Purchasing a property is exciting but it can also be quite confusing. That is especially so when you are trying to make sense of unfamiliar words in the contract of sale such as

• strata;
• common property;
• by-laws;
• owners’ corporation;
• levies; and
• sinking funds.

Strata title or unit title refers to a single lot of land having more than one owner. Each owner shares the ownership of the property as a whole and is entitled to vote on what should be done to insure, maintain and improve the property. Strata schemes may include:

• residential properties such as apartment blocks, townhouses, duplexes, multi-occupancy rural properties or gated estates;
• retirement villages;
• industrial complexes;
• hotel and resort schemes;
• commercial and retail schemes such as shopping malls or arcades; and
• mixed use schemes (combining residential and commercial lots).

In a typical residential apartment complex each individual apartment owner owns only the inside walls of that apartment and the floor space between them. The “owners’ corporation” owns the outside of the walls of the apartment as well as the hallways, driveways and other “common areas” or “common property.” All the owners of the property who vote to decide how the common areas should be maintained and improved are members of the owners’ corporation.

There may be benefits for strata title or unit title holders such as the shared cost of expensive facilities like a pool or gym. However there are also restrictions, obligations and the potential for social and legal complications with your neighbours and with strata scheme managers.

It is important to fully understand your obligations and responsibilities before purchasing into a strata or unit title property so you can decide if it is the right choice for you. Even if you are purchasing an investment property you will still need to ensure that your tenants are informed of and follow the by-laws (rules) that apply.

This Legal Guide on Strata and Unit Title provides property owners in New South Wales with information about strata law. It may also be useful for people in other states or territories. Before making important decisions it is advisable to obtain legal advice specific to your situation. LegalEagle’s™ free directory profiles all lawyers in Australia. You can use it to Find a Lawyer near you.

Please select from our Articles, FAQ and Questions & Answers sections all written by experienced lawyers. Our Glossary helps explain the meaning of any words you are unsure about. You can also Ask a Lawyer a question yourself. It is free and anonymous.

Warning: Information provided through LegalEagle™ is for general guidance. It is not legal advice. Laws and procedures referred to may change and differ between states, territories and nationally. There may also be important exceptions or qualifications. Only a lawyer providing formal legal advice can assess your particular circumstances to determine how the law will apply.