Every strata title property has its own strata corporation. The role of a strata corporation is to administer and maintain the common property for the benefit of all unit holders, to administer all other property of the corporation, and to enforce the articles of the strata corporation [Strata Titles Act 1988 (SA) s 25].

All unit holders are automatically members of the corporation [s 18(4)], but tenants are not.

Note that unit holders are guarantors of their corporation's liabilities, which means the corporation's debts are enforceable against each or any of the unit holders directly [s 21(1)]. If the corporation has a debt, the unit holders have, amongst themselves, the right of contribution to the debt based on their respective unit entitlements [s 21(2)].

The corporation must have a common seal [s 18(3)], which may be used for entering contracts, and must be used if the corporation wishes to amalgamate with another strata corporation.

The strata corporation can delegate some or all of its functions to a management committee and may appoint a strata manager or other such agent to assist with the management of the corporation.

The corporation can make rules which are binding on the corporation, unit holders and tenants regarding the use of common property and the units [ss 19, 20], providing that the rules do not contravene the Strata Titles Act 1988 (SA) or other laws.

Articles are the rules of the strata corporation. While legal obligations under the Strata Titles Act 1988 (SA) cannot be avoided or changed, the articles are determined by the strata corporation itself.

Schedule 3 of the Strata Titles Act 1988 (SA) sets out the model articles for all strata corporations. If a particular strata corporation wishes to adopt its own articles, or amend any number of its articles, it can do so [s 19(2)].

The articles are binding on the strata corporation and the unit holders [s 20]. Articles that relate to the use of units or the common property are binding on tenants [s 20(1)(c)]. A unit holder who has a tenant in the unit must take reasonable steps to ensure that the tenant complies with the articles [s 20(2)].

Some common provisions compel the owner or occupier to:

How to change the articles of a strata corporation

The articles of a strata corporation can be changed by a special resolution of its members (see Types of resolutions) [s 19(2)]. Any change must be lodged with the Registrar-General at the Lands Titles Office to be effective and legal [s 19(3)].

For a variation or substitution of articles to take effect, the changes must be certified in accordance with the form prescribed in Schedule 1 Form 3 of the Strata Titles Regulations 2018 (SA). The certification is then lodged with the Registrar-General, where a copy of the special resolution amending the articles is attached to the certification [see reg 9(1); Strata Titles Regulations 2018 (SA) Schedule 1 Form 3 - Certificate of Amendment of Articles].

What cannot be in the articles

Dealing with a unit

A corporation cannot prevent a unit holder from selling their unit [s 19(4)(a)], or leasing or allowing someone to live in their unit [s 19(4)(b)].

Assistance dogs and therapeutic animals

The articles may not prevent an occupier of a unit who has a disability [see Equal Opportunity Act 1984 (SA) s 5(1)] from having and using an assistance dog or a therapeutic animal [see ss 19(4)(c), s 3(1)]. Similarly, a visitor to a unit who has a disability may not be prevented from using their assistance dog or therapeutic animal [see ss 19(4)(d), s 3(1)].

An assistance dog is an accredited guide dog or hearing dog, or a disability dog under the Dog and Cat Management Act 1995 (SA) [s 21A]. A therapeutic animal is an animal, other than an assistance dog, certified by a medical practitioner as being required to assist a person as a consequence of the person's disability [Equal Opportunity Act 1984 (SA) s 88A]

Articles that reduce the value of a unit or unfairly discriminate against a unit holder

Any articles that reduce the value of a unit or unfairly discriminate against a unit holder may be struck out by order of the Magistrates Court or the District Court [Strata Titles Act 1988 (SA) s 19A(1)].

The application to strike out the article/s must be made by a person who was a unit holder, which includes a person who has contracted to purchase the unit, when the articles came into force.

The application must be made within 3 months after the person (or either or any of the unit holders where the unit is held by 2 or more persons) first knew, or could reasonably be expected to have known, that the articles had been made [s 19(2)].

An application to strike out an article would normally be made to the Magistrates Court as a minor civil action under s 41A. If the matter was particularly complex or significant [s 41A(5)], a unit holder could seek the permission of the District Court to commence proceedings there [s 41A(3)]. Alternatively, the District Court could agree to transfer proceedings begun in the Magistrates Court to the District Court [s 41A(4)].

Breaches of the articles

If it is claimed that a unit holder or occupier (for example, a tenant) of a unit is in breach of the articles, the corporation may request that the person either do what is required under the articles, or stop doing what is not allowed under the articles. If the person continues to breach the articles, mediation may be sought, or a penalty may be imposed by the corporation if there is provision for this in the articles, and/or the matter may be taken to the Magistrates Court (see Disputes).

Penalties for breaching the articles

The articles of a strata corporation may impose a penalty of up to $500 [s 19(5)(b)] for contravention of, or failure to comply with, any articles [s 19(3a)]. If all the units in the strata scheme are non-residential, the penalty may be up to $2 000 [s 19(5)(a)]. Note that the articles set out in Schedule 3 of the Act (see above) do not include provision for imposing a penalty for a breach of the articles. If a corporation wants this power, it must amend its articles accordingly (see How to change the articles of a strata corporation above).

If the articles state that the corporation ‘may impose a penalty of up to $500’ for a breach of the articles, this does not mean that any penalty must be $500. A corporation should ensure that the amount of any penalty imposed is reasonable in relation to the nature and extent of the breach. The amount of a penalty could be disputed in the Magistrates Court if it could be argued to be oppressive, unreasonable or unjust [s 41A] (see Disputes).

Note that it is the strata corporation that may impose a penalty for an alleged breach. If a corporation has a management committee, the management committee may act for the corporation. Thus, unless some other valid delegation has been made, a duly called meeting of either the corporation or the management committee will be needed to impose a penalty for an alleged breach of the articles. A strata manager cannot impose a penalty for an alleged breach of the articles [see Strata managers].

Notice of a penalty

The strata corporation must give notice of the imposition of a penalty using the Form 4 set out in Schedule 1 of the Strata Titles Regulations 2018 (SA) [see Strata Titles Act 1988 (SA) s 19(3b)(c)(i)]. The form is set out below.

Time for payment of a penalty

The date set for payment of the penalty must be at least 60 days after the date the notice is served [s 19(3b)(c)(ii)].

Non-payment of a penalty

If the penalty is not paid in time, the strata corporation may recover the amount as a debt. If the notice has been given to a tenant, then, ultimately, action can be taken in the Magistrates Court (minor civil action jurisdiction) to recover the debt. If the notice has been given to a unit holder, the penalty may be recovered by the strata corporation as if it were a contribution payable to the strata corporation, and interest will be payable on the penalty amount in the same way as if it were such a contribution [s 19(3b)(d)].

Challenging a penalty

Revocation of the notice

A person who has received a penalty notice may, within 60 days after service of the notice, apply to the Magistrates Court for revocation of the notice [s 19(3b)(e)]. A representative of the strata corporation will be required to attend the hearing and will have to show that, on the balance of probabilities, the person committed the alleged breach [s 19(3b)(f)].

When an application to revoke a penalty is made, the requirement to pay the penalty is suspended until the matter is resolved [s 19(3b)(g)].

The Court must revoke the penalty if it is not satisfied that the person breached the articles as alleged, or if it is satisfied that the alleged breach is trifling [s 19(3b)(e)].

A breach may be regarded as ‘trifling’ if the circumstances surrounding the breach were such that the person ought to be excused from the imposition of a penalty on any of the following grounds [s 19(3c)]:

Challenging the amount of the penalty or time to pay

If a person served with a penalty notice considers the amount of the penalty or the time given to pay the penalty to be oppressive, unreasonable or unjust, they may approach the corporation in the first instance (in writing to the secretary) to request that the amount and/or time be reviewed. If unsuccessful, an application may be made to the Magistrates Court to review the corporation’s decision (see Disputes). While there is no time limit for such an application, be aware that the requirement to pay the penalty may not necessarily be suspended until the matter is resolved, and that interest may be payable on unpaid amounts. Legal advice would be useful in such matters.

The strata corporation can choose to run all of its business through general meetings or it can delegate some functions to a management committee [Strata Titles Act 1988 (SA) s 35]. The management committee's job is to carry out the business of the strata corporation.

Powers and responsibilities of the management committee

The management committee has full power to transact any business of the corporation [s 35(2)], except that:

If a management committee is considering a contentious issue, such as raising special levies, it may be prudent to invite all unit owners to the committee meeting.

A management committee must keep minutes of its meetings and ensure accurate and proper accounting records are kept in respect of financial affairs [s 35(8)].

Membership of the management committee

A management committee is appointed by an ordinary resolution at a general meeting of the strata corporation [s 35(1)]. The members of the management committee must be unit holders (unless all the units are non-residential, in which case, non-unit holders may be on the committee) [s 35(1), (1a)]. The number of committee members and the term of their office (usually 1 year) are fixed by the corporation. Members may be removed by an ordinary resolution of the strata corporation at any time [s 35(5)].

Committee members can appoint another unit holder as their proxy for any meeting they cannot attend [s 35(7)].

If there is a casual vacancy in the membership of the committee, the management committee may co-opt a suitable person to fill the vacancy [s 35(6)].

A strata manager can be appointed to assist the management committee in the running of the affairs of the corporation [s 35(10)].

Liability of committee members

Members of the management committee are personally liable for any offences of the strata corporation against the Act. Each person who was a member of the management committee at the time of the offence is also guilty of an offence, and is liable to a penalty of up to half of the maximum prescribed for the offence committed by the corporation [s 47(1)].

A management committee member has a defence if [s 47(2)]:

Many insurance companies offer office bearer liability cover against such risk.

Meetings of the management committee

Notice of meetings

At least three days notice of a management committee meeting must be given [s 35(4b)].

Decisions

Decisions of the management committee are made by majority vote [s 35(4b)].

Quorum

To work out the quorum required for a management committee meeting, divide the total number of members of the committee by two, ignoring any fraction resulting from the division, and add one [s 35(4a)].

A strata corporation may hold a meeting of its members (a general meeting) at any time [Strata Titles Act 1988 (SA) s 33(1)].

A meeting must be held at least once every calendar year (the annual general meeting), and within 15 months of the last annual general meeting [s 33(4)].

Calling of general meetings

A general meeting can be called by the secretary, or any two members of the management committee, or one fifth of the unit holders, or by order of the Magistrates Court [s 33(2)]. An application to the Magistrates Court (minor civil action jurisdiction) to call a general meeting can be made by the owner or occupier of a unit, a person who has contracted to purchase a unit, or any other person bound by the articles of the strata corporation (except for persons invited to or visiting the site) [s 41AA].

Note that, while a strata manager may be given the task of issuing the notice for a general meeting, a strata manager may not call a general meeting.

Notice of general meetings

At least 14 days written notice must be given to all unit holders before the meeting [s 33(3)]. Anyone proposing to convene a meeting of the members of a strata corporation must take reasonable steps to ensure that the proposed day, time and place are reasonably convenient to a majority of members of the corporation [s 33(3a)].

A unit holder may request that the strata corporation provide notices of meeting to another person in addition to (not instead of) the unit holder, for example, someone they have appointed as a proxy. The unit holder must still be sent notices of meetings [s 33(3aa)].

Agenda

The notice convening a general meeting must set out the agenda for the meeting [s 33(4a)]. The agenda must include [s 33(4b)]:

In the case of an annual general meeting, the agenda must also include [s 33(4b)(c); Strata Titles Regulations 2018 (SA) reg 15]:

Expenditure statements [Strata Titles Act 1988 (SA) s 33A; Strata Titles Regulations 2018 (SA) reg 16]

An expenditure statement must be presented by a strata corporation to each annual general meeting of the corporation. The statement must include:

Recurrent expenditure is expenditure for a particular purpose that is normally made every year or more frequently [s 33A(5)].

Forward budget (sinking fund budget)

While strata corporations are not required to have sinking funds (unlike community corporations, which must do so), certain strata corporations are required to present forward budgets at their annual general meetings.

Exempt corporations

Strata corporations with six or less strata units, and strata corporations that have buildings and other improvements on the common property insured for less than $100 000, are not required to present a forward budget at their annual general meeting [Strata Titles Regulations 2018 (SA) reg 16(3)].

Corporations required to have forward budgets

For corporations with seven to twenty units, and with improvements on the common property insured for $100 000 or more, a forward budget must be presented at each annual general meeting, as part of the expenditure statement. The forward budget must include proposed expenditure (other than recurrent expenditure) for a three year period. New information must be presented about proposed non-recurrent expenditure every three years [reg 16].

For corporations with more than twenty units, and with improvements on the common property insured for $100 000 or more, the forward budget presented at each annual general meeting must include proposed expenditure (other than recurrent expenditure) for a five year period. New information must be presented about proposed non-recurrent expenditure every five years.

Quorum

It is necessary to have not less than half of all unit holders represented at any meeting, in person or by proxy or, if applicable, via remote communication. If a quorum is not present, the meeting must be adjourned for at least 7 days, but no more than 14 days, and written notice given to unit holders of another meeting. If less than half of the unit holders are represented at the second meeting, those present are entitled to work as a 'quorum', which means they can legally make decisions, even when special and unanimous resolutions are required [Strata Titles Act 1988 (SA) ss 33(5), 33(6), 33(7)].

Attendance by remote communication

The articles of a corporation may make provision for attendance and voting at meetings by unit holders by means of telephone, video-link, Internet connection or any similar means of remote communication. If the unit holder complies with the requirements in the articles, they may attend and vote at a meeting by remote communication [s 33(11); Strata Titles Regulations 2018 (SA) reg 15(4)(a)].

A unit holder may request the secretary of the corporation, in writing, to attend and vote at the meeting by means of remote communication. If the secretary of the corporation makes the necessary arrangements to receive and record the unit holder's attendance and voting at the meeting by remote communication, and the unit holder complies with any requirements of the secretary in relation to the request, then the unit holder may attend and vote at the meeting by remote communication [Strata Titles Act 1988 (SA) s 33(11); Strata Titles Regulations 2018 (SA) reg 15(4)(b)].

A corporation is under no obligation to provide facilities for remote communication to unit holders [Strata Titles Act 1988 (SA) s 33(11)].

Chairing of meetings

A strata corporation must elect a presiding officer, who must be a unit holder (see Officers of the strata corporation). The role of the presiding officer is to chair meetings of the corporation. However, if the presiding officer is not present, another person at the meeting may be appointed to chair [s 33(8)].

If it is proposed that the corporation's strata manager, or an employee of the strata manager, will chair a meeting of the corporation, a majority of those present and entitled to vote at the meeting must agree to this [s 33(9)].

In addition, if it is proposed that the manager chair the meeting, the manager must inform the meeting, before any vote is taken [Strata Titles Regulations 2018 (SA) reg 15(3)]:

Disclosure of interest by chair

Any person chairing a meeting who has a direct or indirect pecuniary interest in any matter to be voted on at the meeting must disclose the nature of the interest to the members present at the meeting before the vote is taken, even if they themselves cannot or are not voting on the matter. Failure to do so is an offence with a maximum penalty of $15 000 [Strata Titles Act 1988 (SA) s 34A(3)].

Normally, each unit is entitled to one vote (the possible exception to this relates to non-residential strata schemes) [Strata Titles Act 1988 (SA) s 34(1)].

