Questions about Strata Schemes
What is a strata scheme?
A strata scheme is a system of multiple ownership of a building or collection of buildings. Each owner owns a portion (called a ‘lot’ or ‘unit’), which is usually an apartment, townhouse or commercial/retail unit; but every owner shares ownership of any common property (e.g. foyers, driveways, gardens) if it is indicated on the title.
The multiple ownerships are combined in a legal entity called the owners corporation — or body corporate, strata company or community association. Although the term for an owners corporation varies across New Zealand, the role of an owners corporation is essentially the same in every state and territory.
The owners corporation is responsible for the good management of the strata scheme. All owners can vote on management decisions at an Annual General Meeting (AGM), but decisions are usually made on behalf of the owners corporation by a committee of owners who are elected at the AGM.
Some strata schemes also manage the day-to-day financial, maintenance, and other administrative duties themselves, but given these are complex, most choose to use the services of a professional strata manager.
Does every high-rise/multi-dwelling building have a strata scheme?
Generally speaking where there is multiple ownership within a single structure or plan there will be a strata scheme. That said, there are still a smattering of company titles and/or cross leases – the main multi-owner legal form before strata.
If I buy into a strata scheme building do I automatically become part of the owners corporation?
You cannot buy into a strata scheme without buying into the owners corporation. The two elements of your property rights are separate but not separable.
What exactly do I own in a strata scheme?
Generally speaking all you own in a unit is the air space and its contents, including internal walls and fixtures. Everything else – outside walls and the roof, hallways, stairs, foyers, lifts, gardens, carparks etc — is collectively owned by all of the owners.
How much say do I have in a strata scheme?
Your interest and voting rights (at general meetings of the owners corporation), which are known as ownership interests, will be spelt out either in the original strata plan for the building or, by a formula based on market value. These should be spelt out in your purchase documentation and you should take the time to understand them. They are also registered with Land Information New Zealand (LINZ)
What costs are involved in owning a strata apartment and how are the costs set? Does everybody pay the same amount?
Strata owners are levied by the owners corporation to cover many of the expenses faced by all home owners, such as council charges, insurance, cleaning, general maintenance and utilities such as power and water. It should also include an amount to be saved for long-term expenses as the building ages, such as painting, tiling, plumbing, carpet, plant and equipment, etc for the Sinking Fund. The amount is usually calculated in proportion to an owners ownership or utility interest, as it relates to the total number of lot entitlements in the strata scheme.
If I buy into a strata scheme building what are my obligations, apart from costs? What are my rights?
You must pay your levies and comply with the scheme’s by-laws/rules, which can cover everything from renovations to pets. You have the right to contribute to your community’s decision making, to stand for a position on your committee and generally be heard. As an owner, you also have a share of an unlimited liability for anything that goes wrong, which is why strata insurance is required.
Will I need to attend regular meetings? What happens if I do not live in the property, or live close by, or live in another country?
It’s in everyone’s interests to be actively involved in your strata scheme. If you can’t attend a general meeting of the owners corporation in person, you can appoint a proxy to vote in your place.
If there is something I want addressed, can I call for a meeting, regardless of whether the strata scheme is due for one?
First talk to your Strata Manager, chairperson or committee members. The scheme’s governing legislation will include specific provisions on calling meetings but it’s not something to be done lightly as it can inconvenience your neighbours. If it’s not urgent, wait for the next general meeting.
In what sort of instances will I need to seek permission or approval from the owners corporation?
This depends upon your relevant legislation and rules. Generally speaking, you will need the approval of the owners corporation when you intend to make significant structural alterations to your lot, or any alterations to any part of the common property. You will also need the approval of the owners corporation if you plan on engaging activity that contravenes your scheme’s rules — for example, the keeping of a pet may be prohibited. You should consult your rules to determine whether approval is necessary.
Does majority rule or does each and every member of the strata scheme need to agree to any proposals?
It depends on the type of decision and the legislation in your state or territory – routine matters are usually delegated to committees and/or a professional strata manager. Levies and annual budgets are usually approved by general meetings and spending outside those budgets may also require a general meeting. Major decisions such as changing by-laws can require a three-quarters majority of owners, depending on relevant laws.
What happens if I have a disagreement with the owners corporation? What can I do?
If you are unhappy with the way the rules are being applied you can talk to a committee member, raise it at a general meeting or contact for advice the government authority responsible for regulating strata issues in New Zealand.
Questions about Committees and Contacting Management
What is an owners committee?
