A strata scheme is usually a single building, or a selection of buildings in which the owners have small portions called lots. These schemes can be small communities. As such, the actions and approach of some people of the scheme can have a direct impact on the lifestyle of others in the same community. This is why in strata schemes the most important part for the people is to remain conscious about their responsibilities along with the rules and regulations of the scheme. Most corporations that own strata schemes usually hire property management companies or professional managers to look after their strata.
Generally, there are two types of provisions in strata schemes: small and large. Both of these provisions are discussed in this post in detail.
Small Schemes Provisions
- Executive Committee, which is usually created by the owner corporation, needs to be formed between the owners. Elections aren’t necessarily required for people in the Executive Committee.
- A quorum takes place in meetings, but only when all the owners of the lots are present.
- The buildings in the scheme are kept separated from the other in order to avoid the need for insurance as all owners can mutually decide whether or not insurance is required.
- Owners are allowed to have their buildings insured individually.
- Since a common property is missing, owners have the ability to not opt for a sinking fund. As such, none of the buildings in the scheme are placed outside the lots.
- Auditing of a statements and financial accounts is not required. In any case the owners of the lots wish to have their accounts audited, meeting the auditing standards is unnecessary.
Large Schemes Provisions
- Auditing of financial accounts is necessary every year. As such, the auditing process needs to be strictly carried out on a yearly basis.
- An expected amount that is likely to be used on specified things needs to be listed under the annual budgets.
- The owner corporation of the scheme needs to obtain at least two or more quotations for the items that are likely to cost more than the official amount.
- The Executive Committee isn’t allowed to spend over 10% of the budget, except of course, in case there are any emergencies.
- A notice detailing any upcoming Executive Committee Meetings needs to be provided to all of the lot owners. Forwarding the notices through the scheme’s notice board is usually acceptable.
A large scheme which consists of a larger number of lots needs to have all of its proceedings handled in a different manner as compared to a small scheme that consists of only 2 owners. Simply put, the more owners a strata scheme features, the higher the chances of conflict among all of them. As such, strata schemes managing the affairs need to enforce special policies and terms in order to make sure all issues and underlying conflicts are taken care of effectively.