Understanding Strata Committee: Roles, Responsibilities, and Insurance Necessities

Date published: 14/07/2024, updated 25/07/2024

What is a strata committee?

A strata committee is a group of elected lot owners in a strata property. If you purchase a strata title property, you automatically become a member of the owners corporation.

The strata committee is responsible for managing the strata property and making decisions about the common property and shared spaces. This includes carrying out tasks required under state strata laws such as maintenance, managing finances, and enforcing by-laws. 

The main roles within a strata committee typically include:

• Chairman: The chairman oversees meetings and ensures all decisions made concerning the strata property comply with state strata laws and regulations. 
• Secretary: The secretary is responsible for managing committee records, correspondence, and administration.
• Treasurer: The treasurer manages all the finances including budgets, managing expenses, and collecting levies. 

This article will dive further into the obligations and responsibilities of a strata committee and how strata insurance plays a crucial role in safeguarding the property and its members.

Understanding The Responsibilities of a strata committee

The strata committee makes decisions on behalf of the owners corporation unless the legislation specifies otherwise or if restricted by the owners at a general meeting. 

Each state and territory has specific laws that govern the functions and duties of strata committees. Here are the common tasks and responsibilities typically handled by each member of the strata committee:

Committee duties 

A strata committee falls under the owners corporation, and laws require that each committee member owes a duty of care and diligence when making decisions for the owners corporation.

Under new legislation, the committee can be authorised to approve minor renovations through a by-law passed by the owners' corporation. Additionally, the committee has the right to seek legal advice and can engage legal services up to a cost of $15,000.

Strata committees can consist of anywhere from 1 to 9 members. In a two-lot scheme, both lot owners are required to be committee members. For larger schemes, a minimum of three members is required. Once elected, the committee must appoint the following roles: 

Chairperson

The chairperson oversees both general meetings and strata committee meetings. They ensure there are enough members present for the meeting to be valid and handle procedural issues at these meetings. They do not possess a casting vote. This means that if there is a tie during any vote, the proposal does not pass unless the bylaws or legislation specifically grants the chairperson to cast a deciding vote. They can announce and confirm the results of votes and consider the vote conclusive, and they can declare a motion out of order. 

Secretary

The secretary ensures that the administrative and procedural aspects of the strata property are handled appropriately. Strata laws also give the secretary the authority to conduct investigations, research to resolve complaints and disputes and provide information about the owners corporation to relevant parties. Other duties include:

• Maintaining the strata roll
• Organising committee meetings
• Providing members notice of meetings
• Prepares and takes minutes of meetings
• Has authority to access books and records for inspection
• Responds to internal communications 

Treasurer

The treasurer handles all financial aspects of the strata property, the strata committee, and owners corporation. Duties include:

• Issuing levy notices
• Receiving, banking, and keeping records of all payments made to the owners corporation
• Issuing the strata information certificate concerning the sale of a lot
• Maintaining accounting records and preparing financial statements

Who can be elected to form a committee in a body corporate?

The strata committee is composed of the number of members set by the owners corporation, with a maximum of nine members. Once the strata committee is elected, the members of the committee are to decide who will hold the office-bearer positions. 

The owners corporation has the authority to dismiss some or all of its strata committee, and they may also employ a strata managing agent to carry out some or all of the responsibilities of the strata committee. 

The following people are eligible to be elected to the strata committee:

• Lot owners

Owners of lots within the strata scheme can be elected to the committee, provided they hold a legal title to a property within the scheme. A co-owner of a lot is also eligible if nominated by another owner other than the co-owner, or the co-owner if they are not a candidate. Only one co-owner of a lot can be a member at the same time.

• Current committee members

Individuals who are already serving on the strata committee can be re-elected or continue their roles if they choose to and meet the eligibility criteria.

• A company nominee

A company nominee can be elected to the strata committee if the owner of a lot is a corporation.

• An authorised representative

An individual who is not an owner can be elected to the committee if they are nominated by an owner who is neither a member nor a candidate for the committee. This can include a strata management agent or caretaker. 

