Conveyancing
Strata title explained
Buying a strata lot is not simply buying a smaller house. You are buying into a corporation, a set of rules, a shared budget and a shared repair bill. Most of what determines whether that is a good purchase is in documents you can read before you sign.
Alicia Catron 0407 171 626 or Michelle Simmons 0407 534 594. Bella Vista in the Norwest Business Park, acting for buyers and sellers across New South Wales.
On this page: What strata title is · What you actually own · Strata, Torrens, community and company title · Unit entitlement · By-laws · Levies and funds · Repairs to common property · Before you sign a contract · Renovating your lot · Defects in new buildings · Disputes · Selling a strata lot · Recent changes to strata law · Common questions
What strata title is
Strata title is a way of subdividing a building, or a group of buildings, so that parts of it can be owned separately. Each separately owned part is a lot. Everything that is not a lot is common property, and it is owned by all of the lot owners together through a legal body called the owners corporation.
Strata title was invented in New South Wales and it is now the standard form of ownership for apartments, most townhouse and villa complexes, duplexes, retirement villages, commercial suites, factory units and even some caravan parks. If the plan number attached to the property starts with SP, it is a strata lot. If it starts with DP, it is not.
Three things follow from that structure, and they are the source of nearly every strata problem we see.
- You do not own the building your lot sits inside. You own a defined space within it, and you share the building itself with everyone else
- You are automatically a member of the owners corporation from the day you settle, whether or not you ever attend a meeting
- You are liable to contribute to the cost of maintaining the whole building, including parts of it you will never use
The boundary
What you actually own
In most schemes the boundary of your lot is the inner surface of the walls, the upper surface of the floor and the under surface of the ceiling. Put plainly, you own the airspace inside the shell and the things inside it. You do not own the shell.
Your lot
- Internal, non-structural walls within your lot
- Floor coverings such as carpet, timber and tiles
- Kitchen and bathroom fixtures, benchtops, baths, basins and toilet pans
- Internal doors, cupboards, light fittings and appliances
- Paint and wallpaper on the internal surface of the walls
- Any courtyard, balcony, garage or car space that is drawn as part of your lot on the strata plan
Everyone’s
- External walls, the roof, the slab and the structural frame
- Windows and window frames, and often the front door
- Balcony balustrades and waterproof membranes
- Foyers, stairs, lifts, driveways, gardens and pools
- Pipes, wiring, ducts and cables that serve more than one lot
- Anything shown on the strata plan as being outside your lot boundary
The strata plan is the answer, not the assumption. Boundaries are set by the registered strata plan, and they are not identical in every scheme. Some plans draw a lot to the centre of a wall. Some make a courtyard part of the lot, others make it common property with an exclusive use by-law over it. Before you buy, we read the plan and tell you what is inside your boundary, because that is what decides who pays when something fails.
Exclusive use by-laws
A scheme can grant a particular lot the exclusive use of part of the common property, commonly a car space, a storage cage, a courtyard or a roof terrace. That right comes from a by-law rather than from the title, and the by-law usually shifts the cost of maintaining that area onto the lot owner who benefits from it. If the agent tells you a car space or a courtyard comes with the unit, we check whether there is a registered by-law behind that promise or only a long-standing habit.
Strata, Torrens, community and company title
Four forms of ownership turn up in New South Wales listings, and they behave very differently once you own them.
| Title | What you own | What to expect |
|---|---|---|
| Torrens | The land and everything on it, exclusively | Full control and full responsibility. No levies, no by-laws, no approvals needed to renovate beyond council |
| Strata | A lot within a scheme, plus a share of common property | Levies, by-laws, an owners corporation, approvals for structural work, and shared liability for building repairs |
| Community | Your own lot, which may itself be Torrens or strata, within a wider scheme with shared facilities | Association levies and a community management statement on top of anything that applies to your own lot |
| Company | Shares in a company that owns the building, giving you the right to occupy a unit | Older blocks, board approval to sell or lease, restricted lending and a narrower resale market |
Company title in particular is worth identifying early. It is not strata, the protections in strata legislation do not apply to it, many lenders will not finance it or will demand a larger deposit, and the company constitution can restrict who you sell to. It is not necessarily a bad buy, but it must be priced and financed as what it is. For a longer comparison of strata against a freestanding house, see strata title versus house title in NSW.