The administration of an owners corporation may be undertaken on behalf of all the lot owners by a committee. This consists of a group of owners elected at each Annual General Meeting (AGM) who represent all the lot owners of the strata scheme, and is charged with making decisions on all matters which confront the owners corporation. These include the control, maintenance and repair of the common property. The committee also has the responsibility of enforcing the rules, as well as the ability to make new ones.
Must a strata scheme have a committee?
Yes, except where it is optional, if there are 9 lots or less, or the Body Corporate opts out by special resolution
How do I join the owners committee?
By attending the Annual General Meeting (AGM) where you can be voted in. All owners corporation committees must hold an annual meeting which is open to all lot owners.
Can I choose not to be part of the committee?
Positions on the committee are obtained through election at the Annual Meeting of lot owners. You don’t have to nominate yourself for a position. You also don’t have to attend the meeting. However, given you are a part owner, it is in your best interests to participate as much as possible.
I live in a strata apartment/townhouse. How do find out who manages it so I can contact them?
A strata scheme may be either managed by a professional strata manager or self managed.
If managed by a strata manager — they implement the decisions of the owners corporation, which consists of all the lot owners. The decisions are usually made on their behalf by a committee or chairperson (a group of elected owners, or their proxies). However, some small strata schemes may not have a committee. In such cases, decisions are typically made by all owners, with one or more elected owners performing the duties of Chairperson, Treasurer and Secretary.
If self-managed — this is usually through a committee of elected owners, working on behalf of the owners corporation. However, as previously mentioned, some small strata schemes may not have a committee, with the management decisions typically made by all owners, with one or more elected owners performing the administrative duties.
If the strata scheme is managed by a strata manager (who may be either a self-employed person, or someone who works for a strata management company), their name, their company and contact details will be on the minutes of the committee meetings. If you are a lot owner you must be sent these, and a copy of the minutes should be also attached to Contract of Sale of your lot. If you have any issues with your strata scheme the strata manager should be your first point of contact.
If the strata scheme is self-managed, the names and contact details of the committee titleholders (Chairperson, Secretary, Treasurer) will be on the minutes. If there is no committee, and no meeting minutes, you will need to ask the other owners in your strata scheme who the go-to person is.
If you are renting and have an issue concerning the management of the block, you should contact the office of the real estate agent from whom you are renting, or your landlord if renting directly. They may contact the management on your behalf.
How do I find out who the members of the management committee are, and who the Chairperson and Treasurer are?
Their names will be in the committee meeting minutes.
I don’t know what’s going on with the management of our block. How do I get more information?
Read the minutes of the meetings. You can also ask questions of the Strata Manager if there is one.
Questions about Strata Managers
What does a Strata Manager do?
Strata Managers are engaged by the strata scheme’s owners committee to manage the day-to-day affairs of the scheme. Strata schemes are becoming larger and more complex. Strata managers provide services and guidance on:
Clerical and administrative support and follow up
Ad hoc maintenance and contract support
Ensure requirements of the relevant legislation are met
Advise on the legal requirements concerning the operation of the strata scheme.
The role varies depending on the size and type of property and involves people management, requires someone who is organised and is able to handle difficult clients from time-to-time.
How do I choose a Strata Manager?
The first thing to establish is whether the strata manager has a good working knowledge of the relevant legislation. Look also at how the strata management company communicates and consider whether they have the depth and experience to service the building.
A lot of strata schemes choose their Strata Manager based on price, but this is not necessarily the best way of choosing. If the building is going to be complex then it may be best to consider on experience instead. Sometimes there may be hidden costs such as charges for stationery or archiving, so it’s always best to check this out too.
SCA is currently introducing an accreditation program where members will be able to gain a certain level of accreditation according to the training and experience they have in the sector. This will make it easier for strata schemes to determine if their strata manager has the appropriate qualifications and experience to manage their property.
By choosing an SCA accredited Strata Manager, strata schemes are also choosing someone who adheres to a code of ethics and undertakes regular training.
What is the benefit of having a professional strata manager, rather than self-managing the owners corporation?
The legislation governing owners corporations and the compliance requirements are quite complex. Self-managed owners corporations are expected to perform the role of a property manager, with the expertise of a lawyer, valuer, insurance broker and accountant on tap.
In addition, owners corporations are well advised to make short and long term plans for ongoing, periodic, routine and urgent maintenance management. For owners who may have other jobs, getting to grips with all this can be daunting.
That’s why many owners corporations are moving away from self management and turning to professional strata managers to assist with finances, insurance, administration, meetings and maintenance functions. Occasionally they are appointed to solve intractable problems, including those involving relationship breakdowns between lot owners.
Strata managers are experts in the administration of all aspects of owners corporations. They work to ensure owners corporations are compliant with their legal responsibilities and strive to protect owner assets.
