WA: Do small strata schemes need a committee and shared insurance?

Question: In a group of 3 villas, do we need to have a strata committee? Do we need shared strata community insurance?

I am the owner in a group of 3 units. We have a shared driveway for the middle and back villa).

We have always paid strata community insurance by all being sent the invoice and splitting the bill by 3. I have now been told by the insurer that we need to have a strata committee and he can only speak with the strata chair, and we should all be paying it together. If there are less than 4 villas, is it a requirement the have strata meetings, committee, AGM’s, etc.

In a group of 3 villas, do we need to:

1. have a strata committee?
2. shared strata community insurance?

Should we change insurance companies? 

Answer: Strata Schemes of 3 to 5 lots can have by-laws exempting them from certain requirements

Under section 140 of the Strata Titles Act 1985 Strata Schemes of 3 to 5 lots can have by-laws exempting them from the following:

• Having an administrative fund,
• Keeping accounting records and preparing a financial statement,
• Keeping minutes,
• Having a designated Strata Letterbox, and
• Keeping a roll of owners.

In the case of a three lot scheme such as yours, all owners automatically form the council of owners.

If you are not sure if your strata company has such by-laws in place it might be worth seeking guidance from a strata specialist.

In relation to insurance there are a number of factors to be considered. These factors are:

• If your strata scheme is a single strata scheme (no lot above or below another lot) or a multi-tier scheme,
• If your scheme is a survey strata plan or strata plan.

Single tier strata schemes may dispense of its insurance obligations (Insurance of insurable assets that are common property and insurance in respect of damage to property, death, bodily injury or illness for which the owners of lots in the scheme could become liable in damages as holders of the common property) by passing a resolution without dissent (no vote against). It is important to be aware that one owner can revoke the resolution.

From your question I gather that your strata scheme has a strata insurance policy and the arrangement you have is for the premium to be divided and paid by each lot owner. This arrangement in my mind is fine for a three lot strata scheme. In terms of changing insurers I would suggest that this is done by seeking terms from alternate insurers prior to renewal. An insurance broker would be able to assist you with this process. It is important to ensure that you compare coverage between the different policies to ensure that you understand any differences and that the chosen policy meets the requirements for your three owners.

This post appears in Strata News #454.

Luke Downie
Realmark
E: ldownie@realmark.com.au
P: 08 9328 0999