Wednesday, June 3, 2020

Requirements of Two lot strata schemes

The Strata Schemes Management Act 2015 provides some partial exceptions for two lot strata schemes that are different to the usual strata management structure and the resulting administration costs.

A do-it-yourself approach may suit some schemes but it is vital to have knowledge of your responsibilities, the special provisions as well as staying ahead of legislative changes. You may decide to look after the day-to-day tasks and leave items like record keeping to a third party.

Administrative Fund (Section 73)

It is compulsory for all strata schemes to have an administration fund. Regardless of the building configuration (attached or detached), two lot strata schemes must establish a fund and lot owners must pay the levied contributions.

Capital Works Fund

Two lot strata schemes are exempt from having a capital works fund (Section 74, 5) if:

  • the building in each lot are physically detached;
  • no building or part of a building is situated outside the lots; and
  • the owners pass a unanimous resolution for the owners corporation not to have building insurance for both buildings and/or not to have a sinking fund.

If a two lot scheme has a capital works fund they must prepare a ten-year plan. (Section 80)

Accounts & Finance Statements

Accounts and finance statements are not required to be audited unless the annual budget exceeds $250,000 (Section 95)


Read related: Two lot strata scheme – getting some painting done


Insurance

(We recommend you obtain professional advice for the insurance of two lot strata schemes)

Owners can obtain their own building insurance for their lot (Section 160) if:

  • the building in each lot are physically detached;
  • no building or part of a building is situated outside the lots; and
  • the owners pass a unanimous resolution for the owners corporation not to have building insurance for both buildings and/or not to have a sinking fund.

Section 164 of the Strata Scheme Management Act 2015 states the other mandatory insurance requirements.

Two lot strata schemes insurance can get complicated. Taking out the wrong insurance for an Individual lot or the owners corporation could void a claim on an insurable event. We recommend you obtain professional advice for the insurance of two lot strata schemes.

Strata Committee

  • an owner from each lot form the strata committee. (Section 30)

Read related: Requirements of large strata schemes


Portions of this article may be subject to copyright.

© State of New South Wales (NSW Fair Trading). For current information go to fairtrading.nsw.gov.au

Strataville Editorial
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