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The Original Owner

The original owner is the owner of the strata scheme when the strata plan is registered and is usually the developer of the project.

Upon registration of the strata plan, the owners corporation is formed and the scheme enters into the initial period.

The scheme continues in the initial period and expires on the day when there are owners of lots (other than the original owner) whose unit entitlements is at least one-third of the aggregate unit entitlements.

The Strata Schemes Management Act 1996 imposes a number of restrictions and duties on the original owner during the initial period. The original owner may elect to appoint a strata managing agent to undertake these duties and advise on the restrictions. These restrictions and duties assist in providing a smooth transition in the control, management and administration of the strata scheme from the original owner to the incoming purchasers.

Some of the restrictions imposed on the original owner are as follows:-

• Alteration of by-laws - The owners corporation cannot change or cancel the by-laws that do not give right or obligation to all owners or all lots.

• Alteration of common property - The owners corporation cannot alter any common property or effect any structure on common property except in accordance with the development contract.

• Incurring debts - The owners corporation cannot incur a debt for more than is set aside in its funds to repay it.

• Borrow moneys or give securities - The owners corporation cannot borrow money or give securities.

• Appointment of a strata managing agent -  The owners corporation cannot appoint a strata managing agent or caretaker to continue after the first annual general meeting. 

• Common property - The owners corporation cannot sell any common property.

Some of the duties imposed on the original owner are as follows:-

• First Annual General Meeting - The original owner must hold the first Annual General Meeting within 2 months of the end of the initial period, that is, when one-third of the total unit entitlements have been sold.
  
  The notice of the first Annual General Meeting must be served on each owner and each first mortgagee and covenant chargee shown on the strata roll. This must be done at least 14 days before the scheduled date of the meeting.

• Duties and Functions - The original owner must fulfill the duties of the owners corporation contained in the Act, regulations and by-laws. The original owner must also perform the powers, authorities, duties and functions of the chairperson, secretary and treasurer of the owners corporation until such time as these positions are filled or until the expiry of the first Annual General Meeting.

• Deliver the books and documents -  At the first Annual General Meeting, the original owner must deliver to the owners corporation the following books and documents:-

• all plans, occupation certificates, specifications, diagrams, maintenance and service manuals, depreciation schedules, insurance policies and other documents relevant to the scheme
• all development consents, complying development certificates and related endorsed plans, ‘as built’ drawings, compliance certificates (within the meaning of the Environmental Planning and Assessment Act 1979), fire safety certificates and warranties obtained or received by the owner or lessor and relating to the scheme or any building, plant or equipment in it
• any other document or item relating to the parcel or any building, plant or equipment as prescribed (eg. sewerage diagrams)
• the certificate of title for the common property, the strata roll and any notices or other records about the strata scheme
• the accounting records and the latest financial statement.

There can be a penalty of up to $11,000 if the original owner does not give the owners corporation all of these items.

Voting rights of original owner

At the first Annual General Meeting if the original owner still owns half or more of the total unit entitlement, and a vote by poll or special resolution is called, the value of the original owners vote is reduced to one-third of their respective unit entitlement.

If the motion is for electing the executive committee and the original owner still owns half or more of the lots, their vote is reduced to one vote for each three lots owned. If a poll is called on the election of the executive committee, the value of the original owner’s vote is reduced to one-third of the total unit entitlement.

The Strata Agency understands the complexities of issues facing Developers today, from planning through to completion.

We believe that the early appointment of a strata managing agent will have a direct result on the success and marketability of any development.

If you would like an obligation free management quotation please contact us

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