Strata Title vs Body Corporate

There’s more to it than you think

Check to see if you are eligible for a home loan

Are you planning to buy an apartment, a unit or a townhouse? If so, you might be confused about the difference between a strata title vs body corporate. These are widely used terms in the property industry, and many people often get confused between the two.

There are a number of things you should consider and understand if you want to know the difference between strata title vs body corporate. However, before doing that, let’s look at what these terms are.

Table of Contents

What is Strata Title?

When you buy a unit, a townhouse, or an apartment, you also buy a part of the strata title. It means you will also be owning a part of the whole building, along with some common amenities, such as a gym, pool, lifts, garden, lobbies, entrances, car parks, and other facilities. You will also own a part of the land on which your unit is built.

Strata title vs body corporate
As a unit owner, your are also responsible for the maintenance of common areas.

Although you are responsible for your own unit or apartment, under the strata title, the upkeep and maintenance of common areas will be the collective responsibility of all the lot owners, including you. This can be difficult because when many people are involved in a decision, they might have different ideas on the best way to manage things, and this can cause confusion and disagreement. This is where the body corporate comes in.

What is a Body Corporate?

Also known as an owners corporation, a body corporate is a legal entity whose core responsibility is to look after the maintenance and management of common areas in the building.

It’s up to them to decide whether to form a strata management team for the management of the building on the owners’ behalf or select someone from an executive committee who wants to do the work voluntarily. 

So, the main difference between a strata title and body corporate is ownership and legal responsibility.

The body corporate is responsible for taking care of a number of issues related to the internal and external structure of the common area. It also tackles and resolves the problems that arise among the lot owners.

For example, if a person has issues with the general behaviour of their neighbour, the complaint goes straight to the owner’s corporation. Similarly, if there are any issues related to car parking or noise experienced by a lot owner, they can take the matter to the body corporate. Any decision regarding these matters is made in a general or committee meeting in the presence of lot owners.

Body Corporate—rules and regulations

To better understand the concept of a strata title vs body corporate, you should understand the rules and regulations from the perspective of both the owners corporation and as a lot owner.

Body corporate regulations

Your responsibilities as a lot owner include:

  • Getting the correct insurance for the lot. The lot is insured under the insurance agreement of the building, so you will only need to arrange contents insurance. 

  • Abiding by all the by-laws laid out by the body corporate.

  • Attending general meetings or participating via proxy in case of absence from the meeting. You can nominate a committee member to be your representative or choose a family member as a proxy.

  • Letting the body corporate know if or when there is a change in ownership. In the case of a tenanted lot, you should notify them when a tenant changes.

  • Making payment of all the levies in accordance with a schedule and without delay. Levies usually include the repair and maintenance cost, and a part of it goes into the sinking fund for coverage of any extraordinary expenditure.

The body corporate is responsible for the following:

  • Maintaining the rules and regulations laid out by the state legislation.

  • Taking care of the administrative tasks, finances and other funds, and insurance.

  • Taking responsibility for the repair and maintenance of common areas without causing any delay or inconvenience to the lot owners.

  • Maintaining proper records of all documents, including the register of committee members and lot owners, budget cost, financial records, and minutes of the meeting.

  • Making sure all documents are available for lot owners.

  • Resolving any issues that arise among lot owners (in the light of by-laws).

Strata title—rules and regulations

Strata title gives certain rights to a lot owner. For instance, it enables you to live peacefully in your lot. This is because all owners are required to honour the by-laws and be respectful of one another.

Strata title regulations

As a strata title owner, your responsibilities are as follows:

  • Pay fees that are used for maintenance of the property.

  • Contribute towards insurance of the building and any common property.

  • Pay council rates.

  • Pay your regular bills like electricity and water.

Bonus: 7 steps to follow before buying a unit

  1. Research the area. Find out the local demographics.  An excellent tool for this is microburbs. You can just type in the suburb you’re looking at,  even the specific property.  It will give you a cafe score, and it tells you how hip it is and the average age groups of people in that area. All this is important because, if you’re buying a place, you will probably be there for a couple of years, so it should be an area that works for you.  Demographics will also give you an idea of your potential tenants if you plan to rent the property out.

  2.  Check the quarterly strata fees. This is one thing that you will have to do on each property that you find. You can get this information from the real estate agent. This is usually the first indicator of issues with the building. If you’re comparing buildings and one building has really high strata fees compared to the other ones, it could mean that there are some problems there that you’re not aware of. Also, be mindful that things like pools and lifts can add to maintenance costs.

  3. Check the sinking fund. The sinking fund is a rainy day fund that all the owners in the unit complex contribute to. It looks after any emergencies or maintenance that needs to be done on the building. For example, the sinking fund will cover an air conditioning unit that breaks in the common area. If there is a lot of money in the sinking fund, it may mean that some maintenance is being overlooked. On the other hand, if there is nothing in the sinking fund, then be prepared that you might have to contribute thousands of dollars in special levies if there is a maintenance emergency. So it’s important to make sure the sinking fund has a healthy amount of money in it, but not too much.

  4. Complete a building and pest inspection. These are extremely important. For example, I went with an inspector to check out a property I wanted to buy, and they found that the foundations were sinking.  Make sure to get a professional to make sure everything is all good.

  5. Check what other units have sold for in your building complex. This can also tell you if there are issues in the building. If people are selling for a significant discount in your building compared to the ones next door, it could mean there are probably issues there or that there’s something in the body corporate that you’re not aware of. Finding out how much other units have sold for can also give you a good idea of what you should pay for your property.

  6. Get a copy of the body corporate minutes. The minutes can let you know what has been going on with the property, especially if there are scheduled levies that are about to come up. The minutes of the meeting are the heart and soul of everything that’s going on with the property, so you want to get a copy of that and understand what’s been going on. The further back you can go, the better the understanding and the better history you can put together of that particular unit.

  7. Consider a pre-approval. Unfortunately, not all banks like to lend for units. Some banks have specific units that they will not lend on, and other banks have specific postcodes they won’t lend on. Other banks want the units to be of a certain size. It can get complicated, so when you get your pre-approval, ensure the bank is okay with the type of place you want to buy before you get too far along.

Thinking of buying a unit or any other property? We're here to help.

Are you thinking of buying a unit or any property? Our team at Hunter Galloway is here to help you buy a home in Brisbane. Unlike other mortgage brokers who are just one-person operations, we have an entire team of experts dedicated to helping make your home loan journey as simple as possible.

If you want to get started, please call us on 1300 088 065 or book a free assessment online to see how we can help.

Why Choose Hunter Galloway As Your Mortgage Broker?

Mortgage Broker of the Year
in 2017, 2018 and 2019
The highest rated and most reviewed
Mortgage Broker in Brisbane on Google
One of the lowest rejection rates

across Mortgage Brokers in Australia

Approximately 40% of home loan applications were rejected in December 2018 based on a survey of 52,000 households completed by 'DigitalFinance Analytics DFA'. In 2017 to 2018 Hunter Galloway submitted 342 home loan applications and had 8 applications rejected, giving a 2.33% rejection rate.
We have direct access to 30+ banks
and lenders across Australia