If there are two or more unit holders for one unit, only one of them, or a proxy appointed by one of them, needs to attend the meeting to vote. If both or all unit holders attend a meeting, only one may vote. If they cannot agree on who will vote, the unit holder whose name appears first on the certificate of title for the unit is the one who may vote [s 34(3)(b)(ii)].

Where a unit holder is under a disability, the rights and powers of that unit holder under this Act may be exercised on their behalf by a guardian [s 45(1)]. Thus, a guardian of a person under a disability may vote on behalf of the person.

Disclosure of interest

A person who attends and is entitled to vote at a meeting of a strata corporation, and who has a direct or indirect pecuniary interest in any matter to be voted on at the meeting must disclose the nature of the interest to the members present at the meeting before the vote is taken. Failure to do so is an offence with a maximum penalty of $15 000 [s 34A(3)]. See also Disclosure of interest by a proxy (below).

Proxy voting

Unit holders may appoint in writing a 'proxy' or someone to vote for them if they will not be present [s 34(2a)]. The proxy may be another unit holder, a tenant, relative or friend. The strata manager or an employee of the strata manager may also be appointed as a proxy, but if they cease to have these roles, the proxy also ceases [s 34(3c)].

Even if a proxy nomination has been made, a unit holder may attend and vote at meetings on his or her own behalf [s 34(3a)(f)].

How to appoint a proxy

The nomination of a person as a proxy of a unit holder must be [s 34(3a)(a)]:

Failure to comply with these requirements of section 34(3a)(a) will invalidate the nomination [s 34(3b)].

Sample proxy nomination

I [your full name], the owner of [your unit number], [the strata corporation’s address] appoint [proxy’s full name] of [proxy’s address] to attend and vote at meetings of the strata corporation on my behalf.

This nomination remains effective for 12 months.

DATED:

SIGNED:

Disclosure of interest by a proxy

Declaration of a unit holder's interest

If the proxy is required to vote in a particular way in relation to a matter in which the unit holder has a direct or indirect pecuniary interest (other than an interest that the unit holder has in common with all the holders of the strata units), the nomination must specify the nature of the unit holder's pecuniary interest [s 34(3a)(c)]. In addition the proxy must declare the unit holder's interest before the vote is taken [s 34A(1)(b)]. Failure to declare the unit holder's interest is an offence with a maximum penalty of $15 000.

Declaration of a proxy's interest to the meeting

Similarly, if the proxy themself has a direct or indirect pecuniary interest in any matter to be voted on at the meeting, they must disclose the nature of the interest to the members present at the meeting before the vote is taken [s 34A(3)]. Failure to do so is an offence with a maximum penalty of $15 000.

Declaration of a proxy's interest to the person who nominated them

If a proxy has a direct or indirect pecuniary interest in any matter to be voted on at a meeting (other than an interest that a proxy who is a co-owner has in common with all the other co-owners [s 34A(2)]), they must, if it is practicable to do so, disclose the nature of the interest to the person who nominated them before the vote is taken. If this is not practicable, they must disclose the nature of the interest to the person who nominated them as soon as practicable after the vote is taken. Failure to do so is an offence with a maximum penalty of $15 000 [s 34A(1)(a)]

Conditions on a proxy

A proxy nomination may specify conditions [s 34(3a)(b)] for example, how the unit holder requires the proxy to vote on certain matters.

Period of proxy nomination

A proxy nomination is effective for a period of 12 months or such lesser period as may be specified in the written notice of nomination [s 34(3a)(e)]. However, the nomination may be revoked earlier at any time by the unit holder, by giving written notice to the secretary [s 34(3a)(d)]. Any contract or agreement purporting to prevent revocation is unenforceable [s 34(3a)(d)].

An attorney as a proxy

A person who has been appointed to exercise a general power of attorney or an enduring power of attorney may vote on behalf of a unit holder. Note that, if a person is appointed by general power of attorney specifically for the purpose of attending and voting at meetings, or specified meetings, of the strata corporation, the appointment is (despite any provision of the Powers of Attorney and Agency Act 1984 (SA) or the terms of the general power of attorney) only effective for a period of 12 months. The unit holder can, of course, specify a lesser period in the power of attorney, or revoke the power of attorney at any time [Strata Titles Act 1988 (SA) s 34(3d)].

If a general power of attorney appoints a body corporate manager specifically for the purpose of attending and voting at meetings, or specified meetings, of the strata corporation, a copy of the general power of attorney form must be provided to the secretary of the corporation before the meeting, or the first of the meetings, to which it relates [s 34(3e)].

Proxy forms must be available for inspection

The secretary of the corporation must ensure that a copy of each written proxy nomination and each general power of attorney form appointing a body corporate manager is available for inspection at a meeting before any matter is voted on. Failure to do so may incur a maximum penalty of $500 [s 34(3f)].

Absentee votes

A unit holder may exercise an absentee vote by giving the secretary of the strata corporation written notice of the proposed vote at least six hours before the meeting [s 34(4)].

Right to vote

Normally, all voters must be paid up members of the corporation; however non-financial members of the corporation can vote for or against a motion requiring a unanimous resolution [s 34(7)].

Application to dispense with a vote

If a unit holder is under a disability or cannot be found, the strata corporation or any other person with a proper interest in the matter may apply to the Magistrates Court (minor civil action jurisdiction) to dispense with the need to have the unit holder vote [s 45(2)].

Written ballot

A written ballot may be demanded by a unit holder (or a proxy of a unit holder) attending a meeting [s 34(5)]. The person presiding at a meeting has the power to manage a written ballot as they think fit [s 34(6)].

Remote communication and written ballots

A person attending a meeting via remote communication such as telephone [s 33(11); Strata Titles Regulations 2018 (SA) 15(4)] may participate in a written ballot if it is provided for in the corporation’s articles, or if approved and arranged by the secretary. If the situation of a written ballot is not covered in the articles or the arrangements, this may preclude someone attending via remote communication from participating in a written ballot. However, the person presiding at a meeting has the power to manage a written ballot as they think fit [Strata Titles Act 1988 (SA) s 34(6)].

Ordinary resolutions

An ordinary resolution is one passed at a properly convened meeting of the corporation by a simple majority of the votes of unit holders present and voting on the resolution [Strata Titles Act 1988 (SA) s 3(1)]. Decisions of a strata corporation are made by ordinary resolution unless the Act or articles specify otherwise.

Special resolutions

Special resolutions must be proposed by at least 14 days written notice to all unit holders, including the terms of the proposed resolution and the reasons for the proposed resolution [s 3(1)(a)].

A special resolution is required to:

A special resolution is achieved if the resolution is passed at a properly convened meeting of the strata corporation and the number of votes (if any) cast against the resolution is 25% or less of the total number of votes that could be cast at a meeting at which all unit holders are present and entitled to vote [s 3(1)(b)].

When there are two or three units

When there are only two units, both unit holders must agree to achieve a special resolution [s 3(1)(b)].

When there are three units and the owner of each unit is entitled to 1 vote (as is the case for all residential strata corporations), a special resolution is achieved if the resolution is passed at a properly convened meeting of the strata corporation at which either no vote, or only 1 vote, is cast against the resolution [s 3(1)(b)].

Non-residential units

A strata corporation comprised of only non-residential units may decide by unanimous resolution to have the number of votes exercisable in respect of each unit equivalent to the unit entitlement of the unit [see s 34(2)].

Unanimous resolutions

A unanimous resolution is the same as a special resolution but passed without any dissenting vote, that is nobody must vote against the resolution. Any unit holder who does not attend (or send a proxy to vote), or attends and chooses not to vote, is not counted as a dissenting vote.

Unanimous resolutions are required when:

Note that, although a special resolution is required to make alterations or additions to a unit, a unanimous resolution is required if the alterations affect the boundaries of a unit or the common property. Any changes to unit or common property boundaries must be ratified in an amendment to the strata plan.

When a unanimous resolution is not obtained

Where a unanimous resolution is necessary but is not obtained, but the resolution is supported to the extent necessary for a special resolution, then a person included in the majority in favour of the resolution may apply to the Magistrates Court or the Supreme Court to have the resolution declared sufficient to authorise the particular act proposed [s 46].

Notice of an application to convert a special resolution to a unanimous resolution must be served on every person who was entitled to vote and did not, either in person or by proxy, vote in favour of the resolution. The court may also order that any other person the court declares to have a sufficient interest in the proceedings be served with notice of the application. The court may direct that any such persons be joined as a party to the proceedings [s 46].

The business of properly running a strata corporation, such as keeping records and running meetings, can be complex, particularly when there is a large number of units in a group. Many strata corporations choose to appoint a strata manager to assist in running the affairs of the corporation. Professional strata management firms charge for these services.

A strata manager can only carry out the powers and functions delegated to them by the corporation and stated in the contract appointing them. A strata manager does not have any powers independent of the corporation. Strata managers have to act in the best interests of the corporation; if they do not, they can be sued for negligence by the strata corporation. As a preventative measure, it is advisable for a corporation to maintain an active involvement in its affairs.

The legal responsibilities of the strata corporation do not change with the appointment of a manager. It must still have a Presiding Officer, a Secretary and a Treasurer, who must all be unit holders, and is still legally liable for decisions made on its behalf.

Delegation of powers and functions to a strata manager

By an ordinary resolution [Strata Titles Act 1988 (SA s 27A(3)] a corporation may delegate the following powers or functions to a strata manager, so that the strata manager can deal with them on the corporation’s behalf [s 27A(2)]:

However, a strata manager cannot do anything which requires a special or unanimous resolution of the corporation [s 27A(4)].

A corporation may place conditions on the exercise of any delegated power or function [s 27A(5)].

Even if a corporation has delegated powers or functions to a strata manager, it is still able to exercise those powers or functions itself [s 27A(5)].

Compliance with the Articles

Unit holders have certain responsibilities as outlined in the articles of the strata corporation. In addition to complying with the articles themselves, unit holders are also required to take reasonable steps to make sure that their visitors or tenants do not breach the articles [Strata Titles Act 1988 (SA) s 20].

Contributions

Unit holders must keep up their contributions to the corporation. If the funds are not paid, they are recoverable as a debt [s 27(5)], which means the corporation can sue the unit holder for the money, possibly with interest added at a rate reasonably decided by the strata corporation [s 27(4)(b)]. If you buy a unit and there is a contribution owing, you as the new owner are liable for that contribution [s 27(5)]. Check carefully before buying any unit as there may be debts outstanding on that unit.

Debts of the strata corporation

If the strata corporation does not or cannot pay its debts, the individual unit holders are personally liable. The corporation's debts are enforceable against each or any of the unit holders directly [s 21(1)]. If the corporation has a debt, the unit holders have, amongst themselves, the right of contribution to the debt based on their respective unit entitlements [s 21(2)].

Work benefitting particular units

Certain unit holders may have to pay for work which substantially benefits their own particular unit or group of units and not the strata corporation as a whole. However, this may be difficult to determine. Consider the example of a leaking pipe causing damage to one particular unit. If the pipe was common property, then the cost of repairs would have to be borne by the corporation. On the other hand, if the pipe was not common property, then the individual unit holder would be responsible.

Structural work

Unit holders must seek permission from the strata corporation before starting any building or structural work, or generally altering the outward appearance of a unit [s 29], for example, installing an air conditioner or external awnings. An exception is if work is required because of an order under the Housing Improvement Act 2016 (SA), or where work is carried out on a unit in a strata scheme consisting of only 2 units and that work is approved development under the Planning, Development and Infrastructure Act 2016 (SA).

Structural changes that affect the delineation of a unit or what exists on the common property should be recorded by amending the strata plan lodged with the Lands Titles Office. Failure to do so may affect ownership of a unit and insurance policies held by unit holders and the corporation.

Right of entry

A unit holder, or a person authorised by them, has the right of entry into another unit, after giving such notice to the other unit holder as may be practicable in the circumstances, if [Strata Titles Act 1988 (SA) s 42]:

Reasonable force may be used to enter the other unit, but any damage to the other unit must be immediately made good at the expense of the unit holder exercising the right of entry.

Disputes often arise when people live close together. Problems with a strata corporation can arise, for example, if the requirements of the Act are not followed, if the common property is not maintained or there are complaints about how meetings are run. In most cases, problems can be resolved within the corporation, sometimes with help from a mediation service.

The strata corporation can intervene where a dispute between unit holders involves a breach of the articles, for example where a unit holder continues to play loud music late at night. The strata corporation may write to the unit holder and point out that there has been a breach of the articles and that, under the Strata Titles Act 1988 (SA), the unit holder is bound by the articles (see also Penalties for breaching the articles). In other disputes not involving a breach of the articles, the strata corporation may also try to intervene (usually through its management committee or strata manager) to sort out the problem.

Application to the Magistrates Court

If the dispute cannot be resolved privately, then an application may be made to the Magistrates Court as a minor civil action [s 48A] to decide the matter.

An applicant should use a Form 2- Originating Application, with a supporting affidavit.

If the matter is particularly complex or significant [s 41A(5)], a unit holder can seek the permission of the District Court to commence proceedings there [s 41A(3)]. Alternatively, the District Court may agree to transfer proceedings commenced in the Magistrates Court to the District Court [s 41A(4)].

An application can be made to the court by [s 41AA]:

The court can deal with disputes where [s 41A(1)]:

The strata corporation may appoint a member of the corporation to represent it in any proceedings [s 41A(8)], or it may be represented by its strata manager.

The court may [s 41A(9)]:

Any person who fails to comply with an order of the court is guilty of an offence with a maximum penalty of $2,000 [s 41A(13)].

Appointment of an administrator

If substantial problems arise, the corporation, a creditor of the corporation, a unit holder, or someone with a registered interest in a unit (for example, a mortgagee) can apply to the Magistrates Court or Supreme Court to have an administrator appointed to take over the affairs of the corporation [s 37]. Any application to court would only be in extreme circumstances, and the court would be reluctant to appoint an administrator unless incompetence or illegality were clearly shown. An administrator has wide powers and can do anything for which a special or unanimous resolution is usually required [s 37(2)]. The legal costs relating to the appointment of an administrator and remuneration of the administrator are payable from the funds of the strata corporation [s 37(4)].

Evicting a tenant

If a tenant of a unit uses the unit for an illegal purpose or causes a nuisance or interferes with the reasonable peace, comfort or privacy of occupiers of the other units, then the affected person or persons can apply to the South Australian Civil and Administrative Tribunal to terminate the tenancy. Legal advice should be sought in this situation.

Matters to be considered in purchasing a strata unit

There are particular issues related to buying a strata unit. Effectively, you are buying into a strata corporation and will become a member of the strata corporation. As well as being responsible for maintaining your own unit, you will share the responsibility for maintaining the common property (the external structure and foundations of the buildings and pipes, cables, wires, ducts and drains). It is therefore essential that you have as much information as possible about the corporation before you decide to purchase.

You may obtain information before you enter into a contract. Alternatively, if you have entered into a contract, you must be provided with certain information at least 10 clear days before the date of settlement under s 7(1) of the Land and Business (Sale and Conveyancing) Act 1994 (SA) (see below).

As a prospective purchaser, you may apply to the strata corporation for a range of information for moderate fees. See The Strata Corporation, Access to information. Some of the information must be available as copies, and some must be made available for inspection. Any information requested should be provided within 5 business days of making the application. The information should enable you to establish the current financial position of the corporation.