Unit entitlement
Every lot is given a number on the strata plan called its unit entitlement. It is set when the scheme is created, usually by reference to the relative value of the lots, and it does far more work than most buyers realise.
- It fixes your share of the levies. A lot with double the entitlement of another pays double the contributions
- It fixes your voting power when a poll is demanded at a meeting
- It fixes your share of the common property, and your share of the proceeds if the scheme is ever wound up or sold collectively
- It does not change because your unit has been renovated, or because the unit next door has a better view
Check the entitlement before you sign, not after. Schemes where a developer retained a large lot with a low entitlement, or where the entitlements were never adjusted after a building was extended, produce owners who pay a disproportionate share of every levy for the life of the scheme. An entitlement can be reallocated by order, but it is a contested and expensive application.
By-laws
By-laws are the rules of the scheme. They bind every owner, every tenant and every occupier, and they are enforceable. A scheme can adopt the model by-laws, adapt them, or write its own, so the by-laws in the block you are buying into are the ones that matter, not the ones in a brochure.
By-laws commonly deal with pets, floor coverings and noise, parking and visitor parking, use of common property, smoking, short-term letting, renovations, garbage, signage and whether lots can be leased at all.
Pets
A by-law cannot unreasonably prohibit an owner or occupier from keeping an animal. A blanket ban on pets is invalid and cannot be enforced. A by-law that regulates pets, by requiring notice, requiring animals to be carried through common areas or setting conditions on their keeping, generally can be. If the scheme is telling buyers that pets are not allowed, that statement is worth testing rather than accepting.
Short-term letting
A scheme can pass a by-law prohibiting short-term holiday letting of a lot that is not the host’s principal place of residence. Statewide rules also cap the number of nights a non-hosted property can be let in much of greater Sydney and require registration of the premises. If your plan is to buy and let short term, both layers need checking before exchange, not after.
Breaches
An owners corporation can issue a notice to comply and then apply for a penalty. Owners can also act against an owners corporation that will not enforce its own by-laws. Enforcement is not automatic, and a scheme with by-laws it has never enforced tends to have a records file that shows exactly that.
Changing them
By-laws are made, amended and repealed by special resolution at a general meeting, and they must be registered to take effect. A by-law that is oppressive or unreasonable can be challenged. If you need a specific by-law to make a purchase work, get it resolved before settlement rather than relying on an assurance that the committee will be reasonable.
The ongoing cost
Levies, funds and special levies
Owners contribute to two separate funds, and the difference between them is the single most useful thing a buyer can understand about a strata report.
| Fund | What it pays for | What a buyer should look at |
|---|---|---|
| Administrative fund | Day to day running costs: insurance, common area electricity and water, cleaning, gardening, strata management fees, minor repairs | Whether it is running at a deficit, and whether insurance has been renewed at a much higher premium |
| Capital works fund | Long term and capital expenditure: roof replacement, repainting, lift replacement, waterproofing, fire systems | The balance against the ten year plan. A large building with a small capital works balance is a special levy waiting to happen |
| Special levy | A one off levy raised when the funds are insufficient for particular work | Any special levy already struck, proposed, or discussed in minutes. It follows the lot, not the owner who was there when it was resolved |
Levies are apportioned by unit entitlement, set at the annual general meeting and usually payable quarterly. Owners corporations must estimate what each fund needs for the coming year and must take the ten year capital works plan into account when doing it. Unpaid levies accrue interest and are recoverable as a debt, and an owners corporation must offer a payment plan and consider hardship before it takes recovery action.
The trap for buyers. A special levy resolved before you settle can become your liability, and a scheme that has kept levies artificially low to protect resale prices has simply deferred the cost onto whoever owns the lot when the work can no longer be put off. Low levies in an older building are a warning, not a selling point. We adjust levies at settlement and we check the minutes for what is coming.
Repairs to common property
The owners corporation has a strict duty to properly maintain and keep the common property in a state of good and serviceable repair, and to renew or replace it where necessary. That duty does not depend on the owners voting for the work, and it does not depend on the money being there.
If an owner suffers loss because the owners corporation fails to perform that duty, for example water entering a lot through a failed membrane or a defective external wall, the owner can recover damages. There is a time limit on bringing that claim, and it runs from when the owner first becomes aware of the loss, so delay is expensive.
