EBCM.COM.AU
Guide to Strata Living
Ernst Body Corporate Management (Ernst) ABN 87 010 209 784 Disclaimer The information provided in this publication is general only and is not legal, financial or personal advice. This material is provided to assist members living in strata. If further information is required an appropriately qualified professional should be consulted. Copyright Š Ernst Body Corporate Management, July 2019. Reproduction or reuse of this material is forbidden without written permission.
2
HELLO AND WELCOME TO THE ERNST COMMUNITY Whether you are new to strata, or we are new to you and your strata community, Ernst Body Corporate Management – or Ernst for short – is delighted to be your appointed body corporate management company. As a member of the Body Corporate, you have various obligations under the Body Corporate and Community Management Act. You are ultimately responsible legally for the overall good management of the strata scheme. To do all this takes time, skill and a clear understanding of complex strata law. That’s why most Body Corporate Committees choose to engage the services of a professional to manage these duties on their behalf. Professionals like Ernst.
3
4
INTRODUCING ERNST Ernst Body Corporate Management (Ernst) has been successfully managing buildings throughout Queensland since 1979. Originating from a division of one of the world’s top accounting firms, Arthur Young & Company (now EY), Ernst is a high performing Body Corporate management company with 40 years’ proven experience providing seamless management solutions for bodies corporate of all sizes. We manage a diverse portfolio from mixeduse high-rises to small-medium residential blocks including townhouses and villas, commercial properties and hotels. Our teams understand each Body Corporate is unique and we design our solutions to meet the specific needs of each property.
Local Expert, National Support Ernst is proudly part of Smarter Communities, one of the largest Community Management companies in Australia. Nationally we manage over $30 billion of properties across New South Wales, Queensland, South Australia and Victoria. Our brands include Adelaide Strata & Community Management (ASCM), Challenge Strata Management, Ernst Body Corporate Management (Ernst), Strata Title Management (STM) and Victoria Body Corporate Services (VBCS). Together, we have one aligned vision – to deliver smart solutions to create a better lifestyle for people living and invested in communities.
smartercommunities.com.au
5
WHAT IS A STRATA SCHEME?
WHAT IS COMMON PROPERTY?
A strata scheme is a building, or collection of buildings, where individuals each own their own portion of the scheme known as a ‘lot’, such as an apartment or townhouse, where there is also common property.
Common property is all the areas of land and building not included in any lot. This can include external walls, windows, roof, driveways, foyers, fences, gardens and facilities such as a pool or gymnasium.
Strata schemes vary in size, from two-lot duplex developments up to large 1,000+ lot residential developments. They can also be commercial, mixed-use, industrial, hotel and retirement village strata developments.
It is jointly owned by all owners and the Body Corporate is responsible for its management.
Within each strata scheme are individual lot owners, forming a self-governing community, and this community operates as a democracy. The legal entity of all lot owners within a scheme is called the Body Corporate. The Body Corporate is legally responsible for the good management of the strata scheme.
6
AS AN OWNER, YOU HAVE RESPONSIBILITIES. NOT ONLY DO YOU OWN YOUR OWN INDIVIDUAL LOT, BUT YOU SHARE OWNERSHIP AND RESPONSIBILITY OF COMMON PROPERTY WITH THE OTHER OWNERS AS WELL.
WHAT IS A BODY CORPORATE? A Body Corporate is the name given to represent all lot owners within a strata scheme. When you purchase an apartment, or lot, you automatically become part of the Body Corporate for your building.
Responsibilities The Body Corporate is responsible for the overall management of the strata scheme. This includes financial management, arranging insurance, conforming to strata law and by-laws, record keeping, ongoing maintenance and managing repairs of common property.
The Body Corporate should hold regular meetings to discuss the scheme’s management and decide on a course of action to manage tasks required. To enable quicker and more precise decision making in your strata scheme, every year you can nominate yourself, or vote for candidates, to form the Body Corporate Committee at the Annual General Meeting, who will in turn represent all owners. It is in your best interest to attend these meetings, especially the Annual General Meeting (AGM). You have a right to participate in the decision making of your scheme and influence how your community functions.
As a lot owner, and part of the Body Corporate, you also share the ownership and responsibilities of common property with other owners in the scheme.
7
WHAT ARE LEVIES?
WHO SETS THE LEVIES?
As a lot owner you must financially contribute towards the running costs associated with your building and common property.
Ultimately, it is you, the owner.
These contributions are called levies and they are payable to your strata scheme. Levy notices are typically distributed to each owner four times a year to meet the financial obligations of the Body Corporate. As part of Ernst’s management agreement we will send levy notices to owners on behalf of the Body Corporate. It is important to pay your levies on time, every time. It is your scheme who receives these funds. Penalty fees are usually applicable for late payments.
8
Levies, as part of the budget, are voted on and approved by the Body Corporate at the Annual General Meeting (AGM) each year. Utilising its wealth of strata experience Ernst prepares detailed budgets for the Body Corporate Committee to present to owners at the AGM. These have been carefully forecasted to assist your Committee make better, more informed financial decisions to future-proof your scheme. It is you, the owner, who votes on and approves the budgets at the AGM, therefore setting the levies amount to be paid for the year.
WHERE ARE LEVIES USED? Once levies have been collected from all owners, they are typically divided into two funds; an Administration Fund and a Sinking Fund. The Administration Fund is used for the dayto-day running costs of the Body Corporate and its assets. This includes council expenses, insurance, management fees and payments to service contractors, cleaning, general maintenance and repairs, and utilities such as power and water.
The Sinking Fund is essentially a savings account for the Body Corporate for future major expenses as the building ages. This fund covers non-recurring maintenance expenses such as painting, tiling, plumbing, carpet and plant and equipment, or the purchase of new Body Corporate assets. Having a healthy Sinking Fund reduces the need to raise a ‘special levy’ to pay for unexpected costs. It makes good management and smart financial sense.