In rare cases, tenants of the strata scheme may be eligible to join the strata committee if permitted by the strata’s by-laws. Similarly, family members of the lot owner may be eligible to serve on the committee provided they meet any additional requirements set out by the strata scheme rules.

Does a strata committee need protection?

It's not just strata buildings that should be insured.

Committees of body corporates, owners' corporations, and strata corporations almost universally understand and appreciate the need for strata insurance over their properties. Basic cover to meet the costs of repairs or replacement of assets, as well as public liability insurance for personal injury or property damage, are required by law under each state's strata laws.

Basic cover however, is just that... basic: leaving a lot of risk in other areas that can easily remain uninsured, and thus put the burden of costs on individuals. Fortunately, specialised strata insurers such as Flex, make it easy for strata corporations to identify potential risks and tailor their policies accordingly. Even failing to do so can leave committee members in a perilous position, but that doesn't need to be the case.

Understanding Strata Committee Decision-Making and Liability

In Australia, the law treats corporations as independent legal entities that can enter into contracts, hold bank accounts, sue and be sued. But the difference between a corporation and a human being, is that only humans can make actual decisions - which is why every company has a board or committee.

As with any organisation, the committee has an obligation to make decisions reasonably, logically and in the best interests of the organisation. And while decision-makers can enjoy some indemnity for the choices they make, if it can be shown that a decision was reckless or the committee was negligent in its procedure (even though the members thought they were doing the right thing at the time) claims can potentially be made against it for damages or rectification.

In strata corporations, especially large ones, individual lot owners can be a very diverse bunch of people, each with different ideas and interests. What's more, strata properties deal with many others who are not owners, including visitors and guests, contractors, neighbours, the general public and government entities - all with their own interests as well.

How liability insurance can help cover the costs of legal defence

Strata committees, when making any decision must take into account the potential effects of a decision, and occasionally, a decision or action by a committee can adversely impact someone else (or at least be perceived to impact them). Even if the committee, or the entire strata corporation, believes a decision was sound, it can still end up in legal proceedings. And this is where the costs can really mount up, with expenses potentially being borne by committee members themselves.

Fortunately, it is possible for owners' corporations to take out committee members' liability insurance to cover the costs of legal defence where members made bona fide decisions, that turned out to be unexpectedly costly or detrimental. Even if a court decides that the committee's decision or actions were sound, the legal expenses can still be eye-wateringly high.

What about the compulsory volunteer cover?

In NSW, all relevant owners' corporations must take out 'volunteer worker' cover. The Act states that this must cover: "damages for which the owners' corporation could become liable because, without fee or reward or any expectation of fee or reward, a person acting on behalf of the owners' corporation does work in a building or on the common property in the strata scheme."

Under this wording, it could be argued that only physical work by a volunteer committee member would be covered, not the decisions they make.

 FAQS

1. How can a strata committee ensure they have adequate protection? 

Strata committees can consider strata insurance and additional coverage like committee members liability insurance for adequate protection. 

2. What areas of risk typically cover the committee under strata insurance? 

Strata insurance protects against risks like property damage, public liability, legal costs, and committee members' liability. It safeguards the committee from financial losses and liabilities.

Still not sure? Contact us for help

Ultimately, if you're under any doubt, your committee should look at the costs (and potential savings) of adding office bearer liability cover to your strata insurance policy, and have a chat with your insurer and/or strata manager. 

Understanding the roles and responsibilities of your strata committee is essential for effective strata property management. From ensuring compliance with strata laws to managing finances and addressing maintenance issues, the strata committee plays a crucial role in keeping a safe and well-maintained property. In addition to strata committee decision-making and duties, adequate insurance coverage is vital. It helps safeguard against risks that may undermine the financial standing or safety of the strata property and its committee, including property damage, potential disputes, and liabilities. 

If you are a strata owner and have any questions or want to explore additional coverage options for your strata committee members, speak to an expert. Contact Flex for advice today.