NSW Fair Trading now also has power to investigate an owners corporation’s compliance with the repair duty, to enter and inspect a scheme, and to issue notices and rectification orders. That is a meaningful change for owners who have spent years being told that the work is on a list.
- Report water ingress, cracking or membrane failure to the owners corporation in writing, and keep the response
- Do not carry out repairs to common property yourself and then seek reimbursement without approval
- Photograph and date the damage as it develops, because the history is what proves the loss
- Get advice early if the scheme is defending its position rather than fixing the defect
Due diligence
Before you sign a contract
A contract for the sale of a strata lot must include prescribed documents, including the strata plan and the by-laws. What it does not include is the financial and behavioural history of the scheme, and that is where the risk sits. That comes from a strata search.
Send us the contract
We review the contract before you sign or bid, check the plan and the by-laws that are attached, identify what is inside your lot boundary, and negotiate the special conditions. Auction purchases have no cooling off period, so this has to happen first.
Order a strata report
An inspector attends the strata manager and reads the books: the funds, the ten year plan, insurance, the minutes of every meeting, correspondence, quotes, notices, orders and litigation. We tell you what to make of it. We do not recommend buying into a scheme without one.
Read the minutes properly
Minutes are where defects, disputes, insurance claims, proposed special levies and difficult neighbours first appear, usually years before anyone acts on them. Recurring items across several years matter more than any single entry.
Certificate and adjustments
Before settlement we obtain the strata information certificate, which confirms the levies, any amounts owing on the lot and other prescribed information, and we adjust levies between you and the vendor to the settlement date.
What we look for in a strata search
- Capital works fund balance against the age and size of the building, and against the ten year plan
- Any special levy struck, proposed or foreshadowed, and how much of it is unpaid
- Building defects, rectification work, building bond claims and any orders made against the scheme
- Water ingress, cladding, waterproofing and fire safety items, which are the expensive ones
- Insurance: whether the building is insured for full replacement value, the premium trend, and the claims history
- Litigation and tribunal proceedings involving the owners corporation
- By-laws affecting pets, parking, floor coverings, leasing and renovations, and any exclusive use by-law over the space you are being sold
- The proportion of lots held by one owner or by the developer, and the proportion tenanted
- Unauthorised works by other lot owners that the scheme has never resolved
- Embedded electricity, hot water or internet networks, and what they cost the owners
Buying off the plan. Off the plan strata contracts carry their own regime: a disclosure statement, an extended cooling off period, restrictions on how a developer can use a sunset clause, and rules about notifying you of material changes. The scheme itself does not exist yet, so there is no history to search and the protections are all contractual and statutory. More on buying a property.
Renovating your lot
Strata legislation splits renovation work into three categories, and the category decides whose approval you need.
| Category | Examples | Approval |
|---|---|---|
| Cosmetic work | Painting, filling holes, hanging pictures or a television, laying carpet, installing handrails or blinds | None needed, provided the work is done properly and any damage is repaired |
| Minor renovations | Kitchen renewal, recabling, installing hard floors, removing a non-structural wall, reconfiguring water services | Approval of the owners corporation by ordinary resolution, or of the committee where the scheme has passed a by-law allowing it |
| Major work | Anything structural, anything that changes the external appearance, anything affecting waterproofing, and anything else not in the first two categories | A by-law passed by special resolution, which will usually impose ongoing maintenance obligations on you |
Two points are worth taking seriously. Work that touches waterproofing, including a bathroom, is almost never cosmetic, and doing it without approval leaves you exposed to the cost of every consequential problem below. And unauthorised work does not become authorised by the passage of time. It surfaces when you sell, when the buyer’s solicitor asks for the approval and there is none.
Defects in new buildings
Defects in newer apartment buildings are the largest single financial risk in strata, and there are several layers of protection. They overlap, they each have their own time limits, and the time limits are shorter than most owners assume.
The strata building bond
For new residential strata buildings above three storeys, the developer must lodge a bond of two per cent of the contract price. An independent building inspector prepares an interim and a final report, and the bond can be used to rectify defective work identified in that process. The window for that inspection regime is measured in months after completion, so a new scheme needs to be alert to it from the first annual general meeting.
Statutory warranties
Residential building work carries statutory warranties enforceable by the owners corporation as successor in title. The period is longer for major defects than for other work, and it runs from completion of the work rather than from when you bought.
