Layering is the Fashion in Victorian Strata
The smart, hip and stylish way to do complex strata buildings …
We all know Melbourne is the fashion capital. So, since layering is a fundamental dressing style, it’s no surprise Victorians have applied layering to strata title buildings as well. Here’s a short overview of how stylish Victorian strata layering works.
Introduction
Victorian strata title has a unique feature for strata building titling structuring and, consequently, strata building operation. It’s layering.
Victoria permits multiple strata entities to be created for a building so that parts of the building and operational functions can be divided and allocated between them and customised groups of strata owners.
It’s a bit like NSW’s part strata, but different as separate and independent legal entities are created for each layer.
And, it’s a bit like NSW community title, but different as the separate strata entity layers are on equal footing and not subsidiaries to a top-level strata entity.
So many Victorian strata buildings have several strata layers to split and share strata owners’ rights, responsibilities and costs. This is very common in mixed-use complexes to give groups of strata owners use, access to, and responsibility for parts of the building.
It’s a very flexible system that has allowed some creative splitting of strata buildings. And, it works like this.
Titling structuring
Where a building subdivision plan is lodged that creates common [shared] property and not just strata lots, it must also create an owners [strata] corporation [s 27A of the Vic strata laws - the Subdivision Act 1988].
But, the subdivision plan can create more than one strata corporation [s 27(1)].
If there’s more than one strata corporation, then one of the corporations must be nominated as the unlimited strata corporation for the building [s 27(3)]. The other corporations will be limited strata corporations.
So, unlimited strata corporations are the most common type found in Victoria.
An unlimited strata corporation will typically own and control the land the building is constructed on and all of the common property in the building, including services, which are not included in a limited strata corporation. It will also affect [their word for control or interact with] all strata lots in the building.
The unlimited strata corporation will usually be referred to as OC1.
One or more limited strata corporations can also be created in the strata building subdivision [s 27(2)].
Each limited strata corporation that is created must specify the common property areas and the strata lots it affects [s 27(4)].
The common property areas and lots that can be included in a limited strata corporation open. So, there can be many limited strata corporations [one for each different common property area or facility] and they can apply to many strata lots or one strata lot only.
Each limited strata corporation will usually be referred to as OC2, OC3, OC4, etc.
So, by splitting the building between multiple layered strata corporations, different parts of the building can be assigned to different groups of strata owners [with overlaps as appropriate] and the core building elements or features can be assigned to the unlimited strata corporations that involve all strata owners.
For example, an apartment building with a large retail outlet on the ground floor and public and private parking areas might layer or split:
the apartment levels into a limited strata corporation for the apartment owners,
the retail level into a limited strata corporation for the retail owners, and
the carpark level into a limited strata corporation for the apartment owners and the public carpark owner.
So strata owners will always be members of the unlimited strata corporation and may be members of one or more limited strata corporations [s 27D].
Allocation of powers [and responsibilities]
Along with assigning common property areas, the strata subdivision can also specify which functions and obligations are allocated to the unlimited and each limited strata corporation very flexibly [ss 27C(2)(4) & 27C(2)(5)].
Typically, the functions/obligations will include the obligation to operate, maintain, repair, and replace the affected common property for the unlimited and each limited strata corporation and to levy the strata owner members of each strata corporation for those costs.
For a plan of subdivision with overlapping strata corporations, Land Use Victoria will require the subdivision to describe how they will share those functions and obligations between them.
It is also possible for limited strata corporations to transfer some or all of their functions to the unlimited strata corporation so it performs them for all limited strata corporations in the building subdivision. However, this needs a three-quarter majority vote of each strata corporation.
Typically, these transferred functions include:
issuing of information certificates,
keeping records and registers,
enforcing rules,
complaints handling and procedures,
financial management, and
reporting.
Strata purposes
Strata building subdivisions must also define the purpose of each strata corporation [unlimited and limited].
The standard example of different purposes for multiple strata corporations illustrates this is as follows:
'The purpose of owners corporation No 1 PS##### is to manage and administer the common services and maintain common property affected by owners corporation No 1 PS##### (except the use and maintenance of any common property affected by a limited owners corporation).'
‘The purpose of owners corporation No 2 PS##### is to manage and maintain common property No 2 and the common services within the land affected by owners corporation No 2 PS#####.'
‘The purpose of owners corporation No 3 PS##### is to manage and maintain the common property No 3 and the common services within the land affected by owners corporation No 3 PS #####.'
Lot liabilities and entitlements
Finally, strata building subdivisions must set out for each strata corporation the lot liability and the lot entitlement for each strata lot affected by it [s 27F].
The lot entitlement defines each strata owners’ ownership interest in the common property affected by the strata corporation and their voting rights as a proportion of aggregate entitlements.
The lot liability defines the proportion of the expenses of a strata corporation each strata owner must pay.
Prescribed corporations
An unlimited or limited strata corporations can also be prescribed if they:
contain more than 100 lots (including storage, car parking, and accessory or ancillary lots), or
collect more than $200,000 in strata owners’ levies in a financial year.
There are extra requirements for prescribed strata corporations as follows:
to prepare 10-year maintenance plans for major capital works,
to establish a maintenance fund to implement the maintenance plan,
to report on the implementation of the maintenance plan at every general meeting,
to prepare a financial statement according to the standards,
to have its financial statements audited every financial year unless exempted,
to value all insured buildings every 5 years and table the valuation at the next owners’ meeting.
Conclusions
The Victorian model of layering and overlapping strata corporations within a building is an elegant way to deal with differences in the building structures, differences in how parts of the building are used, and, distinct groups of strata owners.
Very classy …
Mar 17, 2021
Francesco …