Information to be provided when entering into a contract

If you enter a contract to buy a strata unit, along with the information that must be provided in relation to any proposed sale of land, the vendor must provide certain information under s 7(1) of the Land and Business (Sale and Conveyancing) Act 1994 (SA) and reg 8 Land and Business (Sale and Conveyancing) Regulations 2010 (SA). Both general information about strata titles, and information specific to the strata corporation and unit you are proposing to buy must be provided.

General Information

The general information is found in the notice in the Land and Business (Sale and Conveyancing) Regulations 2010 (SA) sch 1 div 3, which sets out a range of issues to consider when buying into a strata corporation, as follows.

Governance

You will automatically become a member of the body corporate, which includes all owners and has the job of maintaining the common property and enforcing the rules. Decisions, such as the amount you must pay in levies, will be made by vote of the body corporate. You will need to take part in meetings if you wish to have a say. If outvoted, you will have to live with decisions that you might not agree with.

Use of your property

You, and anyone who visits or occupies your property, will be bound by rules in the form of articles or by-laws. These can restrict the use of the property, for example, they can deal with keeping pets, car parking, noise, rubbish disposal, short-term letting, upkeep of buildings and so on. Make sure that you have read the articles or by-laws before you decide whether this property will suit you.

Depending on the rules, you might not be permitted to make changes to the exterior of your unit, such as installing a television aerial or an air-conditioner, building a pergola, attaching external blinds etc. without the permission of the body corporate. A meeting may be needed before permission can be granted. Permission may be refused.

Note that the articles or by-laws could change between now and when you become the owner: the body corporate might vote to change them.

Are you buying a debt?

If there are unpaid contributions owing on this property, you can be made to pay them. You are entitled to know the financial state of the body corporate and you should make sure you see its records before deciding whether to buy. As a prospective owner, you can write to the body corporate requiring to see the records, including minutes of meetings, details of assets and liabilities, contributions payable, outstanding or planned expenses and insurance policies.

There is a fee. To make a request, write to the secretary or management committee of the body corporate.

Expenses

The body corporate can require you to maintain your property, even if you do not agree, or can carry out maintenance and bill you for it. The body corporate can require you to contribute to the cost of upkeep of the common property, even if you do not agree. Consider what future maintenance or repairs might be needed on the property in the long term.

Guarantee

As an owner, you are a guarantor of the liabilities of the body corporate. If it does not pay its debts, you can be called on to do so. Make sure you know what the liabilities are before you decide to buy. Ask the body corporate for copies of the financial records.

Contracts

The body corporate can make contracts. For example, it may engage a body corporate manager to do some or all of its work. It may contract with traders for maintenance work. It might engage a caretaker to look after the property. It might make any other kind of contract to buy services or products for the body corporate. Find out what contracts the body corporate is committed to and the cost. The body corporate will have to raise funds from the owners to pay the money due under these contracts. As a guarantor, you could be liable if the body corporate owes money under a contract.

Specific Information

Information specific to the strata corporation and unit you are proposing to buy must be provided by the vendor under the Land and Business (Sale and Conveyancing) Regulations 2010 (SA) [sch 1 div 2]:

The following documents should also be provided:

Note that, if the vendor has no agent but the purchaser has an agent, the purchaser’s agent must apply for the information [Land and Business (Sale and Conveyancing) Act 1994 (SA) s 9(2)].

In addition to the information that must be provided by the vendor, you may apply to the corporation to inspect the following documents [Strata Titles Act 1988 (SA) s 41(1); Strata Titles Regulations 2018 (SA) reg 31]:

The documents must be made available within 5 business days of the application. See The Strata Corporation, Access to information.

Annual general meeting

When should we have an annual general meeting?

The strata corporation must hold the next annual general meeting no more than 15 months after its last meeting. An annual general meeting should be held in every calendar year [Strata Titles Act 1988 (SA) s 33(4)].

Approval for structural work

An owner in our block of units wants to put awnings on the outside of the building to shade her kitchen windows from the afternoon sun. Does she need permission from the corporation to do this?

Yes. The decision to alter the external appearance of the units must be taken by the corporation. A special resolution of the corporation will be required to grant permission for this work [s 29].

Attendance by proxy at meetings

I am a member of the management committee but find it hard to get to every meeting. Can I appoint a proxy (someone to vote for me) for these meetings or at general meetings?

If a member of the management committee is unable to attend a committee meeting, they can appoint another unit holder as their proxy [s 35(7)].

However, for a general meeting, there are strict rules about the appointment of a proxy: the nomination must be sent in writing to the secretary of the strata corporation; it must specify whether the nominated person is nominated to attend and vote at all meetings, and in relation to all matters, on behalf of the unit holder, or only at specified meetings, or in relation to specified matters, on behalf of the unit holder [s 34(3a)].

In addition, a proxy attending a general meeting has strict obligations in relation to disclosure of interest (see Voting: Proxy voting: Disclosure of interest).

Auctions and sales

Can I sell my unit at anytime? Can I hold an auction in my unit when I wish to sell it?

Yes. There are no limitations on the sale of a unit by the unit holder, but you will need the corporation’s permission to place an auction or sale sign on common property.

Auditing

Do we have to make sure the corporation books and records are audited?

This depends on whether your strata corporation has appointed a strata manager or agent to receive and hold money on behalf of the corporation. A manager or agent must keep money in a trust account and has a legal obligation to have the trust account audited at regular intervals [s 36H]. The Strata Titles Act 1988 (SA) does not require a member of the corporation who is the treasurer or holds corporation money to have accounts audited; however the appointment of an auditor is sensible to make sure that a proper statement of accounts has been prepared. This should be balanced against the cost of auditing the accounts.

Bank Accounts

How do we open a new bank account in the name of the corporation?

The Strata Titles Act 1988 (SA) s 26(1)(c) gives the corporation the power to open and maintain a bank account. The bank will require evidence that the account holder is an incorporated body. This could include a copy of the deposited Strata Plan, a copy of the common property title or a copy of the deposit slip. These can all be requested from the Lands Titles Office with payment of the prescribed fee.

A strata manager can be asked to open a bank account for the corporation. If there is no strata manager, the bank may also wish to see evidence that the individual/s opening the account on behalf of the corporation have the power to do so. Minutes of the general or management committee meeting giving authority to open the account would usually be accepted.

Books and records

I have recently been elected treasurer and secretary of our corporation. What sort of books and records do I have to keep?

The requirements in relation to maintaining and keeping records of the corporation may be delegated to a strata manager. If this function is not delegated, as the treasurer, you must keep all accounting records relating to receipts and expenditure of the corporation and management committee.

As the secretary, you are responsible for administrative and secretarial matters for the corporation and the management committee. Record keeping is part of this function. If the function of maintaining and keeping records has not been delegated to a strata manager, you must keep: a register of the names of the unit holders; minutes of all meetings; notices and orders served on the corporation; copies of correspondence received or sent by the corporation; notices of meetings of the corporation and its management committee; documents received by the strata corporation from the original registered proprietor.

For further detail, see The Strata Corporation, Records.

Calling meetings and initiating action

I have advised the secretary of the strata corporation that repairs are needed to my water pipes due to tree root damage, but she has taken no action. What can I do?

If the damage is the responsibility of the strata corporation, and the secretary is not acting when requested, the unit holder could approach any two members of the committee, or if the corporation does not have a management committee, the unit holders of one fifth or more units, and ask them to convene a general meeting. If the situation becomes an emergency, the unit holder could have the repairs done and bill the strata corporation. If all else fails, the unit holder could take the strata corporation to court, either to force them to take reasonable action, or to recover costs of repairs.

Car parking

Visitors to other units often park in my space, or on common property, obstructing my access. What can I do to stop this?

Unit occupiers have an obligation under the articles to make sure that their visitors do not park in other unit holder’s spaces, or parts of the common property not authorised for parking. The upset unit occupier can first talk to the other unit occupier about the problem. If the unit occupier is a tenant, the unit owner may also be approached, as they have an obligation to take reasonable steps to ensure that the tenant complies with the articles. If there is no resolution, the management committee or the corporation may be asked to intervene. If the problem continues, it is suggested that a community mediation service be approached. If the articles of the corporation provide for a penalty to be imposed for a breach of the articles, the corporation may impose a penalty on the unit occupier. As a last resort, an application can be made to the Magistrates Court for an order to prevent future breaches. If a court order is not complied with, fines or even gaol sentences can be imposed.

Corporation Records

I am worried about the corporation’s finances. Can I can look at the books and records of the corporation to put my mind at ease?

Yes. The corporation must keep the minutes of meetings for 30 years and accounting records and correspondence for seven years. As a unit holder you can apply to the secretary or a committee member or the strata manager, and they must arrange for you to see the information you require within five business days after the request. Most information is provided free of charge to unit holders but some copying charges may apply. You may also arrange to have quarterly bank statements for all accounts maintained by the corporation. See The strata corporation: Access to information.

Corporation address

What is the strata corporation’s official address?

The official address of the corporation is that shown on the certificate of title issued for the common property in the name of the strata corporation. A corporation must keep a letter box with its name clearly shown on it for postal deliveries to the site. A post office box can only be used as the address of a corporation in districts where there is no postal delivery service. A document may be served on a strata corporation, its secretary or treasurer by posting or delivering to the address of the corporation.

Exclusive use of common property

One of the owners in the block was granted 'exclusive use' of a large part of the common property by the corporation some years ago. We feel that this is an unfair situation. How can we regain this common property for use by all owners?

The corporation can agree, by unanimous resolution, to grant exclusive use of the common property for a set period [s 26(4). A unanimous resolution is also required to revoke the exclusive use or for it to continue past the agreed date. If the exclusive use was granted for a set period then a unanimous resolution at a general meeting would be required for it to continue past the agreed date. If the exclusive use is not limited by time, it was an invalid resolution, as the Act requires any unanimous resolution allowing a unit holder exclusive use of a part of common property to be for a specified time.

One of the owners has fenced in common property next to their unit for their own use. Can they do this?

Excluding others from common property is contrary to the articles, as is using common property as a garden for a unit holder’s own purposes. The corporation can agree, by unanimous resolution, to grant exclusive use of the common property for a set period. Such a decision would need to be made at a general meeting. The corporation or management committee may treat this behaviour as a breach of the articles and go through the steps of communication – mediation – penalty (if possible under the articles) – Magistrates Court minor civil action. See Disputes.

Fences

The fence around my unit is old and needs to be replaced. Should the corporation pay for a new fence?

Generally, fences are common property and therefore the responsibility of the strata corporation. The corporation must maintain the common property to an acceptable standard, which may involve replacing or repairing the fence.

However, a strata plan could specify that a fence is part of a unit, or a fence erected by a unit owner may not be common property. If the fence is not common property, you as the unit owner, are responsible to maintain it. In fact, in this case, the corporation could require you to replace the fence. Legal advice should be sought in these situations.

How many members are allowed on the management committee?

For the last 5 years at each annual general meeting, our corporation, comprising 20 units, has elected a presiding officer, secretary, treasurer and 7 other management committee members. This number of people on one committee seems to me to be too many. How many people are there supposed to be?

There is no maximum number for a management committee. A general meeting of the corporation can fix the numbers for a management committee and must elect the presiding officer, secretary and treasurer. If a unit holder thinks the management committee is too large they could raise this at a general meeting.

Improvements to common property

Some of the unit owners want the corporation to install hand rails on the common stairs. What would be necessary to have the work approved?

As the common stairs are shared by all unit holders, they are considered common property. A simple majority vote at a general meeting can approve this addition to the common property. The corporation is responsible for public risk in the common property area and it may be sensible to install these rails.

Investing funds and borrowing money

Our strata corporation is holding funds put in by the unit owners. Where can we invest these surplus funds? Similarly, if the corporation wanted to borrow money, are there any restrictions?

The Act states that surplus funds should be in prescribed investments. In general terms this means a bank, building society or similar institution which does not expose the funds to great risk. If a strata manager or agent is authorised by the corporation to receive or hold money on the corporation’s behalf, that money must be held in a trust account.

Under the Strata Titles Act 1988 (SA), the strata corporation can borrow money to carry out its functions [s 26(1)(b)]. The articles can state who is authorised to borrow the money and from which financial institutions.

Management committee meetings

Can I attend management committee meetings even though I am not on the committee?

You can only attend those meetings with the committee’s permission, or if the articles allow your attendance, or a general meeting decides you can attend.

Management committee vacancies

Recently some members of our management committee resigned and this left the committee without a secretary. What do we do?

The management committee can appoint a person to fill a casual vacancy until a permanent appointment is made at the next general meeting. The position of secretary must not be left vacant more than six months [s 23(5)].

If the number of resignations takes the number of members below the number required for a quorum, and there is difficulty filling vacancies, decisions can still be made, but they will need to be ratified at the next committee meeting with a quorum, or at a general meeting of the corporation.

Negligence and Insurance

A tree on common property overhangs the street and drops berries. I am worried that a member of the public might suffer injury. Are we responsible?

If a member of the public, or a unit holder, suffers injury as a result of the negligence of the strata corporation, then the strata corporation may be liable. This may include the strata corporation’s negligence in not pruning or maintaining trees in a safe manner. All strata corporations must hold public liability insurance to the value of 10 million dollars to cover these risks [s 31(2) and reg14(1)].

Does the corporation’s insurance cover a burst hot water service?

An insurance policy does not normally cover wear and tear. Unit owners and the corporation have a duty to maintain their equipment. However the building damage caused by a leaking hot water service may be covered.

Notice of meetings

A general meeting of our group has been called but they have given me a notice posted less than 14 days before the date of the meeting. Are the decisions of the meeting legal?

Written notice of the time, place and agenda of a general meeting must be given to all unit holders at least 14 days before the date of a meeting [s 33(3)]. Contact the secretary if you have not received a notice. You could point out that any decision made at the meeting would be invalid as the meeting was not properly called, and any decisions would need to be ratified at a properly convened meeting.

Ongoing costs

What types of costs are involved if I wish to own a strata unit?

Apart from the usual expenses associated with owning land (council rates, water and sewerage, gas, electricity etc.), as a member of the strata scheme you will be required to contribute to the costs associated with the running and maintenance of the scheme. These can be split into two categories: recurrent fees (those that occur on an annual basis), and costs for the long term maintenance of the scheme (often referred to as a sinking fund). Inquiries should be made with the strata corporation that administers the scheme to find out these additional costs.

Painting and gutters

Can the corporation oblige unit owners to clean the gutters on their unit?

Gutters and roofs are common property. There is no reason why unit owners could not agree to clean their own gutters to reduce maintenance costs, but there is no legal obligation to do so. If a unit owner does not or cannot clean their gutters, the corporation remains liable for repairs. A thorough clean before winter is good preventative maintenance.

Can owners decide to save maintenance costs by painting the outside of their own units?

The corporation could agree to this arrangement but it carries some risks in that the end result could be poor or inconsistent. The corporation is liable in the first instance for fixing the external paintwork on a poorly painted unit.

Quorum

I live in a block of 8 units. At our annual general meeting only three people turned up. Is this a quorum?

