Strata schemes can come in all shapes and sizes; they may include as few as two lots, or as many as several hundred. While many aspects of managing strata schemes are universal regardless of size, NSW strata schemes legislation does discriminate between “large schemes” (schemes containing more than 100 lots but not including parking or utility lots) and other schemes with fewer than 100 lots.
A number of specific provisions also apply to the smallest schemes, comprising of the bare minimum two lots, creatively referred to as “two lot schemes”. In this article, we take a look at some of these quirks in the legislation.
Financial and accounting standards for strata schemes designated “large schemes” under NSW legislation are different to their smaller counterparts in several key respects.
Notably, financial accounts for large schemes (and also other schemes with an annual budget greater than the amount prescribed by the regulations, currently $250,000) must be audited every year before being presented to the owners at general meeting. By comparison, the owners corporation for any other strata scheme may require the accounts and financial statements to be audited, but does not have to.
Similarly, large schemes must identify in their annual budgets the amounts forecast to be spent on specific items in the year ahead for the benefit of members, where no such requirement exists for other schemes. Save for a few emergency matters, at least two quotes must be obtained for any expenditure anticipated to exceed $30,000, and the owners corporation for a large scheme must not exceed the estimated expenditure for any budgeted matter or item by more than 10 per cent unless authorised to do so by a resolution of owners at a general meeting.
Lastly, a few procedural rules exist for general meetings of large schemes which do not apply for other schemes. For example:
Two lot schemes
The financial resources available to a two lot scheme will generally be significantly less than for other schemes and particularly than for large schemes. Of course, the matters a two lot scheme has to deal with are generally expected to be a lot more straightforward, so several aspects of NSW strata legislation relaxed or altered as a result.
If you have any questions about large or small strata schemes, please get in touch with one of our dedicated strata professionals today!