Community title schemes, body corporates, strata properties and management committees... they can be hard to get your head around, especially if you're new to strata schemes and trying to work out what is what.Community title schemes, body corporates, strata properties and management committees... they can be hard to get your head around, especially if you're new to strata schemes and trying to work out what is what.
So, we've provided a helpful summary of what's what in Queensland strata title schemes.
What is a strata title?
Strata title is the most common type of property ownership where different people own individual units in one building or on one piece of land. The strata property can be as simple as a two-unit set or a huge multi-level apartment complex, but they all consist of two key features - multiple lot owners and shared common areas.
What is a body corporate in Queensland?
In a strata property, the body corporate (often called a community title scheme or body corp) is the legal body that owns all the common property, infrastructure and the building itself. It may also employ staff such as cleaners and caretakers. Owners of the individual residences are the voting members of the body corporate and can make decisions about how the property is run and maintained.
What are the differences between a body corporate and the committee?
The body corporate is simply the company that owns the building, land and common areas of the property. It is a legal entity like any other company, and, as such, it needs a board of directors. In the case of body corporates, that board is the committee.
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 individual owners. Committees can also outsource the day-to-day or technical responsibilities to a specialist body corporate 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 body corporate?
Like any company that owns property, the body corporate has obligations to the owners, tenants, the public and the law. In Queensland, the Body Corporate and Community Management Act 1997 and its regulations control how committees and body corporates act and operate.
In short, the body corporate is responsible for maintenance, repair, insurance 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 records including details of lots, owners, tenants, 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 body corporate 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 community title schemes
In Queensland, certain insurance is required by law, while other cover is highly recommended. Compulsory insurance in Queensland for body corporates 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.
Both 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
- 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.
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 properly covered, not just for the compulsory insurance, but also for extras that may otherwise see you or the corporation paying large additional costs.
The value of insuring the body corporate committee
Decisions by the body corporate committee can sometimes end up in legal action, and committee members will not always be covered for the legal costs or liabilities. In Queensland, only building and public liability insurance is compulsory, but committee members should not be kept awake at night worrying about their strata decisions. That's where Flex Insurance's optional committee member liability cover comes in, bringing peace of mind at a sensible price.