No business may be transacted at a general meeting unless a quorum of at least half the unit owners is represented (in person, or by validly appointed proxy, or by remote communication if this has been allowed)[s 33(5)]. In your particular strata corporation, four persons entitled to vote would constitute a quorum. If a quorum is not present, the meeting must be adjourned for at least one week, but not more than 14 days, and written notice given to unit holders of another meeting. Then if after one half an hour of the relevant time less than half of the unit holders are represented, those present are entitled to work as a quorum. See General Meetings, Quorum.

Rates

I have bought a unit in a block of three. Do all three owners individually have to pay the water and sewerage rates and the council rates?

Each of the units in your block will be billed separately for council and sewerage rates. However, unless there are separate water meters for each unit, there is no way to determine a unit's water usage. Contributions are normally paid by unit entitlement; a unanimous resolution is needed to change this arrangement. SA Water offers the following billing options: sending one lump sum bill for water usage every three months to the strata corporation secretary; dividing the bill in percentages nominated by the corporation and billing owners separately; dividing the bill equally between the unit owners and billing them separately. Whatever the billing arrangement, the strata corporation is ultimately responsible to SA Water for the bill. Private water meters may be installed to each unit to determine how the SA Water account should be divided. There are costs associated with the installation and reading of private meters.

Renting

I am renting out my unit. Do I have to tell the strata corporation? What rights do the tenants have in relation to the strata corporation? Can they attend and vote at meetings? What happens if my tenants cause problems for other unit occupiers?

The unit holder must immediately notify the strata corporation of any change in the occupancy of the unit. Tenants do not have any voting rights in relation to the unit. However you may appoint your tenant as your proxy to attend general meetings and vote. You have an obligation to ensure your tenants abide by the articles of the strata corporation. It should be noted that it is not possible for a strata corporation to restrict your rights to rent your unit or to specify to whom the unit can be rented.

If your tenant causes the unit to be used for an illegal purpose, or interferes with the peace, privacy or comfort of other residents, the affected residents could approach the South Australian Civil and Administrative Tribunal SACAT for an order that your tenants be evicted.

Salt (rising) damp

I own a unit in a group where two of the other units have plaster falling off from rising damp. Why should I pay for damage inside their units?

The building foundations are common property and the corporation is therefore responsible for maintaining the damp course that protects the walls. The corporation has an obligation to make good damage caused by rising damp that can be shown to come from the soil through the foundations.

Trees

Who is responsible for a tree located in a unit holder's yard?

Generally this needs to be determined by looking at the definition of what is a yard and common property on the strata plan. Reference to the care of trees within unit subsidiaries could be made in the articles so that any costs associated with the tree (including damage and trimming) can be apportioned between the unit owner and the corporation.

Voting

Our strata manager has sent the owners a postal form to vote about which painting quote to accept. Is the result binding on all owners?

No. The Act only provides for decisions to be made by a general or management committee meeting. Postal voting is not provided for in the Act.

What is common property?

I have paid for my blocked sewer pipe to be cleared, but the secretary refuses to reimburse me, claiming it was not common property. Who should pay?

The issue of what is and what is not common property can cause many disputes. Generally speaking, the boundary of a unit is the internal surface of its walls, floors and ceilings, and a unit can also include an area known as a ‘unit subsidiary’ marked on the strata plan as being for the exclusive use of a particular unit, for example, a carport or garden area.

Common property comprises any land or space that is not within a unit, and such things as pipes, drains or electrical wiring that are not for the exclusive use of a unit. The strata corporation has a responsibility to maintain the common property. However, if the corporation carries out work that wholly or substantially benefits a particular unit, or group of units, then responsibility for payment may be placed on those unit owners. In past court cases, ‘benefit’ has been interpreted as meaning something more than ongoing maintenance. If the pipe serves only your unit it could be argued that the clearing of the pipes should be at your expense. The cause of the blockage may also be relevant to who pays the bill. If it was clearly your fault, for example, your child’s toy blocked the pipe, then you may well have a responsibility to pay for clearing and possibly even repairs. On the other hand, if the blockage was caused by roots from a tree on common property then the corporation is liable.

White ants

I am the owner/occupier of a unit in a block of 12. Recently the corporation has decided to have each unit treated for white ants. I suffer from asthma and I am concerned about pesticides and their effect on my family and the environment. Can the corporation force me to undertake this work?

The corporation has an obligation to administer and maintain the common property for the benefit of all unit holders. This includes protecting the units from white ants as they come from outside the unit boundaries. Any white ant damage to a unit will need to be made good by the corporation. As the proposed work is for the benefit of the entire block of units the corporation would be allowed to treat your unit and recover the cost.

You could approach the presiding officer with your special reasons for an exemption or suggest an alternative treatment for your unit. If a suitable resolution cannot be reached, it is suggested you approach a mediation service. Finally, if there is still no satisfaction, the Magistrates Court can make a decision on the matter. It is advisable to obtain legal advice in this situation.

There are several ways in which a Strata Plan may be cancelled:

On cancellation:

It is suggested that legal advice be sought before taking the step of cancellation.

Key documents

Owners and prospective buyers of a community title property should be aware of four documents which are associated with the title. The Plan and the By-Laws must be lodged with the Land Titles Office (LTO). If there is a scheme description and a development contract then those documents must also be lodged with the LTO. These documents may be attached to the contract of sale but can also be purchased from the LTO for a fee.

The Plan

The plan identifies whether it is a community scheme or a community strata scheme. There are significant differences between the two.

The plan divides the land into community lots and common property [Community Titles Act 1996 (SA) s 7(1)]. In a community strata scheme, the plan refers to strata lots and lot subsidiaries [ss 9, 19].

The plan will also show whether it covers a primary, secondary or tertiary scheme. Most residential properties are a primary scheme but properties with mixed uses may have two or even three schemes.

There may also be a development lot which may be divided at a later date to create additional lots [ss 6(2), 8]. Ideally the plan should show service infrastructure [ss 3, 14(5)(e)].

A community strata plan further divides the site by reference to the buildings on the land and must also have upper and lower boundaries (for instance, relating to the storeys of a building). A strata lot may also include a lot subsidiary which is an area either within the building or on land outside the building [s 19(3)(d)].

The plan also includes a schedule of Lot Entitlement [s 14(5)(i)].

The By-Laws

By-laws are the rules of the community corporation [ss 12, 34]. They provide for the administration of the common property but can also regulate the use and enjoyment and appearance of the community lots and the purposes for which a lot may be used. They are binding on the corporation, the owners and occupiers of the lots and persons (such as contractors and visitors) entering the property [s 43].

The Scheme Description

The scheme description gives the owner or prospective purchaser an overall view of how the scheme is to be developed and the end result. This document is optional for schemes of six lots or less that are used predominantly for residential purposes. This document must be lodged for commercial schemes, irrespective of the number of lots, or if the plan contains a development lot, or if the common property or a lot within the scheme is to be developed in a specific way.

The Development Contract

This is a contract entered into by the developer to develop a development lot, the common property and community lots in accordance with the scheme description and the by-laws [ss 47, 48]. The corporation or a lot owner may sue if the developer does not comply with the contract [s 49].

Important Terms

The Community Corporation

The owners of the lots (but not the owner of a development lot) are members of the community corporation. The owners of secondary lots are not members of the primary corporation and nor are owners of tertiary lots members of the secondary corporation.

The secondary or tertiary corporation is a member of the respective primary or secondary corporation [s 74]. The certificate of title for the common property is issued in the name of the community corporation. Among other functions the corporation is responsible for administering, maintaining and insuring the common property and for enforcing the by-laws and the development contract (if any) [s 75], and for enforcing the duty of maintenance and repair imposed upon the lot owners by the Act or the by-laws [s 101].

Lot entitlements

The lot entitlement of a lot in a community scheme is the proportion of the unimproved value of the lot to the aggregate value of the lots. It is expressed as a whole number. If the value of the respective lots is 45%, 30.5% and 24.5% of the total then the entitlements may be expressed as 90, 61, and 49 out of 200 [s 20(1)-(4)].

In the case of a community strata scheme lot the value will be taken to include the value of the part of the building containing or comprising the lot without taking into account the value of the fixtures and other improvements.

Community Schemes

In a community scheme lot boundaries generally do not relate to a structure, but are determined by surveyed land measurements and are unlimited in height and depth, unless otherwise specified on the plan. Unlike a strata scheme the owner is therefore responsible for the maintenance and insurance of any structures on that lot, and has no obligation for maintenance of other lot owners' buildings. The Corporation may enforce that obligation [Community Titles Act 1996 (SA) s 101].

Alternatively, the by-laws may require the community corporation to act as an agent for the owners in arranging policies of insurance.

Unlike a Torrens Title property, a lot owner may be restricted by the by-laws of the corporation which may regulate the design, construction, and appearance of buildings and other improvements and even regulate the landscaping on the lot. The by-laws must be consistent with the scheme description [s 11(4)].

The owner of a lot is also responsible for the service infrastructure (pipes, cables, etc) which only service that particular unit.

As a member of the community corporation the lot holder is also responsible through the corporation for maintaining and insuring the common property.

Community Strata Schemes

Creation of community strata schemes

There are three reasons why a community strata scheme rather than a community scheme is created. Firstly, if a new scheme is created under the Community Titles Act and there is at least one lot that exists above another lot then it must form part of a community strata scheme [s 19(1)]. Therefore apartment blocks must form a community strata scheme and so must land which comprises even one double storey building which has a lot on each floor, even if all other buildings are single storey. In the latter example the property could be split into a primary community scheme comprising the single storey buildings and a secondary community strata scheme for the remaining building.

Secondly, clause 2 of the Schedule to the Community Titles Act provides that a strata corporation under the Strata Titles Act 1988 may, by ordinary resolution, decide that the Community Titles Act 1996 and not the Strata Titles Act 1988 will apply to the corporation and the scheme.

Clause 3 of the Schedule to the Community Titles Act allows some company and moiety schemes to apply to be covered by the Community Titles Act 1996. If this can be achieved then the scheme will become a community strata scheme.

Features of a community strata scheme

The major differences between a community scheme and a community strata scheme is that in the latter each lot must be wholly or partly within a building. In addition to the lot there may also be lot subsidiaries which are for the exclusive use of the lot holder [s 19(3)(d)]. Examples of subsidiaries include yards, garages, carports or parking spaces, storage places, balconies and porches.

The corporation is responsible for insuring the common property [s 103].

Some requirements in the Community Titles Act 1996 (SA) do not apply to some small schemes. In addition, the by-laws of some schemes may exempt a scheme from certain requirements. Exemptions vary depending on the number of lots in the scheme or the value of the common property. See also Types of Resolutions: Special resolutions and Financial Management: Audit of accounts.

Forward budgets

In relation to forward budgets, corporations with six or less community lots and corporations with buildings and improvements on the common property insured for less than $100 000 are not required to present a forward budget as part of their expenditure statement at their annual general meeting (see Financial Management).

Fidelity guarantee insurance

The requirement to have fidelity guarantee insurance, which began on 27 October 2014, does not apply to two lot community corporations with no administrative or sinking fund, or to community corporations with common property insurance cover of $100 000 or less (see Insurance).

Officers of the corporation

If a scheme has ten or less lots, one person may hold two or all of the positions of presiding officer, secretary and treasurer [Community Titles Act 1996 (SA) s 76(3)(a)] (see Community Corporation: Officers of the corporation).

By-laws may exempt a corporation from certain requirements

The by-laws of a scheme consisting of two lots may exempt the corporation from the requirements to [s 35]:

The by-laws of a three lot scheme may only exempt the corporation from the requirement to maintain a register of names of the owners of the community lots.

Obtaining information as a prospective purchaser

There are particular issues related to buying a community lot. Effectively, you are buying into a corporation and will become a member of the corporation. It is therefore essential that you have as much information as possible about the corporation before you decide to purchase. You may obtain information before you enter into a contract. Alternatively, if you have entered into a contract, you must be provided with certain information at least 10 clear days before the date of settlement under Land and Business (Sale and Conveyancing) Act 1994 (SA) section 7(1).

As a prospective purchaser, you may apply to the community corporation for a range of information for moderate fees (see Community Corporation: Access to information). Some of the information must be made available as copies, and some must be made available for inspection. Any information requested should be provided within five business days of making the application. The information should enable you to establish the current financial position of the corporation.

Key documents

There are a number of documents to always consider when purchasing a community title property.

The community (or community strata) plan determines the fundamental nature of what you are buying. It will also show the lot entitlements which determine the proportion of the contributions that you will be required to make.

The by-laws set out the rules of the corporation that you are buying into. The by-laws, along with the scheme description (if any) and the development contract (if any) may impose restrictions on what you or other owners can do with or on your lot. For instance you may not be able to let your property on short term stays if the by-laws prevent leases of less than two months.

These documents should be included in the attachments to the contract of sale. You should also look at the minutes. financial records and insurance policies held by the corporation.

Service infrastructure issues for new developments

Both SA Power Networks and SA Water have requirements for the location of connection points for power, water and sewerage. The location of connection points and meter enclosures that service more than one lot may be shown on the community plan, which is available for a fee from the Land Titles Office. However, these details are often not shown. If service infrastructure is not shown on the community plan, agreement must be reached among the lot owners as to the location of the services [Community Titles Act 1996 (SA) s 24(4)(b)], subject to the requirements of the relevant agencies. Even if there is an existing house on one of the lots with connections in place, it may be necessary for new connection points to be established which cater for all lots. To determine requirements for the number and location of connections and meters, contact the relevant utility.

Information to be provided when entering into a contract

If you enter a contract to buy a community lot, along with the information that must be provided in relation to any proposed sale of land, the vendor must provide certain information under the Land and Business (Sale and Conveyancing) Act 1994 (SA) s 7(1) and the Land and Business (Sale and Conveyancing) Regulations 2010 (SA) reg 8. Both general information about community titles and information specific to the community title you are proposing to buy must be provided.

General information

The general information is found in the notice in Land and Business (Sale and Conveyancing) Regulations 2010 (SA) sch 1 div 3, which sets out a range of issues to consider when buying into a strata corporation, as follows.

Specific information

Information specific to the community corporation and lot you are proposing to buy must be provided by the vendor under Land and Business (Sale and Conveyancing) Regulations 2010 (SA) sch 1 div 2:

The following documents should also be provided under the Land and Business (Sale and Conveyancing) Regulations 2010 (SA) sch 1 div 2:

Note that if the vendor has no agent but the purchaser has an agent, the purchaser’s agent must apply to the community corporation for the information [Land and Business (Sale and Conveyancing) Act 1994 (SA) s 9(2)].

A community corporation is created upon deposit of the community plan [Community Titles Act 1996 (SA) ss 10, 71] to administer the scheme's by-laws and manage the common property and any fixtures erected on it [s 75].

The members of the corporation are the owners of community lots [ss 10(2), 74]. Owners of development lots are not members of the corporation unless they also own community lots [ss 10(2), 74].

Lot owners are guarantors of their community corporation's liabilities, which means the corporation's debts are enforceable against each of the lot holders directly [s 77].

A community corporation must have a presiding officer, treasurer and secretary [s 76], and may establish a management committee [s 90(1)] to carry out the functions and perform the duties of the corporation within the limits of the committee’s powers [s 92(1)]. A community corporation may also delegate some of its functions to a person outside the corporation (such as a body corporate manager) to assist in the running of the corporation [s 78A(2)].

