Strata in Western Australia: Rules for Small Schemes

When a strata titles scheme is registered, a strata company is set up for it, named "The Owners of" the scheme, with "strata scheme" or "survey-strata scheme" and the number the Registrar of Titles gives it (Strata Titles Act 1985, s 14). The owners of the lots are its members and the council is its governing body. A common seal is optional.

The Act covers strata schemes and survey-strata schemes. It defines a "2, 3, 4 or 5-lot scheme" as a scheme with that number of lots (s 3), and a single tier strata scheme as one where no lot sits above or below another (Sch 2A cl 3). Disputes go to the State Administrative Tribunal.

The strata company "may" authorise a strata manager to do a scheme function (s 143). A manager can act only under a strata management contract or a volunteer agreement (s 144). Some jobs can never be handed to a manager, such as deciding contributions, starting proceedings in the Tribunal or a court, and authorising use of the seal (s 143(5)).

A volunteer strata manager needs no professional indemnity insurance (s 144(2)) and cannot be required to hold qualifications (s 144(3)). The honorary fee is fixed at $250 per calendar year for each lot (Regulations reg 11). The experience rules for paid managers, 2 years for a principal and 1 year for a strata community manager, do not apply to a volunteer (reg 97B).

• A 2-lot scheme does not have to carry out the "designated functions": the administrative fund (unless its by-laws require one), accounting records and the statement of accounts, minutes of meetings, the letterbox and the roll (s 140(1), (4)).
• A 3, 4 or 5-lot scheme can exempt itself from those functions in its by-laws (s 140(2)). Landgate says it must pass and register a governance by-law to do so.
• Any member of a 2 to 5 lot scheme can ask the Tribunal to make the strata company carry out a designated function anyway (s 140(3)).
• The yearly AGM rule does not apply to a 2-lot scheme, though its by-laws can require one (s 127(2)). Landgate says 3, 4 and 5-lot schemes still hold an AGM.
• In a 2-lot scheme a resolution without dissent and a special resolution must both be unanimous (s 123(3), (5)), and the quorum is people able to vote for both lots (s 130(2)).
• With 3 lots or fewer, all the owners are the council (Sch 1 by-law 4(3)).
• If a 2 to 5 lot scheme keeps no roll, each owner must give the strata company and the other owners written notice of their address for service (s 106).

• AGM once in each 12 months and no more than 15 months after the last one. The agenda includes electing the council, the accounts and copies of the current insurance certificates (s 127).
• The council must call an extraordinary general meeting when owners holding 25% or more of the unit entitlements ask in writing; if it does not act within 21 days, those owners can call it (s 128).
• At least 14 days' notice to every owner and first mortgagee, with each accepted way of voting, electronic or other (s 129).
• Quorum (schemes over 2 lots): people able to vote for 50% of the lots. After 30 minutes without a quorum, the voters present are taken to be a quorum (s 130).
• A person may attend and vote by phone, video or internet in line with the by-laws, if this does not place an unreasonable burden on the strata company (s 131).
• One vote per lot. An owner who owes money cannot vote, except on a unanimous resolution or a resolution without dissent (s 120).
• Special resolution: votes for at least 50% of lots by number and by unit entitlement, and votes against under 25% by number and by unit entitlement. In a 3, 4 or 5-lot scheme the votes for must come from at least 2, 3 or 4 lots, with at least 50% of unit entitlements (s 123(4), (6)).
• Ordinary resolution: more than 50% of the lots for which votes are cast; a tie fails (s 123(7)).
• Voting on a unanimous, without dissent or special resolution stays open for 28 days, including 28 days after a meeting (s 121).

With more than 3 lots, the council has 3 to 7 owners, as the strata company decides, elected at each AGM (Sch 1 by-law 4). At its first meeting it appoints a chairperson, secretary and treasurer, and one person may hold more than one office. The council decides by simple majority. If there is no council, the owners can do its work in general meeting (s 138).

• Every strata company except a 2-lot scheme keeps an administrative fund and levies contributions by unit entitlement, unless its by-laws set another basis (s 100(1)).
• A reserve fund is required for a "designated strata company": a scheme of 10 or more lots, or one whose building replacement cost is over $5,000,000 (s 100(7); reg 79). Others may have one.
• A designated strata company also needs a 10 year plan for maintenance, repair and replacement, revised at least every 5 years (s 100(2A)).
• The budget goes to the AGM for approval by ordinary resolution (s 102).
• Spending outside the budget is allowed up to $500 per lot per financial year, unless the strata company sets another amount by special resolution (s 102(6); reg 81). A budget item for common property spending above $500 times the number of lots needs a special resolution (reg 80).
• Late levies carry 11% simple interest a year unless the strata company decides on a lower rate or none (s 100(4); reg 78). An unpaid amount is a debt that can be recovered in a court, and a new owner is liable with the earlier owner (s 100(4), (6)).

The strata company must insure all insurable assets of the scheme to replacement value against fire, storm and tempest (not sea, flood or erosion), lightning, explosion and earthquake, and carry public liability cover of at least $10,000,000 (s 97). The Tribunal can exempt a company, with conditions.

In a single tier strata scheme, insuring the buildings inside a lot is up to the lot owner, unless the strata company decides by ordinary resolution to take it on (Sch 2A cl 53B). A resolution without dissent can also switch off the duty to insure common property, but any owner can end that by written notice, which takes effect 1 month later (Sch 2A cl 53C).

• Most records are kept 7 years; special, unanimous and without dissent resolutions and insurance contracts 20 years; key scheme documents for the life of the scheme (reg 83). Records may be electronic (reg 84).
• The strata company must keep a letterbox in its name and an electronic way for owners and occupiers to contact it (s 104(3)).
• Maximum fees: $10 for information, $1 for an inspection by a person with a proper interest ($100 for a person they authorise), and $140 for a certificate under s 110, plus GST where it applies (reg 86).
• A s 110 certificate is due within 14 days and covers contributions, amounts owing, the interest rate, insurance and the management contract. It is conclusive evidence in favour of a buyer.
• Before the buyer signs, the seller must give the buyer the scheme notice, plan, by-laws, unit entitlements, recent AGM minutes, the last statement of accounts and the lot's contributions and debts, on the approved form (s 156).

Governance by-laws are made, changed or repealed by resolution without dissent, and conduct by-laws by special resolution (s 44). In a 2-lot scheme both votes must be unanimous. The strata company must apply to register a change within 3 months (s 48). The Tribunal can impose a penalty of up to $2,000 for a by-law breach (reg 58).

The State Administrative Tribunal hears scheme disputes, such as disputes about scheme documents, functions, resolutions and council elections (s 197). It may dismiss a dispute that is trivial or that the parties could reasonably be expected to settle themselves (s 198(5)). A dispute about a debt is in most cases outside the Tribunal's scheme dispute power, so levy debts go to a court (s 197(3)(f)).