Can I contact a Strata Manager directly?
Yes. However, you need to understand that the Strata Manager works for the strata scheme and not for individual property owners or tenants. If you have an issue that you raise directly with the Strata Manager, they are obliged to pass it on to the owners committee for review.
How do I evaluate a Strata Manager’s performance?
Ask whether your Strata Manager is providing a proactive service delivery. Are they professional? Do they act in a timely manner? Do they provide the level of care you expected? If the answers are yes and if your strata manager is also SCA accredited, then you have likely found the right person for your scheme.
I’m not happy with our Strata Manager. What do I do?
If you’re not on the committee, you can voice your concern at the Annual Meeting, or do so in writing to the Chairperson or the committee. However, your first step should be to talk to the strata manager themselves to explain your concerns, which may arise out of a simple misunderstanding.
If you’re a member of the committee, you can also discuss the matter with your fellow members and establish a consensus of opinion regarding the performance of the strata manager. You can also examine the terms of their contract. It may be that the committee agrees that there has been under-performance, and sets new performance benchmarks, or chooses not to renew the contract.
Questions about Maintenance and Renovation
Something in our block needs attending to. How do I arrange it?
If your strata scheme is self-managed, contact the Chairperson or the committee. If there is no committee, ask the other owners who the go-to person is. If your strata scheme is managed by a strata manager, contact them.
However, it’s very important to understand that a strata manager only acts on behalf of the committee, and will need to first seek their approval for any action that may need to be performed. If it is a major issue, it will need to be placed as an agenda item for a forthcoming meeting of the committee, before any action can be taken. Occasionally, if the issue is urgent, the committee may agree to a special meeting.
If you are renting, contact the office of the real estate agent from whom you are renting, or your landlord if renting directly.
My bathroom tap is leaking. Can I charge the owners corporation for it?
Generally speaking, no. The taps are internal of the apartment and not in or relating to the benefit of more than one lot or the common property, so it is unlikely that the bathroom tap of a lot would be classified as common property. The obligation of the owners corporation extends only to repairs and maintenance of the common property; and the chattels, fixtures, fittings and services related to the common property or its enjoyment.
If you are renting, contact the office of the real estate agent from whom you are renting, or your landlord if renting directly.
Can I replace the carpet in my apartment with timber flooring without asking anyone?
Never – repeat, never – install hard flooring in a multi-storey strata dwelling without first (a) reviewing the strata development’s by-laws to see if there are any specific rules regarding hard flooring; (b) seeking permission from the owners committee, preferably with a consultant’s report; and not least (c) ensuring adequate acoustic underlay is installed. (Ideally, more than adequate.) Many strata owners who have installed hard flooring without following these straightforward steps have found themselves saddled with the expensive burden of having to rip it out after challenges from owners committees and owners living beneath them who have suffered ‘loss of amenity’ due to noise.
What right has an owners corporation have to enter a lot owner’s property to undertake maintenance?
An owners corporation does not have a right to enter onto a lot owners property to carry out any activities without the lot owners permission. To do otherwise may constitute a trespass. Permission should therefore be sought from each lot owner.
Can the owners corporation force me to remove a shed/glasshouse from my balcony?
This is one of the powers provided to an owners corporation to assist maintain control of an owners corporation in an attempt to maintain the value of the property and enjoyment of the property for the benefit of all owners. If the shed/glasshouse is adversely affecting the outward appearance of a lot or is an occupational health and safety hazard in its position on the balcony, then the owners corporation does have the right to request its removal. In general if in doubt, simply ask the question prior to purchasing and installing anything on your balcony, it could save you unnecessary expense. Remember too, to consult your owners corporations rules which can also provide guidance in many similar situations.
Questions about Levies
The owners corporation has sent me an invoice. Do I have to pay it?
Definitely. You must pay it by the due date. You cannot object to a levy by not paying it. Penalties apply for non-payment. Read more about levies.
Do unpaid strata levies incur penalty interest?
Yes. The penalty interest rate is 10% in the Unit Titles Act. Any costs in recovering a debt are also entirely payable by the debtor. For specifics please refer to the Act and Regulations.
Questions about Common Property
Will Home and Contents insurance cover items lost or stolen on common property?
Only the home owner’s home and contents insurer can accept or deny such a claim. An owners corporation has the option to take out cover for property that belongs only to the owners corporation, i.e. not the personal possessions of each of its owners. If a claim was made against the owners corporation in such circumstances, the owners corporation would not directly be in a position to deny or accept a claim, but rather would refer the claim on to their insurers for consideration.
For more information, please contact us or visit the Ministry of Business, Innovation and Employment website: http://www.mbie.govt.nz/