The corporation must have a common seal [s 73].

A community corporation must keep a letter box with the name of the corporation clearly shown on it, for postal delivery to the corporation. Where there is no postal delivery to the community parcel, the corporation must keep a post office box. [s 155(4)]

The by-laws are the rules of the corporation. The corporation can make rules which are binding on the corporation, unit owners, tenants and visitors [s 43] about the management and use of common property and the use of community lots [s 34(2)]. The first by-laws of a corporation are those filed when the community plan is deposited with the Lands Titles Registration Office. A corporation can vary the by-laws [s 39].

What is common property?

The common property consists of those parts of the community parcel that do not comprise or form part of a lot, and includes the service infrastructure not for the exclusive use of a lot [Community Titles Act 1996 (SA) ss 28(1)(a)—(b)]. In addition, the common property includes any building that is not for the exclusive use of a lot and was erected before the deposit of the community plan, any building erected by the developer or the community corporation as part of the common property, and any other building on the community parcel that has been committed to the care of the community corporation as part of the common property [ss 28(1)(d)—(f)].

Common property in community strata schemes

In the case of a community strata plan, the common property also includes those parts of the building that are not part of a lot [s 28(1)(c)]. Boundaries of the part of the lot within a building are defined by reference to the building and upper and lower boundaries must be defined [s 9].

Unless the community strata plan explicitly states to the contrary:

Service infrastructure

Service infrastructure is the cables, wires and pipes that provide services to lot owners and the common property [s 3].

Services include:

The service infrastructure is shown, as far as it is practical to do so, on the plan of community division through the common property, and on a lot where it services more than the one lot [s 14(5)(e)]. As service infrastructure that serves more than one lot forms part of the common property, it is the responsibility of the corporation to maintain it [s 75]. Service infrastructure that only serves one lot is the responsibility of that lot owner to maintain.

Commercial use of the common property

The common property can be used in community title schemes, subject to planning approval, for commercial ventures such as a public golf course or retail centre [s 28(2)]. Any profits are returned to the community corporation and must be paid into the administrative or sinking funds [s 28(3)]. Surplus profits may, by special resolution, be distributed to owners of the lots in proportion to lot entitlement, if more money than is needed is held in the administrative fund or the sinking fund [s 117]. As there can be losses as well as profits, any commercial venture should be based on detailed financial and legal advice.

Building insurance

It is the responsibility of the community corporation to insure the common property [s 103(1)].

As a general rule, buildings in a community strata scheme are common property (unless otherwise defined on the plan) and should be insured by the corporation [s 103(1)(b)].

In a community scheme, buildings within a lot are not common property and are the responsibility of the lot owners. However, the corporation's by-laws may authorise or require the community corporation to act as agent for the owners of community lots in arranging policies of insurance [s 34(3)(ca)]. If the by-laws do so, the by-laws may also impose a monetary obligation on the owner of a lot in relation to the payment of the insurance premium [s 37(2)(b)].

Owners in a community scheme also have a duty to insure any part of their property such as a wall, which provides support and shelter to a building or other structure on another lot or on the common property [s 106(1)].

Fidelity guarantee insurance

From 27 October 2014, fidelity guarantee insurance must be held by all corporations [s 104(3)], apart from 2-lot community corporations with no administrative or sinking fund and community corporations with common property insurance cover of $100 000 or less [reg 16C(b)]. A policy of fidelity guarantee insurance covers the risk of theft or fraud of the corporation’s funds by any person authorized to handle the corporation’s funds, including a manager. Although the requirement to have fidelity guarantee insurance is a new requirement from 27 October 2014, a corporation may already have fidelity guarantee cover included with its building insurance policy. The insurance cover must be for the amount of the maximum total balance of the corporation's bank accounts at any time in the preceding three years, or $50 000, whichever is higher [reg 16C(a)].

Other insurance

A community corporation must insure itself against risks that a normally prudent person would insure against and the amount of the insurance must be the amount that a normally prudent person would insure for [ss 104(1)—(2)]. In the case of insurance for bodily injury, the insurance must be for at least ten million dollars [s 104(2)].

Sinking fund and administrative fund

A community corporation must establish a sinking fund (for non-recurrent expenditure only) and an administrative fund (for all other expenditure) [Community Titles Act 1996 (SA) ss 116(1)—(2)].

Non-recurrent expenditure is expenditure for a particular purpose that is normally made less frequently than once a year [s 3(1)]. Recurrent expenditure is expenditure for a particular purpose that is normally made every year or more frequently [s 3(1)].

Money received by a corporation, including contributions of lot owners, must generally be credited to the sinking or administrative fund according to the purpose for which the money will be used [s 116(4)].

Expenditure statements

An expenditure statement must be presented by a corporation to each annual general meeting of the corporation. The statement must include [s 113(1)]:

Some corporations must also include a forward budget (a ‘sinking fund’ budget) as part of the expenditure statement.

Forward budget (sinking fund budget)

For corporations with seven to twenty lots, and with improvements on the common property insured for $100 000 or more, a forward budget must be presented at each annual general meeting, as part of the expenditure statement. The forward budget must include proposed expenditure (other than recurrent expenditure) for a three year period. New information must be presented about proposed non-recurrent expenditure every three years [s 113(1)(aa); Community Titles Regulations 2011 (SA) reg 18A].

For corporations with more than twenty units, and with improvements on the common property insured for $100 000 or more, the forward budget presented at each annual general meeting must include proposed expenditure (other than recurrent expenditure) for a five year period. New information must be presented about proposed non-recurrent expenditure every five years [Community Titles Act 1996 (SA) s 113(1)(aa); Community Titles Regulations 2011 (SA) reg 18A]

Exempt corporations

Community corporations with six or less community lots and community corporations with buildings and improvements on the common property insured for less than $100 000 are not required to present a forward budget as part of their expenditure statement at their annual general meeting [reg 18A(3)].

Audit of accounts

A community corporation must have its annual statement of accounts audited unless it is exempted from this requirement [Community Titles Act 1996 (SA) s 138(1)].

The auditor must be a registered company auditor within the meaning of the Corporations Act 2001 (Cth) [Community Titles Act 1996 (SA) s 138(2)]. A member of the corporation and any person who has a personal or pecuniary interest in the results of an audit must not be appointed as auditor [s 138(3)].

Exempt corporations

An annual statement of accounts in respect of a financial year need not be audited in any of the following circumstances:

Authorising expenditure

Depending on the amount the corporation proposes to spend, different types of resolutions are needed in order to authorise the expenditure [s 119; Community Titles Regulations 2011 (SA) reg 21].

If the proposed expenditure is less than the number of community lots in the scheme multiplied by $2,000, an ordinary resolution is required.

If the proposed expenditure is more than the number of community lots in the scheme multiplied by $2,000, and less than the number of community lots multiplied by $5,000, then a special resolution is required.

If the proposed expenditure is more than the number of community lots in the scheme multiplied by $2,000 or $5,000, but is reasonably required to complete works required by council (or a body established by council) or a public authority, then a special resolution is required.

If the proposed expenditure is more than the number of community lots in the scheme multiplied by $5,000 (and not required by council or the like), then a unanimous resolution must be passed to authorise the expenditure.

Unlike the Strata Titles Act 1988 (SA), the Community Titles Act 1996 (SA) does not include a standard set of by-laws. The Community Titles Act 1996 (SA) requires developers of community schemes to draft individual by-laws (Community Titles Act 1996 (SA) ss 12, 34) which reflect the nature of the particular scheme [s 11(4)]. The by-laws must cover the administration, management and control of the common property; must regulate the use and enjoyment of common property; and must regulate the use and enjoyment of community lots to give effect to the scheme description [s 34(2)].

In relation to buildings and other structures on community lots, the by-laws may also regulate issues such as position, design, dimensions, construction, appearance, maintenance and repair [ss 34(3)(a)(i)—(ii)]. Landscaping and the appearance of community lots can be covered in the by-laws [ss 34(3)(a)(iii), (b)], and requirements or restrictions on the use of community lots can be imposed to prevent interference with the use and enjoyment of other lots [s 34(3)(c)].

The by-laws cannot be inconsistent with the scheme description (if any) or development contract (if any) of the scheme or, if there are higher levels above the scheme, the by-laws or scheme description or development contract of those schemes [s 41].

A by-law comes into force when the original by-laws are deposited with the Land Titles Office or a certified copy of the new by-laws is lodged with that office [s 40].

Those bound by the by-laws

The by-laws are binding on the community corporation, the owners and occupiers of the community lots and the development lot or lots (if any) comprising the scheme, and persons entering the community parcel [s 43(1)].

Variation of the by-laws

In schemes where one or more lots are used, or intended to be used, for residential purposes, the by-laws may be varied by special resolution of the corporation [s 39]. That provision also applies to schemes with only commercial lots but, in that case, any by-law that stipulates the number of votes that a lot may have can only be varied by unanimous resolution [s 87(2)].

Note that if one or more of the lots in a scheme is used or intended to be used solely or predominantly for residential purposes then each community lot only has one vote [s 87(1)(a)]. See: Voting at General Meetings.

What cannot be in the by-laws

Monetary obligations

The by-laws may not impose a monetary obligation on the owner or occupier of a lot except where:

Access to a lot

The corporation may not prevent access by the owner or occupier or other person to a lot [s 37(1)(c)].

Assistance dogs and therapeutic animals

The by-laws may not prevent an occupier of a lot who has a disability from having and using an assistance dog, or a therapeutic animal [s 37(1)(d)]. Similarly, a visitor to a lot who has a disability may not be prevented from using their assistance dog or therapeutic animal [s 37(1)(e)].

An assistance dog is an accredited guide, hearing or disability dog.

A therapeutic animal is an animal that has been certified by a medical practitioner as being required to assist a person with their disability [Equal Opportunity Act 1984 (SA) s 88A]. The animal must have been trained, in some way, for that task.

By-laws that reduce the value of a lot or unfairly discriminate against a lot owner

Any by-laws that reduce the value of a lot or unfairly discriminate against a lot owner may be struck out by court order [s 38(1)]. The application to strike out the by-law must be made by a person who was a lot owner, which includes a person who has contracted to purchase the lot, when the by-laws came into force. The application must be made within three months after the person (or either or any of the lot owners where the lot is owned by two or more persons) first knew, or could reasonably be expected to have known, that the by-laws had been made [s 38(2)]. An application to strike out a by-law would normally be made to the Magistrates Court as a minor civil action under s 142.

If it is claimed that a lot owner or occupier (for example, a tenant) of a lot is in breach of the by-laws, the corporation may request that the person either do what is required under the by-laws, or stop doing what is not allowed under the by-laws. If the person continues to breach the by-laws, mediation may be sought, or a penalty may be imposed by the corporation if there is provision for this in the by-laws, and/or the matter may be taken to the Magistrates Court, see: Disputes.

Penalties for breaching the by-laws

The by-laws of a strata corporation may impose a penalty of up to $500 for contravention of, or failure to comply with, any by-laws [ss 34(3)(e), 34(9)]. If all the units in the scheme are non-residential, the penalty may be up to $2 000 [s 34(9)]. These fines may be imposed on members of the community corporation, occupiers, visitors or any other person entering the community parcel [s 43].

If the by-laws state that the corporation 'may impose a penalty of up to $500 for a breach of the by-laws' this does not mean that any penalty must be $500. A corporation should ensure that the amount of any penalty imposed is reasonable in relation to the nature and extent of the breach.

Note that it is the corporation that may impose a penalty for an alleged breach. If a corporation has a management committee, the management committee may act for the corporation. Thus, a duly called meeting of either the corporation or the management committee will be needed to impose a penalty for an alleged breach of the articles. A body corporate manager cannot impose a penalty for an alleged breach of the articles, although a manager may be given the power to issue and sign any penalty notice.

Time for payment of a penalty

The date set for payment of a penalty must be at least 60 days after the date the notice is served [s 34(6)(c)(ii)].

Non-payment of a penalty

If the penalty is not paid in time, the corporation may recover the amount as a debt. If notice has been given to a tenant or visitor, then, ultimately, action can be taken in the Magistrates Court (minor civil action jurisdiction) to recover the debt. If the notice has been given to the owner of a community lot, the penalty may be recovered by the corporation as if it were a contribution payable to the corporation, and interest will be payable on the penalty amount in the same way as if it were such a contribution [s 34(6)(d)].

Notice of a penalty

The corporation must give notice of the imposition of a penalty using the form set out in Schedule 1, Form 11 of the Community Titles Regulations 2011 (SA). The form is set out below.

Form 11

Section 34(6)(c)(i) of Act

Penalty Notice

To [insert name and lot number of the person to whom notice is given]

The [insert name of the community corporation giving notice] gives you notice that you have contravened or failed to comply with [specify the by-law or article that has been contravened or not complied with] by [set out the details of the contravention or non-compliance].

The penalty of [specify the amount of the penalty] is payable to the corporation by you not later than [specify the date for payment].

If you do not pay the penalty as required by this notice, the penalty is recoverable from you by the corporation as a debt. If this notice is served on you as the owner of a community lot, the penalty may be recovered by the corporation under section 114 of the Community Titles Act 1996 (SA) (and interest will be payable on the penalty amount in the same way as if it were such a contribution).

Under section 34(6) of the Act you are entitled to apply to the Magistrates Court for revocation of this notice. The application must be made within 60 days after service of this notice. If you make such an application, the penalty specified in this notice is not payable unless the application is withdrawn or otherwise discontinued by you, or is dismissed or refused by the Court (and, in such a case, the penalty will be payable on the date on which the application is so withdrawn, discontinued, dismissed or refused or on the date for payment specified in the notice, whichever occurs later).

Applying to revoke a penalty notice

A person who has received a penalty notice may, within 60 days after service of the notice, apply to the Magistrates Court for revocation of the notice [s 34(6)(e)]. A representative of the corporation will be required to attend the hearing and will have to show that, on the balance of probabilities, the person committed the alleged breach [s 34(6)(f)].

When an application to revoke a penalty is made, the requirement to pay the penalty is suspended until the matter is resolved [s 34(6)(g)].

The Court must revoke the penalty if it is not satisfied that the person breached the by-laws as alleged, or if it is satisfied that the alleged breach is trifling [s 34(6)(e)].

A breach may be regarded as ‘trifling’ if the circumstances surrounding the breach were such that the person ought to be excused from the imposition of a penalty on any of the following grounds [s 34(7)]:

The corporation can choose to run all of its business through general meetings or it can, by ordinary resolution [Community Titles Act 1996 (SA) s 90(2)], set up a management committee [s 90(1)] to carry out the functions and perform the duties of the corporation within the limits of the committee’s powers [s 92(1)]. The committee cannot delegate its functions or powers, but the corporation can appoint someone, such as a body corporate manager, to assist the committee to carry out its role [s 92(3)].

Powers and responsibilities of the management committee

The management committee has full power to transact any business of the corporation [s 92(2)], except that:

If a management committee is considering a controversial issue, such as raising special levies, it may be sensible to give advance notice of this to all lot owners.

Membership of the management committee

A management committee is appointed by an ordinary resolution at a general meeting of the corporation [s 90(2)]. The corporation’s office bearers (presiding officer, treasurer and secretary) must be members of the committee [s 90(3)]. All members of the committee must be natural persons (not, for example, companies) [s 90(3)]. In a residential, or mainly residential, scheme, the members of the management committee must be members of the corporation (lot owners), but, if a body corporate is a lot owner, the person appointed by it to vote at meetings is taken to be a member of the corporation [s 90(4)].

