Strata Schemes: Size does Matter (Sometimes) – 1996 Act

Gold coast buildings

Yes, I said it, size does matter in strata schemes. The most obvious way it matters is that if the larger the scheme the more lots there are to help in paying for the administration, maintenance and upkeep of the property. Also, the larger the scheme the more on average you can expect to pay in strata management fees. Why? Many strata management firms price their services on a base rate plus the number of lots which makes sense when you consider that more lot owners means more administration for the strata manager.

Apart from these obvious reasons why size matters there are differences on how certain sized schemes are currently treated under both the Strata Schemes Management Act 1996 (NSW) and will be treated under the Strata Schemes Management Act 2015 (NSW) when it comes into effect. Both Acts  distinguish between 2 lot schemes (sometimes called two packs), schemes with between 3 to 100 lots and schemes with more than 100 lots (not including utility lots or parking lots) which are known as large schemes.

The differences between schemes in the 1996 Act are set out below:

Quorum Requirements – note: 2015 Act has similar requirements

2 lot schemes 3 lots – 100 lots 101 + lot schemes
· Both must be present · At least ¼ of persons entitled to vote present either in person or by proxy OR

· At least ¼ of the unit entitlements present in person or by proxy

· At least ¼ of persons entitled to vote present either in person or by proxy OR

· At least ¼ of the unit entitlements present in person or by proxy

Executive Committee Membership

2 lot schemes 3 lots – 100 lots 101 + lot schemes
· Both lot owners are EC members.

· If a lot is co-owned then the co-owners either need to consent to who is to be the EC member or if no consent the lot owner first mentioned on the strata roll is the EC member.

· If a lot is owned by a company then the company nominee is the EC member.

· EC members are elected by the owners corporation at general meeting.

· EC can contain maximum of 9 members.

· OC can vote to have a lesser no. of EC members.

· Eligibility criteria apply.

· EC members are elected by the OC at general meeting.

· EC can contain maximum of 9 members.

· OC can vote to have a lesser no. of EC members.

· Eligibility criteria apply.

Executive Committee Quorum

2 lot schemes 3 lots – 100 lots 101 + lot schemes
·  1 person present ·   If EC is 1 person, that person OR ½ of the members must be present · If EC is 1 person, that person OR ½ of the members must be present

 Executive Committee Meeting Notice & Minutes

2 lot schemes 3 lots – 100 lots 101 + lot schemes
· Must give 72 hours written notice to each EC member & lot owner OR if noticeboard required display notice.

· Must give copy of meeting minutes within 7 days OR display them on the notice board.

· Must give 72 hours written notice to each EC member & lot owner OR if noticeboard required display notice.

· Must give copy of meeting minutes within 7 days OR display them on the notice board.

· Must give 72 hours written notice to each EC member & lot owner AND if noticeboard required display notice.

· Must give copy of meeting minutes within 7 days AND if notice board required display them on the notice board.

 

Convening EC Meetings

Must convene an EC meeting if 1/3 EC members request it within timeframe requested. This is the same for all schemes but differs in 2015 Act

Sinking Funds

2 lot schemes 3 lots – 100 lots 101 + lot schemes
· Need not establish a sinking fund if determined by unanimous resolution & buildings are physically detached & no part of building is outside a lot ·   Must establish a sinking fund

·   Must include estimate at each AGM for specific items

· Must establish a sinking fund

· Must include estimate at each AGM for specific items

Insurance

2 lot schemes 3 lots – 100 lots 101 + lot schemes
· Not required if unanimous resolution passed & buildings are physically detached & no part of building is outside a lot ·   Must insure building ·   Must insure building

Audits

2 lot schemes 3 lots – 100 lots 101 + lot schemes
· Not required unless OC resolves to do so ·   Not required unless OC resolves to do so ·   Audit required before AGM

Spending Limits

2 lot schemes 3 lots – 100 lots 101 + lot schemes
· EC can be limited by OC resolution ·   EC can be limited by OC resolution · Two quotes are required if the amount exceeds $30,000

· EC must not spend 10% more than the amount specified for the item in the AGM

· Does not apply in emergencies

Timeframe for Proxies

2 lot schemes 3 lots – 100 lots 101 + lot schemes
Must be provided at or before meeting Must be provided at or before meeting Must be provided at least 24 hours prior to meeting

In my next post I will consider the provisions of the 2015 Act.

Please note: This is not legal advice. You should seek legal advice particular to your situation.

One response to “Strata Schemes: Size does Matter (Sometimes) – 1996 Act

  1. Pingback: How the size of your Strata Scheme impacts legal requirements - Premium Strata·

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