Ever asked yourself the difference between strata and body corporate? Probably not, but you’ve most likely come across a text that use the two interchangeably. Are they the same? If yes, what’s the difference?
Before we answer the questions, it’s good to acknowledge that many people confuse the two terms because they’re interrelated. In most cases, you find a single arrangement characterised by both.
Defining Strata Title
If you purchase an asset that sits on land with other properties, you acquire a strata title, also known as buying an asset under a strata scheme. In a strata scheme, you purchase a smaller portion of an inseparable larger piece, meaning you’ll be an owner among others. With the whole unit divided into smaller ones, every person who purchases a segment severally acquires a right to their part, shared areas if there are, and remains tied to the strata scheme’s prescribed rules.
Now that you’ve got a picture of what strata title is, you’re probably wondering how that’s different from body corporate, nowadays called owners corporation. While some people would dismissively say that an understanding of the two concepts doesn’t matter, provided you understand the contract you’re going into when you acquire a property, knowing the arrangement under which your purchase lies is essential.
So, let’s look at what a body corporate is.
Body corporate, now known as owners corporation, is an arrangement in which different people purchase a property that sits on the same land, with the terms and conditions of the contract defined by the law. A body corporate must have legal existence. In Australia, every person who purchases a title under a body corporate automatically becomes part of the body corporate.
In a body corporate setup, the land on which the property sits is severally owned by the corporation members, with every member required to meet their obligation as defined by the law. Owners determine the nitty-gritties of a body corporate’s workings, including property management, the payment of insurance rates, general insurance, and more.
Although the ownership is more theoretical because no single person has the right to sell the piece of land that carries the subdivided units, an owners corporation member has an unalienable right to reasonable use of the property they have purchased. The rights that one gets also cover the shared areas but must be within the law’s confines. In case there are other shared amenities such as swimming pools, playgrounds, toilets, or gym, all these are co-owned and jointly managed by the owners.
In most cases, owners agree to delegate the management role to a body corporate manager or a volunteering member of a corporation’s committee. Whatever the case, each member has a management responsibility that they’ve got to shoulder to continue holding their property titles.
Every lot owner must obey all the rules laid down for the peaceful coexistence of all owners. These include adhering to the by-laws set up by the body corporate, attending body corporate meetings, and paying all levies, among others.