A member of the committee must be appointed for a term that expires at or before the next annual general meeting of the corporation [s 91(1)]. A committee member may be re-elected at the AGM.

A vacancy will arise before the annual general meeting if the member:

A member may be removed by ordinary resolution of the corporation (not the committee) on the grounds of misconduct, or neglect of duty, or incapacity or failure to carry out satisfactorily the duties of the office [ss 91(2)(h), 91(3)].

If there is a casual vacancy in the membership of the committee, the management committee may appoint a suitable person to fill the vacancy [s 97].

Duty of honesty

A committee member must at all times act honestly in the performance of their duties. Failure to do so is an offence with a maximum penalty of $4 000, or, if an intention to deceive or defraud is proved, $15 000 or four years imprisonment [s 96(1)].

A committee member must not make improper use of their official position to gain a personal advantage for themselves or another. Doing so is an offence with a maximum penalty of $15 000 or four years imprisonment [s 96(2)].

Immunity of committee members from liability

A committee member is not personally liable for an act or omission while acting, or purportedly acting, as a committee member unless the act or omission was dishonest or negligent [s 99(1)]. A liability that would, but for section 991(1), have attached to a committee member attaches to the corporation [s 99(2)].

Meetings of the management committee

A management committee must keep minutes of its meetings [s 94(7)].

A management committee meeting may be called by the presiding officer, treasurer or secretary, or by any two members of the committee [s 93(1)].

At least three days written notice of a management committee meeting must be given [s 93(2)]. The notice must set out the day, time and place of the meeting, and the meeting agenda [ss 93(2), 93(4)].

The day, time and place of the meeting must be reasonably convenient to a majority of the members of the committee [s 93(3)].

Chairing

The presiding officer chairs committee meetings, but in the absence of the presiding officer, the members present may appoint another member to chair the meeting [s 94(1)].

Decisions and disclosure of interest

Decisions of the management committee are made by majority vote [s 94(3)].

It is an offence with a maximum penalty of $15 000 if a committee member who has a direct or indirect pecuniary interest (apart from an interest arising solely from the fact that the member is also a member of the community corporation [s 95(4)]) in a matter under consideration by the committee does not disclose the nature of the interest to the committee or takes part in any discussions or decisions of the committee in relation to that matter [s 95(1)].

Any disclosure of interest must be recorded in the minutes of the committee [s 95(3)].

Decisions without meeting

A decision may be made by a committee without meeting if [s 94(6)]:

Proxies

A committee member may appoint another person (who must, in the case of a residential scheme, by another committee member or a member of the community corporation) to act as their proxy at a committee meeting that the member is unable to attend [ss 94(4), 94(5)].

Quorum

To work out the quorum required for a management committee meeting, divide the total number of members of the committee by two, ignoring any fraction resulting from the division, and add one [s 94(2)].

A general meeting of owners must be held within three months of the commencement of a primary community corporation's end of financial year [Community Titles Act 1996 (SA) s 82(1)]. This meeting is referred to as the 'annual general meeting'. The annual general meeting of a secondary or tertiary community corporation must be held within six months after the commencement of each financial year [s 82(2)].

However, the by-laws of a corporation with only two lots may say that an annual general meeting does not have to be held [s 35(1)(a)].

The rules about calling general meetings apply to both the annual general meeting and any other general meeting of owners.

A general meeting may be called by [s 81(1)]:

At least fourteen days written notice of a general meeting must be given [s 81(2)]. The notice must set out the day, time and place of the meeting, and the meeting agenda [ss 81(2), 81(4)].

The day, time and place of the meeting must be reasonably convenient to a majority of the members of the corporation [s 81(3)].

Agenda

The agenda of every general meeting must include [s 81(5)]:

In the case of the first statutory general meeting, the agenda must also include [s 80(2); Community Titles Regulations 2011 (SA) reg 15]:

In the case of all subsequent annual general meetings, the agenda must also include [Community Titles Act 1996 (SA) s 81(5)(d); Community Titles Regulations 2011 (SA) reg 16]:

Quorum

To work out the quorum required for a general meeting, divide the total number of members entitled to attend and vote by two, ignoring any fraction resulting from the division, and add one [Community Titles Act 1996 (SA) s 83(4)].

Members may be present in person or by proxy or, if applicable, via remote communication.

If a quorum is not present, the meeting must be adjourned for at least 7 days, but no more than 14 days, and written notice must be given to members of another meeting. If a quorum is not present at the second meeting, those present are entitled to work as a 'quorum', which means they can legally make decisions. [ss 83(5), 83(6)]

Attendance by remote communication

The by-laws of a corporation may make provision for attendance and voting at meetings by members by means of telephone, video-link, Internet connection or any similar means of remote communication. If the member complies with the requirements in the by-laws, they may attend and vote at a meeting by remote communication. [s 83(6a); Community Titles Regulations 2011 (SA) reg 16A(3)(a)]

Alternatively, a member may request the secretary of the corporation, in writing, to attend and vote at the meeting by means of remote communication. If the secretary of the corporation makes the necessary arrangements to receive and record the member's attendance and voting at the meeting by remote communication, and the member complies with any requirements of the secretary in relation to the request, then the member may attend and vote at the meeting by remote communication [Community Titles Act 1996 (SA) s 83(6a); Community Titles Regulations 2011 (SA) reg 16A(3)(b)]

A corporation is under no obligation to provide facilities for remote communication to members [Community Titles Act 1996 (SA) s 83(6a)].

Chairing of general meetings

Presiding Officer as chair

The presiding officer chairs general meetings of the corporation but a body corporate manager may be appointed by the meeting to fulfil that role.

In the absence of the presiding officer a person (including a body corporate manager or an employee of the manager) present at the meeting may be appointed to chair the meeting [s 83(3)].

Body corporate manager as chair

If it is proposed that the corporation's manager, or an employee of the manager, will chair a meeting of the corporation, a majority of those present and entitled to vote at the meeting must agree to this [s 83(3a)].

In addition, the manager or employee must inform the meeting, before any vote is taken [Community Titles Regulations 2011 (SA) reg 16A(2)]:

Disclosure of interest by chair

Any person chairing a meeting who has a direct or indirect pecuniary interest in any matter to be voted on at the meeting must disclose the nature of the interest to the members present at the meeting before the vote is taken, even if they themselves cannot or are not voting on the matter. Failure to do so is an offence with a maximum penalty of $15 000. [Community Titles Act 1996 (SA) s 85(2a)]. However, an owner of a community lot is not obliged by section 85(2a) to disclose an interest that he or she has in common with all of the owners of the community lots [s 83(2b)].

The owner of a community lot is entitled to attend general meetings of the corporation, and is entitled to vote if there are no outstanding amounts payable to the corporation in respect of the lot [Community Titles Act 1996 (SA) ss 84(1), 84(14)]. The owner of a development lot is not entitled to attend or vote at general meetings in his or her capacity as the owner of that lot [s 84(2)].

If at least one of the lots is issued or intended to be used solely or predominantly for residential purposes then the number of votes that may be cast in respect of each of the lots (whether those lots are commercial or residential) is one [s 87(1)(a)]. However if none of the lots are used or intended to be used solely or predominantly for residential purposes then the number of votes that may be cast in respect of each lot is one unless the by-laws prescribe a different number [s 87(1)(b)].

Lots with two or more owners

Where there is more than one owner of a lot and one of them has not been formally appointed to vote on behalf of all the owners, then [s 84(7)]:

Voting by the developer

The Act limits the voting power of the developer of a community scheme who owns one or more community lots. The developer is the person who was the registered proprietor of the land that now comprises the community parcel immediately before the lodgement of the plan of community division [s 3(1)]. The number of votes cast by the developer, and anyone ‘associated’ with the developer according to section 4(2) of the Act, may not exceed the total of votes cast by other community corporation members [s 87(3)]. This is designed to prevent developers changing scheme descriptions and development contracts.

Disclosure of interest

A lot owner who attends and is entitled to vote (other than as a nominee) at a meeting of a community corporation and who has a direct or indirect pecuniary interest in any matter to be voted on at the meeting must disclose the nature of the interest to the members present at the meeting before the vote is taken [s 85(2a)(a)]. Failure to do so is an offence with a maximum penalty of $15 000.

Similarly, anyone who presides at a meeting of a community corporation and who has a direct or indirect pecuniary interest in any matter to be voted on at the meeting must disclose the nature of the interest to the members present at the meeting before the vote is taken [s 85(2a)(b)]. Failure to do so is an offence with a maximum penalty of $15 000.

However, an owner of a community lot is not obliged to disclose an interest held in common with all of the owners of the community lots [s 85(2b)].

Absentee votes

A lot owner may exercise an absentee vote by giving the secretary of the corporation written notice of the proposed vote at least six hours before the meeting [s 84(11)].

Written ballots

A lot owner attending a meeting of the corporation may demand a written ballot on any question [s 84(12)]. A person attending a meeting via remote communication such as telephone [s 83(6a); Community Titles Regulations 2011 (SA) reg 16A(3)] may participate in a written ballot if it is provided for in the corporation’s by-laws, or if approved and arranged by the secretary. The person presiding at the meeting has the power to manage a written ballot as they think fit [Community Titles Act 1996 (SA) s 84(13)].

Proxy voting

A copy of each proxy nomination and any general power of attorney appointing a proxy applying in relation to a meeting must be made available by the secretary of the corporation (or, in the case of a nomination relating to the first statutory general meeting, the person initially presiding at the meeting) for inspection by persons attending the meeting before any matter is voted on at the meeting [s 85(10a)]. Failure to do so is an offence with a maximum penalty of $500.

Proxy voting where there is one owner of a lot

A member may appoint another person to vote on their behalf [s 84(3)]. Even if a proxy nomination has been made, an owner may attend and vote at meetings on his or her own behalf [s 84(5)(g)].

A proxy nomination is effective for a period of 12 months or such lesser period as may be specified in the written notice of nomination [s 84(5)(f)]. However, the nomination may be revoked earlier at any time by the lot holder, by giving written notice to the secretary; any contract or agreement purporting to prevent revocation is unenforceable [s 84(5)(e)].

In addition, if the corporation's manager, or an employee of the manager, is nominated as a proxy, the nomination ceases to have effect on the person ceasing to be the corporation's manager or an employee of the manager [s 84(6a)].

A member may specify conditions on the proxy nomination [s 84(5)(c)], for example, how the proxy is to vote on certain matters.

The nomination of a person as a proxy of a member must [s 84(5)]:

Failure to comply with these requirements will invalidate the nomination [s 84(5a)].

Appointment of a proxy by general power of attorney

If an owner appoints a person as their attorney under the Powers of Attorney and Agency Act 1984 (SA) specifically for the purpose of attending and voting at meetings, or specified meetings, of the community corporation, the appointment is effective for a period of 12 months or such lesser period as may be specified in the power of attorney, unless the power of attorney is revoked earlier [Community Titles Act 1996 (SA) s 85(9a)].

If a body corporate manager is appointed as an owner's proxy, a copy of the power of attorney must be given to the secretary of the corporation before the meeting, or the first of the meetings, to which it relates [s 85(9b)].

Proxy voting where there is more than one owner of a lot

Where there is more than one owner of a lot, a person (who may, but need not, be one of the owners) may be nominated by all of the owners to vote on their behalf [s 84(4)].

The owners may specify conditions in relation to the nomination [s 84(6)(ba)].

The nomination of a person as a proxy of multiple owners must [s 84(6)]:

The nomination may be revoked at any time by one of the owners by written notice to the secretary [s 84(6)(c)].

If the corporation's manager, or an employee of the manager, is nominated as a proxy, the nomination ceases to have effect on the person ceasing to be the corporation's manager or an employee of the manager [s 84(6a)].

Disclosure of interest by a proxy

Declaration of a member's interest

If the nomination declares a lot owner’s pecuniary interest in a matter (because the proxy is required to vote in a particular way in relation to the matter and the member has a direct or indirect pecuniary interest in the matter [see above: s 84(5)(d); s 84(6)(bb)]), then the proxy must declare the member's interest before the vote is taken [s 85(1)(b)]. Failure to declare the member's interest is an offence with a maximum penalty of $15 000.

Declaration of a proxy's interest to the meeting

Similarly, if the proxy has a direct or indirect pecuniary interest in any matter to be voted on at the meeting, they must disclose the nature of the interest to the members present at the meeting before the vote is taken [s 85(1)(a)(ii)]. Failure to do so is an offence with a maximum penalty of $15 000.

Declaration of a proxy's interest to the person who nominated them

If a proxy has a direct or indirect pecuniary interest in any matter to be voted on at a meeting, they must, if it is practicable to do so, disclose the nature of the interest to the person who nominated them before the vote is taken. If this is not practicable, they must disclose the nature of the interest to the person who nominated them as soon as practicable after the vote is taken. Failure to do so is an offence with a maximum penalty of $15 000 [s 85(1)(a)(i)].

Ordinary resolutions

An ordinary resolution is one passed at a properly convened meeting of the corporation by a simple majority of the votes of members present and voting on the resolution [Community Titles Act 1996 (SA) s 3]. Decisions of a corporation are made by ordinary resolution unless the Act or by-laws specify otherwise.

Special resolutions

A special resolution is required to:

Special resolutions must be proposed by at least 14 days written notice to all community lot owners, including the text of the proposed resolution and the reasons for the proposed resolution [s 3(1); Community Titles Regulations 2011 (SA) reg 2(2)].

When there are only two community lots,

When there are only two community lots then the resolution will be defeated if one of the owners votes against it. It will pass if one of the owners votes for it and the other owner either does not attend the meeting, or does attend but abstains or cannot exercise a vote because of overdue amounts payable to the corporation.

When there are three community lots

When there are three community lots and the owner of each lot is entitled to one vote, a special resolution is achieved if the resolution is passed at a properly convened meeting of the corporation at which either no vote, or only one vote, is cast against the resolution [s 88].

When there are four community lots

When there are four community lots, a special resolution is achieved if the resolution is passed at a properly convened meeting of the corporation and the number of votes (if any) cast against the resolution is 25% or less of the total number of votes that could be cast at a meeting at which all lot owners are present and entitled to vote [s 3(1)].

Special Resolution Examples

Unanimous resolutions

A unanimous resolution is achieved if the resolution is passed without any dissenting (opposing) vote; that is, nobody must vote against the resolution.

The resolution must be proposed by at least 14 days written notice to all community lot owners, including the text of the proposed resolution and the reasons for the proposed resolution [s 3(1), Community Titles Regulations 2011 (SA) reg 2(3)].

Any lot owner who does not attend (or send a proxy to vote), or attends and chooses not to vote, is not counted as a dissenting vote.

Unanimous resolutions are required to:

When a unanimous or special resolution is not obtained

Where a unanimous resolution is necessary but only the votes necessary for a special or ordinary resolution are obtained, or where a special resolution is required but only an ordinary resolution is passed, then the corporation or a member of the corporation who voted for the resolution (or whose vote was cast by another person for the resolution) may apply to the Magistrates Court or the District Court to have the resolution declared sufficient to authorise the particular act proposed [s 149].