The duty of care
Those who carry out construction work owe a duty to take reasonable care to avoid economic loss caused by defects, and that duty is owed to current and later owners. It applies to a wide range of participants in the project, not only the head builder, which matters when the builder has been wound up.
Developer obligations
Developers must give the scheme an initial maintenance schedule on a standard form ahead of the first annual general meeting, and for multi-storey schemes that schedule and the first year budget must be independently certified. Where the initial levies were set too low, the developer can be liable for the shortfall.
If you are on the committee of a new scheme, or you have just bought into one, the defect clock is already running. Getting advice in the first year is worth considerably more than getting it in the fourth.
When something goes wrong
Most strata disputes are one of a small number of arguments: the owners corporation will not repair, a by-law is not being enforced, a by-law is being enforced unreasonably, levies are disputed, a neighbour has done unapproved work, or a meeting or election was not properly run.
- Put it in writing. A written request to the owners corporation or the strata manager creates the record everything later depends on
- Use the records. An owner is entitled to inspect the scheme’s records, which is how you find out what has actually been decided and quoted
- Mediation. NSW Fair Trading offers mediation, and for most disputes it is a step you must attempt before the tribunal will hear you
- The tribunal. NCAT can order repairs, invalidate or modify by-laws, appoint a compulsory strata manager, order the payment of damages, resolve levy disputes and set aside resolutions
- Fair Trading enforcement. For failures to repair and maintain common property, Fair Trading can now investigate, inspect and issue orders directly
Where a scheme has become dysfunctional, the appointment of a compulsory strata manager with all of the functions of the owners corporation is often the practical remedy rather than fighting item by item.
Collective sale and renewal
A strata scheme can be wound up and the site sold or redeveloped as a whole. A renewal plan needs the support of a substantial majority of lot owners and then approval by the Land and Environment Court, which considers whether the terms are just and equitable for the owners who did not agree. If your block is being approached by developers, get advice before you sign anything, including anything described as non-binding.
Selling a strata lot
A strata contract cannot be prepared from a title search alone. The prescribed strata documents have to be attached before the property can be advertised, and a contract missing them can give the buyer a right to get out of it.
- We obtain the strata plan, the registered by-laws and the other prescribed documents and attach them to the contract
- We disclose exclusive use rights, any special levy already struck and anything else that affects the lot
- We deal with unapproved works, which are the most common reason a strata sale stalls between exchange and settlement
- We obtain the strata information certificate and adjust levies at settlement so you do not pay past your settlement date
If work has been done to your unit without approval, tell us at the start. It is nearly always manageable when it is dealt with before the contract goes out, and nearly always a problem when the buyer’s solicitor finds it first. More on selling a property.
Current as at 2026
Recent changes to strata law in New South Wales
Strata law in New South Wales has been rewritten in stages across 2025 and 2026. The changes are aimed at transparency, long term planning and enforcement, and several of them are directly useful to owners and buyers.
- Strata managing agents face stricter disclosure obligations, including disclosure of commissions and of their connections to service providers
- NSW Fair Trading can investigate, inspect and issue orders where an owners corporation is not meeting its duty to repair and maintain common property
- Owners corporations must offer payment plans and consider hardship before pursuing owners for unpaid levies
- Capital works fund plans must now be prepared on a standard form when they are revised or replaced, which makes them comparable between schemes
- Developers must provide an initial maintenance schedule in a standard form ahead of the first annual general meeting, and multi-storey schemes require independent certification of that schedule and the first year budget
- Strata information certificates must now disclose additional information, including embedded network arrangements and compliance orders affecting the scheme
- Building managers are subject to statutory duties in line with those applying to strata managing agents
Further strata and building legislation is before Parliament, and this page is updated as changes commence. If you are relying on a particular provision for a decision, contact us so we can confirm the position as it stands on the day.
How we help
Buying a strata lot
Contract review before you sign or bid, strata report interpretation, negotiation of special conditions, and settlement.
Selling a strata lot
Contract preparation with the prescribed strata documents attached, dealing with unapproved works, and levy adjustments.
Transfers between owners
Transfers of strata lots between family members, on separation, or into and out of trusts and self managed superannuation funds.
Advice to owners
By-laws, exclusive use rights, renovation approvals, disputes with the owners corporation and claims for failure to repair.
Advice to owners corporations
Drafting and registering by-laws, enforcement, defect claims against builders and developers, and tribunal proceedings.
