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Why Strata can be a good thing?

6 AUGUST 2020

There are not many things that are universally loathed. Even Donald Trump has his supporters.

But there is one word that seems universally despised…. STRATA!

I meet so many people that come to my inspections. Whether they come to a villa, townhouse or unit, they will always start by asking the same question:

“Is it strata?”

My answer for this type of property is usually “yes”. This is usually followed by:

“No, I don’t want strata”

People consider strata as an extra cost that they wouldn't have to pay if they bought a free-standing house.

With our current levels of immigration and our desire to live close to the action, one thing is guaranteed, we will be seeing more high-rise and multi-unit development in our area.

Pretty much all of these are going to be on strata title. Usually, if it has any common property (such as a driveway, roof or walls), then it will fall under strata title.

Most people think of fees when it comes to strata. They consider it an extra cost that they wouldn’t have to pay if they bought a free-standing house. But that simply isn’t the case.

Most of the fees you are likely to pay to cover the building insurance, maintenance and money that is put aside for future improvements. These are things that you would be paying for if you owned your own place on your own block.

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Yes, you will probably have to pay a strata manager, but this will be a lot less of the fee than you would expect.

But strata is more than that. It is a legal framework that is designed to protect owners.

A few years back I sold a villa in Waratah. It had two attached dwellings at the back of the block. It was one of those rare cases where it had shared walls and roof but was on Torrens title (the normal title if you owned your own place).

At the time, buyers loved the fact that it wasn’t strata. But shortly after my client Belinda moved in, there was a leak from the bath in the unit next door. The leak spilt over into Belinda’s place causing thousands of dollars of damage.

After contacting her insurance company, Belinda was told that she wasn’t covered for the claim because it didn’t fit their underwriting guidelines. Basically, the leak didn’t start in her unit so it wasn’t their responsibility.

Unfortunately, the neighbour’s insurance also refused to pay because the damage was not actually to the house they were insuring (so why would they?).

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Strata is a legal framework designed to protect the owners.

The insurance company would have paid the claim if it was on Strata title as the building insurance under strata is usually combined.

Belinda did some complaining and luckily for her, the claim was eventually paid. To prevent future issues, the two unit owners decided to swap over the title from Torrens to Strata.

I guess the moral to this little story is not to discount strata so quickly. It’s actually a pretty good system and one that eventually most of us will have to get used to.

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