Notice of an application to convert the resolution must be served on every person who voted against the resolution, and every person who was entitled to vote but did not. The court may also order that any other person the court declares to have a sufficient interest in the proceedings be served with notice of the application. The court may direct that any such persons be joined as a party to the proceedings [s 149].

Many corporations choose to appoint a manager to assist in running the affairs of the corporation, or to assist the management committee in carrying out its role.

A manager can only carry out the powers and functions delegated to them by the corporation and stated in the contract appointing them. A manager does not have any powers independent of the corporation. Managers have to act in the best interests of the corporation; if they do not, they can potentially be sued for negligence by the corporation.

The legal responsibilities of the corporation do not change with the appointment of a manager. The corporation must still have a Presiding Officer, a Secretary and a Treasurer, who must all be members of the corporation, and it is still legally liable for decisions made on its behalf.

Appointing a manager

Managers can be appointed at a general meeting by an ordinary resolution [Community Titles Act 1996 (SA) s 78A(3)].

The appointment should specify the powers or functions being delegated to the manager. The delegation may have conditions imposed upon it [s 78A(5)(a)]. Even if a delegation of a function or power has been made, this does not prevent the corporation from carrying out the function or power itself [s 78A(5)(b)].

A community corporation may delegate the following functions and powers to a manager [s 78A(2)]:

A manager cannot be given power to do anything that requires a special or unanimous resolution of the corporation [s 78A(4)].

If it proposed to appoint a manager (or extend or renew a manager's contract) at an annual general meeting, then the agenda for the meeting must include certain items relating to the relevant contract and controls on expenditure [s 81(5)(d); Community Titles Regulations 2011 (SA) reg 16] (see General Meetings).

Documents to be provided

The following requirements must be met when appointing a manager, or renewing or extending a contract with a manager.

At least five clear days before the date of the meeting at which the corporation is to consider whether or not to enter into a contract with a manager, the manager must make available for inspection by members [Community Titles Act 1996 (SA) s 78B(8); Community Titles Regulations 2011 (SA) reg 14(1)]:

The pamphlet

The pamphlet must specify the rights of the corporation to [reg 14(4)]:

The contract

The contract must [Community Titles Act 1996 (SA) s 78B(3); Community Titles Regulations 2011 (SA) reg 14(3)]:

The professional indemnity insurance policy schedule

The professional indemnity insurance policy schedule must state [reg 14(1)]:

Duties of managers

Professional indemnity insurance

A manager must have professional indemnity insurance of at least $1.5 million per claim during a period of 12 months [reg 14(2)]. A corporation’s manager must maintain this level of professional indemnity cover while working for the corporation; if not, the manager does not have to be paid for any period of time they were not covered [Community Titles Act 1996 (SA) s 78B(2)(c)].

Duty to act in the best interests of the corporation

When doing work for the corporation, a manager must [s 78C(2)]:

Disclosure of interest

If a manager, or their employee or agent, has a direct or indirect pecuniary interest in a matter in relation to which they propose to perform delegated functions or powers, the manager must disclose the nature of the interest, in writing, to the corporation before performing the functions or powers [s 78D(1)]. Failure to do so is an offence, with a maximum penalty of $15 000.

For example, if the manager will receive a commission for arranging a contract, has an interest in the maintenance company, or is related to a service provider then this must be disclosed to the corporation.

Access to records

Corporation records

A manager who holds records of the corporation must, at the request of any member of the corporation, make those records available for the member to inspect within 10 business days of the request, and provide the member with a copy of any of the records on payment of a fee (the maximum fee is regulated) [s 78D(7); Community Titles Regulations 2011 (SA) reg 14A(3)]. Failure to do so is an offence with a maximum penalty of $500.

The manager’s dealings with the corporation's money

If a corporation member requests, a manager must provide the member, on a quarterly basis, with a statement setting out details of the manager’s dealings with the corporation's money. The manager must continue to provide the statements until the person ceases to be a member or revokes their request [Community Titles Act 1996 (SA) s 78D(5)]. Failure to provide this information when requested is an offence, with a maximum penalty of $500.

Professional indemnity insurance policy

The body corporate manager must, at the request of any member of the corporation, make a copy of the body corporate manager's policy of professional indemnity insurance available for inspection and copying by the member within three business days of the request [s 78B(9)]. Failure to do so is an offence with a maximum penalty of $500.

Trust account audits

Managers or any agent who is authorised by the corporation to receive and hold money on behalf of the corporation are under strict legal obligations. Detailed and complete records must be kept of all financial transactions in relation to the corporation [ss 126(1), 126(2)], and these records must be kept by the manager or agent for at least five years [s 126(4)]. An audit report of the manager's trust account in relation to a corporation must be forwarded to the secretary of the corporation each financial year [s 127(1)(b)]. Any manager or agent who fails to comply with any of these requirements is guilty of an offence with a maximum penalty of $8 000.

In addition, a statement setting out details of dealings by the manager or agent with the corporation's money must be produced to the corporation upon request by the corporation, and within five business days of the request [s 126(3)]. Failure to do so is an offence with a maximum penalty of $500.

Ending a manager’s contract

A corporation's contract with a manager must state the term of the contract [s 78B(3)(b)]. If a corporation wishes to end a contract before the end of the term because it believes the manager is not performing well, it would be advisable for the corporation to obtain legal advice. If the corporation believes the manager has breached their duty to act in the best interests of the corporation, or any other duties under the Community Titles Act 1996 (SA), the corporation is entitled to seek to end the contract. If the corporation and the manager cannot agree about a proposed termination, or the terms of a termination, the dispute resolution process set out in the Act may be used (see Disputes). This process involves making an application to the Magistrates Court.

A corporation may, by ordinary resolution, end a manager's contract that is for a period of over 12 months, which is taken to include any renewal period at the option of the manager, after the contract has run for 12 months. The corporation must give at least 28 days’ written notice of the termination, although the notice period can be less if agreed in the contract. [ss 78B(4), 78B(5), 78B(7)]

Return of records and trust money

If a corporation revokes the delegations it has given to a manager (effectively, if the corporation dismisses the manager or if the contract between them is not renewed), then the manager must return all records and trust money [s 78D(6); Community Titles Regulations 2011 (SA) reg 14A(1)-(2)]. Failure to do so is an offence with a maximum penalty of $2 000.

Return of records

Records must either be returned by mail sent by registered post, or be made available for collection [reg 14A(1)].

Return of trust money

Trust money must either be returned by electronic funds transfer, or by cheque sent by registered post, or be made available for collection [reg 14A(2)].

The key rights of lot owners are contained in the by-laws of the corporation and in provisions of the Act related to access to information (see Community Corporation: Access to information by unit owners).

Right of entry

In relation to service infrastructure

A lot owner may need to enter a lot in order to set up, maintain or repair service infrastructure. If so, the lot owner wishing to enter must give notice to the other owner [Community Titles Act 1996 (SA) s 146(1)(a)]. Similarly, if a lot owner needs to enter the common property because they have the right to set up, maintain or repair service infrastructure, the lot owner must notify the corporation [s 146(1)(a)], unless they have the right to enter the common property [s 146(2)(c)(i)]. The amount of notice required is whatever is reasonable in the circumstances [s 146(3)].

If the situation is an emergency and there is no time to give notice, then notice need not be given [s 146(2)(a)]. A lot owner may agree that their lot can be entered without notice [s 146(2)(b)], as may the corporation in relation to the common property [s 146(2)(c)(ii)].

If the owner or a person acting on the owner’s behalf cannot enter the lot without using force, such force as is reasonable in the circumstances may be used [s 146(4)]. Any damage caused by the use of force must be made good as soon as practicable by the owner, unless the need for force was the result of an unreasonable act or omission on the part of the owner of the lot that was entered [s 146(5)].

In an emergency

In an emergency, the owner or occupier of a lot may enter another lot or the common property to assist a person on the lot or common property, or to prevent or reduce damage to the lot or another lot or to the common property [s 146(6)].

An owner or occupier who uses force when entering a lot or the common property, or a building on a lot or the common property, to assist in an emergency is not liable for any damage caused if they acted reasonably in the circumstances [s 146(7)].

Maintenance and repairs

Owners of a lot are responsible for the maintenance and repairs of their own property, and must keep the lot and buildings and improvements on the lot in good order and condition [s 134(1)], unless the corporation’s by-laws have transferred this responsibility to the corporation [s 134(2)]. If owners do not fulfil their responsibilities of maintenance and repair, the community corporation may require the work be done within a set time [s 101(1)(a)] (see Powers of the corporation).

An occupier of a lot must keep the external part of the lot and of any buildingor other improvement on the lot in a clean and tidy condition [s 134(4)]. If a tenant is occupying the lot and does not fulfil this requirement, the corporation can require the lot owner to remedy the situation [s 101(1)(b)(i)].

Insurance

Where support or shelter required by an easement pursuant to this Act is provided by a building situated on a lot, the owner of the lot must insure the building against risks that a normally prudent person would insure against for the full cost of replacing the building with new materials and must insure against incidental costs such as demolition, site clearance and architect's fees [s 106(1)]. Failure to do so is an offence with a maximum penalty of $15 000.

A lot owner who is required to insure a building under section 106(1) must provide a photocopy of the current certificate of the insurance that they have taken out to the community corporation as soon as practicable after taking out the policy and after any subsequent change to the terms and conditions of the policy [s 106(2)(a); Community Titles Regulations 2011 (SA) reg 17]. Failure to do so is an offence with a maximum penalty of $500.

A lot owner must also provide a photocopy of the current certificate of the insurance policy to another owner or prospective owner, or the registered mortgagee or prospective mortgagee, of a community lot or a development lot that benefits from the easement. The copy must be provided within five business days after the making of the request [Community Titles Act 1996 (SA) s 106(2)(b); Community Titles Regulations 2011 (SA) reg 17]. Failure to do so is an offence with a maximum penalty of $500.

Compliance with the articles

Lot owners have certain responsibilities as outlined in the corporation’s by-laws, with which they are required to comply [Community Titles Act 1996 (SA) s 43(1)]. The corporation may require and enforce work on a lot to remedy a breach of the corporation’s by-laws, even if the breach was by a former lot owner, an occupier (tenant) or former occupier [s 101(1)(b)(i)] (see Powers of the corporation).

Non-interference

An owner or occupier of a lot must not use, or permit the use, of the lot or common property in a way that causes a nuisance or interferes unreasonably with the use or enjoyment of another lot or the common property [s 133].

An owner or occupier of a lot must not interfere, or permit interference, with support or shelter provided for another lot or for the common property [s 132(1)], or with the service infrastructure or a service provided by means of the service infrastructure in a way that may prejudice the use or enjoyment of another lot or the common property [s 132(2)].

Contributions

Lot owners must keep up their contributions to the corporation. If the funds are not paid, they are recoverable as a debt [s 114(8)], which means the corporation can sue the lot owner for the money, possibly with interest added at a rate reasonably decided by the strata corporation [s 114(4)(b)]. If you buy a lot and there is a contribution owing, you as the new owner are legally responsible for that contribution [s 114(7)]. Check carefully before buying any lot, as there may be debts outstanding in relation to it.

Debts of the corporation

Lot owners are guarantors of their community corporation's liabilities, which means the corporation's debts are enforceable against each of the lot holders directly [s 77].

If the corporation does not or cannot pay its debts, the individual lot owners are personally responsible. The corporation's debts are enforceable against each or any of the lot owners directly [s 77(1)]. If the corporation has a debt, the lot owners have, amongst themselves, the right of contribution to the debt based on their respective lot entitlements [s 77(2)].

Structural work

Community schemes

Lot owners in a community scheme may carry out structural work on their lots, subject to Council approval where necessary, and compliance with the scheme description and by-laws. The scheme description must specify the standard of buildings and other improvements that may be erected on a lot [s 30(1)(d)]. The by-laws may also regulate [s 34(3)(a)]:

In addition, the by-laws may impose requirements or restrictions relating to the appearance of community lots or buildings or other improvements situated on community lots [s 34(3)(b)].

Community strata schemes (residential)

Lot owners in a residential community strata scheme must seek permission from the corporation before carrying out the erection, alteration, demolition or removal of a building, or altering the external appearance of a building [ss 102(1), 102(7)]. The corporation will need to pass a special resolution to authorize the work [s 102(1)(b)]. An exception is if work is required because of a housing improvement order issued pursuant to section 14 of the Housing Improvement Act 2016 (SA), where no permission is needed [see Community Titles Act 1996 (SA) s 102(1a)]. A further exception applies if work is carried out on a lot in a strata scheme consisting only of 2 lots, if the work is approved development under the Planning, Development and Infrastructure Act 2016 (SA).

If a lot owner carries out work without permission, the corporation may, by notice in writing to the owner of the lot, require them to carry out, within a reasonable period fixed in the notice, specified work to remedy any structural deficiency caused by the work or to restore the lot to its previous state [s 102(2)].

If the lot owner does not comply with the corporation’s notice within the time allowed in the notice, the corporation may authorise workers to enter the lot to carry out the specified work [s 102(3)], as long as reasonable notice of the proposed entry is given to the lot owner [s 102(4)].

If force is necessary to enter a lot to carry out work in the corporation’s notice, an order authorising the entry must be obtained from the Magistrates Court [s 102(5)].

Any cost reasonably incurred by the corporation in having the work carried out may be recovered as a debt from the owner of the lot [s 102(6)].

Mediation

Mediation is worth considering for disputes in relation to community titles as it is more likely than legal action to enhance and preserve positive relationships.

Mediation is a voluntary process where trained mediators work with people to help them resolve their differences. A mediator can become involved in a dispute at the request of at least one of the parties. A mediator can write to invite the other party to discuss the problem and to participate in mediation. Because attendance is voluntary from both sides, any party may withdraw from the resolution process at any time.

The role of the mediator is to listen, ask questions and ascertain the facts, not to blame anyone or take sides. With all the information provided by the parties, the mediator helps people to put together an agreement. The agreement is not legally binding, but is made in good faith.

The advantages of mediation as a way to resolve disputes are:

If no resolution can be worked out then an application may be made to the court to decide the matter.

Court Proceedings

What disputes can be taken to court?

The types of disputes that may be heard by the court are set out in section 142(1) of the Community Titles Act 1996 (SA) and are as follows:

In addition, the court can also deal with the following issues:

Who can make an application to the court?

Those who can make an application are [s 141]:

Which court hears disputes?

An application to resolve a dispute must usually be made to the Magistrates Court [s 142(2)]. An application is heard as a minor civil action [s 149A], unless it involves enforcement of a development contract under section 49(2); these matters are heard in the general claims jurisdiction of the Magistrates Court.

An applicant should use a Form 2- Originating Application, with a supporting affidavit.

If the matter is particularly complex or significant [s 142(5)], an applicant can seek the permission of the District Court to commence proceedings there [s 142(3)], or a party may seek to transfer a matter from the Magistrates Court to the District Court [s 142(4)].

A court may, on its own initiative or on an application by a party to the proceedings, transfer a matter to the Supreme Court on the ground that the application raises a matter of general importance [s 142(6)(a)]. Similarly, a court may, on its own initiative or on an application by a party to the proceedings, state a question of law for the opinion of the Supreme Court [s 142(6)(b)].

