Strata companies, body corporates, common property and management committees... if you're new to strata schemes - or even an old hand - it can quickly get confusing.
At Flex Insurance, we want to keep things simple and helpful so we've provided a summary of who's who and what's what in WA's strata title schemes.
What is a strata company?
In Western Australia, a strata company is the legal body that owns all the common property as well as the building and infrastructure in a strata scheme (such as an apartment complex). It may also employ staff. Owners of the individual residences are the voting members of the company and can make decisions about how the property is run and maintained.
What is council of owners?
The strata company is simply the body that owns the property, and, like any company, it needs an actual management committee - and in this case, that committee is known as the council of owners. It looks 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 all owners. The council can also outsource the day-to-day or technical responsibilities to a specialist strata management firm. However, the committee still remains responsible for meeting legal obligations including having proper building and liability cover, such as that provided by Flex Insurance.
What are the responsibilities of the council of owners?
Like any company that owns property, the strata company and its council of owners have various responsibilities to the owners, tenants, the public and the law.
In WA, the Strata Titles Act 1985 regulates how strata committees and companies act and operate. In short, the strata company is responsible for maintenance, repair and overall management of the common property, including:
- Holding appropriate strata insurance - including compulsory cover for building damage and public liability insurance - 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 record 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 OHWS.
Insurance in strata schemes
In Western Australia, certain insurance is required by law, while other cover is highly recommended. Compulsory insurance in WA includes:
- Building insurance, which is designed to cover the cost of repairing damage to buildings and common areas (including infrastructure and first fix plumbing and electrics)
- Public liability insurance for personal injury or damage to other people's things while on common areas of the property.
All these things are automatically covered by Flex Residential Strata Plan Insurance, because we specialise in strata and owners corporation 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
- Fidelity guarantee - Cover if owners corporation funds are subject to fraud or theft by a third party.
- 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.
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.
Are you insured as a member of the council of owners?
If you're on the council of owners for your strata company, and you or the group make a decision that ends up in legal action, you may be on your own when it comes to paying legal expenses or financial liabilities. No council of owners or body corporate wants that.
Thankfully, Flex Insurance can take away that worry, with its optional committee member liability cover.