Question: We own a lot in a duplex with equal unit entitlements. Our lot is larger. Should we contribute more to the strata insurance?
We own a unit in a duplex with equal unit entitlement for each owner. We have a 2 storey, 3 bedroom unit and the other is a single storeys, 2 bedroom unit. The lots are adjoined, and we share the cost of strata insurance equally.
After the recent sale of the other lot, the new owners suggested we pay more than 50% of the strata insurance due to our larger lot, even though we have equal unit entitlements. This property has been in our family since it was built in 1997, and insurance has always been split 50/50. Where do we stand?
Answer: Unit entitlements reflect the relative value of each lot at the time of registration of the scheme and serve as the basis for determining each owner’s financial responsibilities.
Under the Strata Schemes Management Act 2015, contributions for insurance premiums are determined based on the unit entitlements assigned to each lot (Section 83.2). Unit entitlements reflect the relative value of each lot at the time of registration of the scheme and serve as the basis for determining each owner’s financial responsibilities, including insurance costs.
In your situation, despite the differences in the physical characteristics of your duplex units (your unit has 2 storeys and 3 bedrooms compared to your neighbour’s 1 storey and 2 bedrooms), the crucial factor is the unit entitlements allocated to each lot on the strata plan. If your unit and your neighbour’s unit have been assigned equal unit entitlements, you are legally required to pay an equal share of the insurance premiums, which in your case has historically been 50% each.
Your neighbour could potentially seek to amend the unit entitlements under Section 236 of the Act, but this process may be complex, expensive, and a little too expansive to go into detail in this answer.
However, unless and until such a change is officially made to the unit entitlements, the current entitlements dictate that you are obligated to continue sharing the insurance costs equally.
This post appears in Strata News #701.
Nathan Clarke
Hunter Strata Management
E: nathanclarke@hunterstrata.net.au
P: 02 4934 2022
In the situation a motion is likely to be swayed by utility lot owners, if it suits you, you can call for a Poll, in which the motion depends on total unit entitlements instead. See SSMA 2015 Section 14 (3) and (4).
Hi Nick strata owner
We have received the following reply back from Leanne Habib, Premium Strata:
Also, Section 106 (5) SSMA 2015 entitles an owner of a lot to recover from the owners corporation, as damage for breach of its statutory duties to repair and maintain the common property, any reasonably foreseeable loss suffered as a result of the owners corporation breach. In addition to all your other rights, you may also make application to the NSW Civil & Administrative Tribunal for the Owners Corporation to carry out the requisite repair/maintenance works (though you would have to apply for mediation first).