A court may decline to proceed with an application to resolve a dispute if it considers that it would be more appropriate for proceedings to be taken in another court or tribunal [s 142(15)].

Orders that can be made

If appropriate, the court may attempt to achieve settlement of the proceedings by agreement between the parties [s 142(8)(a)].

In an urgent case, the court can make an interim order to safeguard the position of any person pending its final decision.

The court has power to make a range of orders under section 142:

In relation to by-laws, the court may:

In relation to contracts, the court may [s 142(8)(ea)]:

The court may also [ss 142(8)(h)—(i), s 142(10)]:

A person who fails to comply with an order under s 142 is, in addition to being liable to punishment for contempt [s 142(14)], guilty of an offence with a maximum penalty of $15 000 [s 142(13)].

Appointment of an Administrator

The Magistrates Court or the District Court may appoint an administrator to administer the affairs of the corporation [s 100(1)] in cases where governance has broken down to an extent that the group is not functioning. An administrator has, while the appointment remains in force, full and exclusive power to administer the affairs of the community corporation, including power to do anything for which a special or unanimous resolution of the corporation is required [s 100(2)].

An application to appoint an administrator may be made by [s 100(1)]:

It is important to get legal advice before seeking or opposing the appointment of an Administrator.

Some plans refer to Development Lots or Secondary and Tertiary Lots. These are features of more complex and mixed use developments.

Development lots

A development lot is a lot that is intended to be divided into additional lots at a later date. Any development must be in accordance with the development contract, scheme description, and by-laws of the scheme.

Secondary and tertiary schemes

When a property has lots grouped together for different purposes (such as residential, retail or offices) then secondary or tertiary schemes may be created. The primary, secondary and tertiary corporations have their own meetings and functions but are also connected to each other. The secondary (and tertiary) corporations are also bound by the development contracts, scheme descriptions and by-laws of the primary (and secondary) corporations.

Converting from strata title

When the Community Titles Act 1996 (SA) came into operation, it did not affect existing strata corporations, but no new strata schemes are allowed under the Strata Titles Act 1988 (SA). Community titles have been created instead. A strata scheme and a community strata scheme are similar, as the boundaries are defined by reference to structural divisions in a building, whereas in a community scheme lot boundaries are determined by surveyed land measurements and generally do not relate to a structure.

Existing strata corporations may, by an ordinary resolution of the strata corporation, become a community strata scheme, which means the corporation will be covered by the Community Titles Act 1996 (SA) and not the Strata Titles Act 1988 (SA) [Community Titles Act 1996 (SA) sch cl 2]. The resolution does not take effect until a copy of the resolution is lodged with the Registrar- General and filed with the Strata Plan. The resolution will not change the boundaries of the units or the common property. If it is desired that the boundaries be changed, an amendment to the plan and the appropriate application must be lodged at the Lands Titles Office.

The articles that existed under the Strata Titles Act 1988 (SA) continue as its by-laws but may be amended if required [sch cl 2(3)(e)]. Similarly, the officers of the strata corporation continue as the officers of the community corporation [sch cl 2(3)(g)].

Converting from other types of schemes

The Community Titles Act allows many company and moiety title schemes to apply to convert to a community strata scheme. This may not be possible in all circumstances and the local council may require improvements (such as the erection of firewalls) before giving planning consent.

Building on a lot

I want to build an addition onto my house, which is part of a community scheme. Can I just go ahead and organise the building work, without involving the corporation? My friend is in a community strata scheme, and I know she cannot alter the outside of her unit without agreement from the corporation, but community schemes are different, aren’t they?

In many community schemes approval may not be required to extend or alter the appearance of a building on a lot (approval must be obtained in community strata schemes). However, the scheme description (if any) and the by-laws in a particular community scheme may prevent or impose restrictions or conditions on work being undertaken on a lot. Council approval may also be required depending on the nature of the work being undertaken.

Buying a community title

What do I need to be aware of if I wish to purchase a lot in a community plan?

There are various things that must be considered. They include:

Property matters

Financial matters

Management matters

Style of living

Company and moiety titles

Are moiety titles and company titles the same as community titles?

They are not the same. Company and moiety titles are schemes where either a company or a group of owners own the property and the shares or ownership give rise to a right to occupy a unit. Strictly speaking, a shareholder does not own the property, but owns shares in the company that owns the property. The shares give an entitlement to occupy a unit. Such schemes can be more expensive and complex to administer, and prospective buyers may find it difficult to obtain finance to buy shares in a company title. Depending on the structure of the building, it may be possible to convert to a community strata scheme.

Contributions

I don’t use the common property driveway, as I have a driveway on my lot that accesses the street. Do I have to pay contributions for the maintenance of the common property?

The amount of each owner’s contribution to the corporation is normally calculated according to the lot entitlement set out in the community plan. The corporation may, by unanimous resolution, determine that contributions are paid on some other basis.

Contributions are not just used to cover maintenance of the common property. Other costs, for example in relation to insurance, service infrastructure, and management costs are also covered by contributions. Just because you do not use the common property driveway does not mean you do not have to contribute to its maintenance, as a member of the corporation.

Converting to community title

Our strata manager has suggested that we adopt the Community Titles Act 1996 (SA). Would we be better off?

If conversion occurs then much remains the same unless additional expense is incurred to change the nature of the now community strata plan. For instance, you are still required to obtain approval to change the exterior of your building; the corporation must insure the property rather than individual owners; you must still have the annual meetings and you will need to have administrative and sinking funds that you may not have had in your strata corporation.

The by-laws of schemes with only two lots may exempt the corporation from having annual general meetings or administrative and sinking funds.

A conversion to a community strata corporation will also allow the members to vote on a resolution to amend the by-laws to prohibit short term rentals of the holiday let type [Community Titles Act 1996 (SA) s 37(2)(a)].

The question of whether a corporation would be better off is a complex one and dependent on factors such as:

It is suggested that legal advice should be sought before that step is taken, as the Strata Titles Act 1988 (SA) will no longer apply and the conversion cannot be reversed.

If a strata corporation wishes to create a new community scheme rather than convert to a community strata scheme then this could only be done if there is no unit existing above another unit. It would require a unanimous resolution of the unit owners (and not an ordinary resolution as required for mere conversion), a survey to create a new plan, a valuation to establish new lot entitlements, possible approval by local government authority and conveyancing and LTO fees. It can be an expensive exercise.

Exclusive use of the common property

One of the lot owners in our community scheme was granted exclusive use of part of the common property by the corporation some years ago. We feel that this is an unfair situation. How can we regain this common property for use by all owners?

A by-law may confer on the occupiers of a group lots the exclusive right to use a specified part of the common property. The by-laws may impose conditions in relation to the use and may require an owner of a lot to pay a fee for the exclusive use of the common property.

The benefits of the by-law regarding exclusive occupancy are not limited in time and will benefit subsequent occupiers. Normally a special resolution would be required to vary the by-laws to put conditions on the use or to impose a fee, but the owner or owners to which it relates must also give written consent.

Fences

The fence between my lot and an adjacent lot is in need of repair. The body corporate manager says we have to sort it out ourselves and that it is not the corporation’s responsibility. Is this correct?

If you are part of a community scheme (not a community strata scheme), then you and your neighbour are joint owners of the dividing fence. The fence is not common property, so the corporation is not responsible to fix it. The issue of repairing the fence is between you and your neighbour. The Fences Act 1975 (SA) covers this area of law. See also the Fences and the Law booklet, published by the Legal Services Commission.

Similarly, if a fence between your lot and neighbouring land that is not part of your community scheme needs repair, you will need to discuss the matter with your neighbour. The corporation has no responsibility to be involved.

If the fence is between common property and your lot, or between common property and a neighbour who is not part of the scheme then the corporation will own half of the fence and be responsible for negotiating with you or the neighbour.

If you are part of a community strata scheme, the dividing fence will usually be common property (unless the plan states otherwise), therefore it would generally be the corporation’s responsibility to repair it. Similarly, a fence between a lot in a community strata scheme and neighbouring land that is not part of the scheme would be the responsibility of the corporation and the owner of the neighbouring land.

Fines

A visitor to my apartment received a letter from the corporation stating she could be fined $500 for unauthorised parking. Is this legal?

The by-laws may give the corporation the power to impose a penalty of up to $500 (or $2000 if the scheme only includes lots that are used, or intended to be used, solely or predominantly for business or commercial purposes) for breaches of the by-laws. An occupier such as a tenant or anyone who comes onto the property is bound by the by-laws. Anyone who receives a penalty notice may apply to the Magistrates Court to have the penalty revoked. The corporation can enforce the penalty notice by suing the occupier or visitor in the Magistrates Court.

Insurance

Our body corporate manager has advised us that she can arrange our individual building insurance policies for us. Could there be any problems with this?

While each lot owner in a community scheme is responsible for insuring their own buildings, the by-laws of a community scheme may allow for the community corporation to act as an agent for the lot owners in arranging insurance. The corporation may delegate this task to a body corporate manager. If arranging building insurance for lot owners is an option, not a requirement, under the by-laws, then individual lot owners can choose whether they want the corporation to arrange their insurance or whether they want to do it themselves; there is no requirement for all owners to agree.

Problems can arise in relation to the way an insurer invoices the corporation for the insurance premium. If building insurance is arranged on behalf of two or more owners, an insurer may invoice the corporation for one amount, without showing the amount that would be payable for individual lots. If an insurer will not provide a breakdown, then the corporation has to work out each owner’s contribution. Contributions are normally determined according to lot entitlements, but this may not be appropriate in relation to building insurance, because lot entitlements are based on the unimproved value of the land, not the value of the buildings. Thus, whether an insurer will provide a breakdown of the premium in relation to each lot may be one of the factors to consider when choosing an insurer.

A corporation may decide that a lot owner’s building insurance premium, or share of the premium, will be paid as part of the annual contribution levied by the corporation. If so, the levy applicable to your lot may compare unfavourably with the levy applicable to another lot where the owner has arranged their own insurance, or to the contributions levied by another corporation that does not arrange lot owners’ building insurance. Such a disparity in levies may be a problem if you wish to sell your lot.

Managers

What are some issues to consider when choosing a manager?

At least five clear days before the date of the meeting at which the corporation is to consider whether or not to enter into a contract with a manager, the manager must make available for inspection by members:

In addition to the information required to be set out in these documents (see Body Corporate Managers), you may wish to consider the following.

Restrictive rules

The rules of my apartment complex are very restrictive. I can't put a blind on my balcony or have a barbeque. Am I bound by the rules and what can I do about it?

The by-laws that govern a scheme can be amended by a special resolution passed at a properly convened meeting of the corporation, if they meet the above requirements. A copy of the by-laws as amended must be lodged with the Registrar-General within 14 days of the passing of the resolution.

Any by-laws that is inconsistent with the scheme description (if any) will be invalid. The by-laws of a secondary (or tertiary) scheme must also be consistent with the scheme description and the by-laws of the primary (or secondary) scheme. Scheme descriptions can be amended by a unanimous resolution but there are various other requirements to be met before the amendment can be lodged with the LTO.

By-laws are the rules by which the scheme is to be run and bind all the owners, occupiers and persons entering the property. The by-laws and scheme description of a primary scheme bind any secondary and tertiary corporation and owners and those of a secondary scheme also bind the corporation and owners of the tertiary scheme. The by-laws and scheme description of a secondary (or tertiary corporation) cannot be inconsistent with the by-laws and scheme descriptions of the primary (or secondary) corporation. The tertiary by-laws must also not be inconsistent with its scheme description .

Short Term Rentals

A neighbouring lot owner advertises his property for term holiday stays. We do not want strangers coming onto the property - particularly if there is a risk that they may breach the by-laws or cause damage. Can we do anything about this?

Under section 37(2)(a) of the Community Titles Act 1996 (SA) you corporation can pass a special resolution to include a by-law that prohibits or restricts an owner of a lot from leasing for a period of less than two months.

Trees

The owner of an adjoining lot has a tree on their property and its roots are damaging the paving on my lot. Can I ask the body corporate manager to raise the matter with the other owner?

If you are in a community title scheme (rather than a community strata scheme) and the tree is on an owner's lot (not on common property) and is only affecting your property, then it is a matter between you and your neighbour; it is not the corporation's responsibility to involved.

Similarly, if a tree on a neighbouring property that is not part of the community scheme is affecting your lot, then it is up to you to discuss the matter with the neighbouring owner.

If an owner’s tree is affecting the common property, then the corporation can discuss the matter with the owner.

If a tree on common property is affecting your property, then you could raise the matter with the corporation.

If you are in a community strata scheme then the corporation is able to become involved in any cross-boundary dispute between neighbouring lot owners or between lot owners and outside neighbours.

Types of community title

What is the difference between a regular community title and a strata community title?

There are two types of community titles:

Primary community schemes

The satellite image and plan below are of a primary community plan. Each building sits on its own lot. The owners have title to the land under the lot and the sky above, unlike strata titles. Subject to the scheme description and by-laws, they are responsible for the maintenance and insurance of their respective buildings. Where buildings share a common (party) wall the owners of each building are jointly responsible for its maintenance. The common property is the shared driveway down the middle of the group (shown by the red pointer). The body corporate is responsible for the maintenance and insurance of the driveway and any other common property e.g. letter boxes, lighting and any service infrastructure that provides a service to more than one lot.

Primary community strata schemes

The photograph and plan below are of a primary community strata plan. In a community strata scheme the lot boundaries are generally defined by reference to parts of the building, similar to a strata title. There must be at least one lot that exists above another, unless the scheme is a converted strata title, company or moiety scheme which has been brought under the Community Titles Act 1996 (SA).

Community strata schemes are very similar to strata titled unit groups. Common property includes land that is not within a lot, and infrastructure (such as driveways, water, sewer, electricity) that do not serve single lots. In the case of a community strata scheme, depending on the plan, the common property may include the external walls and floor, the foundations, the roof, the space in the roof, gutters and eaves. It does not include the owner's fixtures and fittings such as kitchens and bathrooms.

The internal walls and lot subsidiaries are not common property and therefore are the owner's responsibility to maintain.

It is the responsibility of the corporation to insure all buildings on the land and any improvements on the common property and to maintain the common property, including those parts of the buildings that form part of the common property.

Water rates

Our lots do not have separate water meters and we all pay the same for water, no matter how much we use. Can this be changed?

Unless your lot entitlements are all the same your corporation would have had to pass a unanimous resolution to impose an equal share of the bill upon each lot owner. Without a unanimous resolution the bill should be apportioned according to lot entitlements.

SA Water has three options when it comes to billing. It may send the total bill to the corporation for it to pay. If it is satisfied that any appropriate resolution is in place it may divide the total bill equally amongst all of the lots and send out individual bills to each lot owner. It may also apportion the bill as the corporation directs - for instance based on lot entitlements - and send out individual bills to the lot owners based on that apportionment.

A more expensive alternative is that SA Water may be able to install separate meters for each lot in community or community strata schemes currently without individual meters. There is a cost for this service. The individual lot owners are then responsible for the cost of connecting their lot to the new meter. As the meters are generally grouped together in one location this may be an expensive exercise and it may be impractical or even impossible to do this (for example in multi storey apartment blocks).

Private water meters may be installed on each lot to determine individual usage. These may be read by the corporation itself or the corporation may engage a firm which provides the meters and then reads them.