Title insurance
Whether title insurance is worth taking on a strata purchase, and what it does and does not cover.
Common questions about strata title
Is a strata report really necessary?
Yes. The contract tells you what the lot is. The strata report tells you what the scheme is: the state of the funds, the defects, the disputes, the insurance, the proposed levies and the way the building has been managed for the last decade. It costs a few hundred dollars and it is the only way to see a special levy coming. We do not recommend proceeding on a strata purchase without one.
Can the owners corporation stop me having a pet?
Not by a blanket ban. A by-law cannot unreasonably prohibit an owner or occupier keeping an animal, and a no-pets by-law is invalid. A scheme can regulate how animals are kept, and it can act if an animal causes a genuine nuisance or hazard. If you are being told that pets are not permitted, send us the by-laws before you walk away from the property.
Who pays when water comes through the ceiling?
It depends on where the failure is. If the water is coming through common property, such as the roof, an external wall or a balcony membrane, the repair is the responsibility of the owners corporation, and an owner who suffers loss because it will not act can claim damages. If the source is inside another lot, that owner may be responsible. The strata plan and a plumber’s report between them usually settle it, and the answer needs to be established before anyone starts arguing about the cost.
Am I liable for a special levy struck before I bought?
Practically, yes. Levies attach to the lot, so an instalment falling due after settlement is yours to pay even though the resolution predates your ownership. That is precisely why a special levy already struck, and any proposal recorded in the minutes, needs to be found before exchange and either priced into the deal or made a vendor obligation in the contract.
Do I need approval to renovate my bathroom or kitchen?
Almost always. A kitchen renewal is generally a minor renovation requiring approval of the owners corporation or, where a by-law allows it, of the committee. Bathroom work usually touches waterproofing and is treated as major work needing a by-law passed by special resolution. Painting and new carpet need no approval. Doing waterproofing work without approval leaves you carrying the cost of everything that happens to the lots below.
What is the difference between the administrative fund and the capital works fund?
The administrative fund pays the running costs: insurance, cleaning, gardening, common area utilities, management fees and small repairs. The capital works fund saves for the big items: roof, lifts, repainting, waterproofing and fire systems. A healthy scheme has a capital works fund that is being built toward the ten year plan. An older building with a nearly empty capital works fund is telling you that the cost has been deferred, not avoided.
What happens if I do not pay my levies?
Unpaid levies accrue interest and can be recovered as a debt, with costs. Before recovery action is taken, the owners corporation must offer a payment plan and consider hardship, so contact the strata manager early rather than waiting for a letter of demand. Unpaid levies also have to be disclosed when you sell, and they will be adjusted out of your proceeds at settlement.
How do I find out if a property is strata before I inspect it?
Look at the plan reference in the listing or on the contract. A strata lot sits on a registered strata plan, shown as SP followed by a number, and the property is described as a lot in that plan. A freestanding house on Torrens title sits on a deposited plan, shown as DP. Villas, townhouses and duplexes can be either, so it should never be assumed from the look of the property.
Can a strata scheme force me to sell?
Not on its own. A collective sale or redevelopment requires a strata renewal plan supported by a substantial majority of owners and then approved by the Land and Environment Court, which will consider whether the terms are just and equitable for owners who did not support it. Dissenting owners have a genuine role in that process, and it is worth taking advice at the point the plan is first circulated rather than at the hearing.
Should I buy a strata unit in a building with known defects?
Sometimes, at the right price and with advice. What matters is whether the defect has been identified, whether the scheme is acting on it, whether there is a live claim against the builder or developer, whether the building bond or statutory warranty periods are still open, and what the rectification is likely to cost per lot. A scheme that has quantified the problem and started recovery is a very different proposition from one that has been minuting the same water leak for six years.
Send us the contract before you sign
We act for buyers and sellers of strata lots across Sydney and New South Wales, from single units and townhouses to off the plan apartments. You deal with a principal of the firm, we read the plan, the by-laws and the strata report properly, and we tell you in plain terms what you are buying into. If you are bidding at auction, contact us early, because there is no cooling off period on an auction purchase.
Alicia Catron 0407 171 626 or Michelle Simmons 0407 534 594. Open Monday to Friday 9am to 5pm and contactable outside those hours. Suite 3.13, 33 Lexington Drive, Bella Vista NSW 2153.