Mixed use developments, such as those mixing retail and residential, are popular throughout NSW. But some of the terms when buying or investing in a mixed use development can be confusing!
So how does a strata management statement differ to a building management statement? And what’s the difference between strata management and body corporate management? Let’s cover the basics.
Let’s say we’re looking at a mixed-use building that includes a number of shops, offices, commercial car parks and residential apartments. The management of this building can be a complex exercise as it’s comprised of multiple usages. Here’s where building management statements may come into play.
What is a building management statement?
The building management statement model is now used commonly for newer mixed-use developments in NSW. A building management statement (BMS) is a contract between multiple entities that sets out how the different areas, services and obligations within a mixed-use property work. A BMS can be useful because those different usage types within the building can have very different objectives and needs.
There is no template for a BMS, as it’s drawn up individually for each development. At least one or more lots within a BMS development will be volumetric in nature, which means they provide entitlement to air space and services within that building in exchange for regular BMS contributions. Once a development has been subdivided by a BMS, some entities within that development may or may not be operated as a strata scheme model depending on its needs.
What is a strata management statement?
A strata scheme is an ownership model where owners own individual lots within a property but also take on shared responsibility for common property. Owners within the scheme belong to the owners corporation (previously known as the body corporate), which together makes decisions about the management of common property. The Strata Management Statements, or SMS, is a set of rules agreed to by the owners corporation outlining how to use the property harmoniously. These rules, known as by-laws, might refer to a vast variety of things such as noise restrictions and car parking usage.
So within our mixed-use building example: the residential units might be part of a residential strata scheme, while the offices and retail stores might be subject to two separate commercial strata schemes within the whole development. Each of these strata schemes would likely pay BMC contributions, and so you might expect to pay these in your levies as a strata owner.
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What’s the difference between a BMS and a strata scheme?
You can think of a BMS as the umbrella agreement for the entire development, while a strata scheme might only apply to a certain usage type/s within that development.
While a strata management statement is regulated by NSW Fair Trading, a building management statement is a contract and is registered against your title. We would stress that it’s important to use an experienced and trusted legal advisor when dealing with any legal agreements such as a BMS.
What’s the difference between a body corporate and strata management?
In NSW strata legislation the owners corporation was previously known as the body corporate, which is why you might still hear this term from time to time. An owners corporation manages strata matters for the property including maintenance of common property, compliance, insurance and financial records. In some cases, the owners corporation might engage a professional strata management service such as Jamesons to provide many of these nsw strata management services.
If you have other questions on strata management for residential schemes, the Jamesons Strata Management team is always here to help.