf. The body corporate also ensures that the insurance cover remains adequate and valid at all times.
- Keeps and maintains all the body corporate’s records, including financial accounts, meeting minutes, membership rolls, owner or member information, authorisations, engagements, common property improvements, asset register and many more.
- Decision making regarding matters brought forward.
Since it is not always possible to bring together all members when there is a decision to be made, body corporate members also vote in a committee to act as the primary governing body. The committee then takes responsibility for carrying out the duties above. Alternatively, it may also opt to engage the services of a professional who will take over oversight of the strata’s day-to-day operation. This expert is known as a strata manager.
A strata body corporate makes up a crucial part of any strata’s eco-system. Therefore, it must be well managed to ensure the living community’s success.