9
10
OUR ROLE AS YOUR COMMUNITY MANAGER
THE ROLE OF A BUILDING MANAGER
Each Body Corporate is legally required to manage and maintain shared property and services. This includes ensuring the strata scheme is compliant with strata law and regulations, as well as a myriad of associated laws affecting strata buildings in Queensland.
Some Bodies Corporate choose to engage the services of a Building Manager to oversee the onsite maintenance of the building. They often live or have an office onsite.
This takes time, skill and an understanding of the complex legislation. That’s why most Bodies Corporate choose to engage the services of a professional Body Corporate management company. Just like Ernst. When contracted to a strata scheme by the Body Corporate, Ernst is delegated the responsibility of managing the day-to-day affairs of the scheme on behalf of the Body Corporate Committee. Tasks will vary according to the management agreement, but broadly cover: -
Conducting the Annual General Meeting
-
Financial management
-
Technical services
-
Administrative duties
The Building Manager is responsible for the maintenance of the building, common property and shared services such as heating, air conditioning, ventilation, waste disposal, lifts, garages and utilities. The Building Manager also oversees or undertakes onsite works and arranges for any permissions or access requirements for contractors. Think of it like this: Strata Community Managers look after the business side of strata, while Building Managers look after the building. We all work together to ensure your building is well maintained and cared for.
There is so much more to managing your scheme, including tasks we perform behind the scenes, but you will experience the difference Ernst professional management makes.
11
12
WHAT IS A BODY CORPORATE COMMITTEE? The administration and management of the strata scheme may be performed on behalf of all lot owners by the Body Corporate Committee. The Body Corporate Committee is a group of owners elected at each AGM who can make many of the day-to-day decisions about running the scheme on behalf of the Body Corporate including the control, maintenance and repair of common property. The Body Corporate Committee has the responsibility of enforcing by-laws (rules), the ability to make new ones, and must budget how much money is required to maintain your building now and into the future. The Body Corporate must elect a Committee at each AGM and appoint executive positions of Chairperson, Secretary and Treasurer. Some of these positions can be held by the same person.
Election of the Body Corporate Committee The Body Corporate Committee must have at least 3 members and maximum of 7 members (for schemes with 7 or more lots). If there are less than 7 lots, the maximum number of members is the same as the number of lots. You can be elected to the Committee if you are: • an owner; • a company nominee of a corporation that is an owner; or • an immediate family member. A ballot may need to be held to decide executive positions and ordinary committee members. It is you, the owner, who votes for the Body Corporate Committee.
WHAT ARE BY-LAWS? An essential and unique part of living within a strata scheme is the necessity to follow set rules to ensure all residents can enjoy their home and live safely and harmoniously together. By-laws are the rules and regulations adopted by the Body Corporate that all owners and occupiers living within a strata scheme legally must follow. Some by-laws are set out in legislation and these can be found in the Body Corporate and Community Management Act 1997 (the BCCM Act). Other by-laws are adopted by the Body Corporate. Each strata scheme can decide and enforce its own by-laws to suit the way its owners want to live. It’s important to understand your responsibilities and obligations. Ernst can advise your Body Corporate how by-laws can be changed, or new ones created, to meet the needs of all owners.
Common by-laws Pets, parking, noise, renovations, behaviour of residents, use of common property, and smoking are all common by-laws found in strata schemes. By-laws can vary significantly from scheme to scheme. It’s important you know and understand which by-laws apply to your scheme and you must abide by these by-laws. Some by-laws, such as pets and renovations, may require permission from the Body Corporate Committee. BEFORE you do anything, check the by-laws, follow procedure and seek permissions. These rules are in place to protect all residents and to promote a harmonious environment and community.
13
EXCLUSIVE SMARTER BENEFITS
ERNST BRINGING STRATA TO REAL LIFE
Negotiated exclusively for ERNST clients, these deals are available to you to help save valuable time and money:
Strata is made up of a truly diverse group of people who have varying levels of understanding.
Discounted contents or landlords insurance
A common misunderstanding from owners is their personal contents will be covered under the strata building’s insurance policy. They’re not. Receive 3% discount on Contents insurance or 5% discount on Landlords insurance from leading strata insurer, CHU, when you use the unique web link smartercommunities.com. au/chu
Tax depreciation schedule discount
Making the most from your investment property makes good financial sense. Property depreciation is often overlooked by investors, resulting in a loss of taxation benefits. Enjoy a discounted rate for a comprehensive Tax Depreciation Schedule from Quantity Surveyors, Mitchell Brandtman, via the unique web link smartercommunities.com.au/mb
14
We recognise this diversity and consequently provide informative content and videos to educate and inspire owners via our e-newsletter, bi-annual magazine and our blog. To learn more visit us at ebcm.com.au
Scan this QR code to watch our Strata FAQs videos
15
This Guide to Strata Living is printed on Pacesetter Coated - made from elemental chlorine free bleached pulp sourced from wellmanaged forests and controlled sources. It is manufactured by an ISO 14001 certified mill.
Gold Coast Level 21, 50 Cavill Avenue Surfers Paradise QLD 4217 t. +61 7 5519 2900 e. goldcoast@ebcm.com.au
Brisbane HQ South, Level 2, 520 Wickham Street Fortitude Valley QLD 4006 t. +61 7 3620 0600 e. brisbane@ebcm.com.au
EBCM.COM.AU
smartercommunities.com.au Ernst Body Corporate Management (Ernst) Pty Ltd ABN 87 010 209 784 is a fully owned subsidiary of Smarter Communities Limited ABN 25 065 006 859.