Community title, community strata schemes, old strata schemes and community corporations South Australia's strata schemes can get pretty confusing, especially if you're new to strata or your updating to a newer property.
To make things easier, we've provided a helpful summary of what's what in South Australia's strata and community title schemes.
What is a community title in SA?
In South Australia, community title is a very common type of property ownership in multi-residence (or strata) settings. It allows different people to own individual units on the same block of land or in the same building. Community title replaced the old strata title, and comes in two types: community schemes and community strata schemes. Owners of the units form and run the community corporation (formerly called a body corporate).
What is the difference between a community scheme and community strata scheme
They sound the same, but they're really different.
- A community scheme is one where the homes are all built on the same level such as a small group of units all facing a shared driveway. Owners are responsible only for their lot (which may include a yard or garage), and for insuring their own building and any shared walls. They also pay a fee to their community corporation to insure and maintain common areas such as shared driveways.
- A community strata scheme is like the older strata titles. Again, owners are responsible for their unit, but the community corporation is responsible for maintaining and insuring all the buildings, as well as other common areas.
How are community and strata schemes insured?
Different community schemes take out different insurance. In strata and community strata schemes, buildings and other infrastructure (e.g. underground parking etc) are shared, so the community corporation must take out building insurance over the entire property, as well as public liability cover. In community schemes, individual owners take out their own building insurance (i.e. just for their homes), and separate insurance is taken out to cover common areas such as shared driveways.
Is community title the same as strata title?
It depends on the type of community title. Community strata schemes are very similar to the former strata title schemes, especially in apartment complexes. Older, multi-residence properties may still be managed under the former strata title laws. The simpler community schemes however, are more like freehold titles with some shared areas of the property that owners chip-in to maintain and insure.
What is the difference between community title and Torrens or freehold title?
Under a Torrens or freehold title, the owner is responsible for their entire property and owns everything on their land, and typically insure it with home and contents. A community title however covers multiple homes, and, while each owner is responsible only for their own residence, they are must also comply with by-laws of the community corporation, and pay a levy or fees to cover the cost of maintaining and insuring common areas such as shared driveways or buildings.
What is a community corporation?
In a community strata scheme, the community corporation (also known as strata corporation) or body corporate is the legal entity that owns all the common property as well as the building and infrastructure. It may also employ staff such as cleaners etc. Owners of the individual units are the voting members of the community corporation and can make decisions about how the entire property is run and maintained.
What are the differences between a community corporation and the management committee?
Like any organisation, the community corporation needs an executive and, in this case, it's the management committee. It's elected by owners to look after the administration and management of the property. Some decisions it can make on its own, while others must be put to a vote of owners. Committees can also outsource the day-to-day or technical responsibilities to a specialist strata management firm. Community titles with only two units generally don't need to have a community corporation or committee.
What are the responsibilities of the community corporation?
The body corporate in a strata scheme has various responsibilities to the owners, tenants, the public and the law. In South Australia, the Community Titles Act 1996 (or, in old properties, the Strata Titles Act 1988) regulates how committees and community corporations act and operate.
In short, the community corporation of a strata scheme is responsible for maintenance, repair and overall management of the common property, including:
- Holding appropriate strata scheme insurance - including compulsory cover for building damage where required, public liability insurance, and financial fidelity cover - with an insurer such as Flex Insurance
- Proper, responsible and transparent financial management, including charging fees for capital and maintenance funds, and using those funds
- Maintaining and keeping detailed records including a roll of lots, owners, tenants and insurance; financial statements; and the minutes of all meetings
- Providing up-to-date information to owners and other stakeholders as required
- Arranging timely repairs and maintenance of common property
- Issuing, publishing and enforcing by-laws
- Notifying owners and residents of any upcoming works, such as maintenance or pesticide use
- Getting legal advice and taking or defending a legal action
- Scheduling safety inspections including fire safety, lift and swimming pool inspections
- Employing staff such as building managers, and contractors such as strata managers (if decided)
- Knowing, understanding and adhering to all applicable laws, such as planning, building, safety, insurance, employment, fire safety, inspections and occupational health and safety.
Insurance in strata schemes
In South Australia, certain community title insurance - often called strata insurance - is required by law, while other cover is highly recommended.
Compulsory insurance for community and strata title in SA includes:
- Building insurance (for strata title and community strata schemes), which is designed to cover the cost of repairing damage to buildings and common areas (including infrastructure and first fix plumbing and electrics)
- Fidelity insurance against fraudulent dealing with corporation finances
- Public liability insurance for personal injury or damage to other people's things while on common areas of the property.
All the above items are automatically covered by Flex Residential Strata Plan Insurance.
While compulsory insurance covers a number of important issues, a body corporate and the committee could still be at risk of other potential costs and liabilities. Fortunately, optional insurance cover can safeguard against these, including:
- Committee member liability
- Voluntary workers - Cover if anyone is injured while doing unpaid work on behalf of the owners corporation.
- Machinery breakdown - Cover for damage and repairs to machinery and plant, including but not limited to lifts, pumps and more.
- Catastrophe cover - Cover for increased building expenses due to a catastrophe.
- Government Audit and Legal expenses - Cover for fees, costs and legal expenses incurred as a result of a Government Audit
- Lot owners fixtures and improvements - Cover for additional improvements or renovations made by the lot owner in the event the building sum insured has been exhausted.
- Exploratory costs - Costs associated with searching for the source of a water leak.
- Loss of Rent - Increased limits for Temp Accommodation/Loss of Rent should a claimable event leave your property inhabitable.
- Fusion - Protection of electrical motors attached to the building for Fusion damage.
- Floating floors - Protection for floorboards that are not fixed to the slab but are held in place by clips or skirting boards.
- Special benefits Covers for or extending limits for the following: Fallen Trees, Landscaping, Removal and Storage Costs of Personal Contents, Failure of Supply Services, Cost of Reletting, Keys and Lock Replacements, Car Park Liability, Hiring of Sporting/Recreational Facilities, Garden Equipment and Court Appearances.
Flex Residential Strata Plan Insurance gives you the flexibility to tailor your strata insurance to suit your needs. You can choose which of the above items you'd like included in your strata cover.
As an owner and/or committee member, it is your right to request that your body corporate is adequately covered, not just for the compulsory insurance, but also for extras that may otherwise see you or the corporation paying large additional costs.
Is your strata committee covered against legal disputes?
As a member of your strata committee, if you, or the committee, make a decision that ends up in legal action, you could be covered by your strata insurance for the legal expenses or financial liability arising out of your action, omission, neglect etc.
That's why Flex Insurance offers optional committee member liability insurance, to give committees peace of mind, without it costing an arm and a leg.