Is a Strata Scheme For You?
A draft law has recently been proposed to repeal the current Strata Titles Registration Law (2005 Revision). The draft bill is currently being considered and introduces various new concepts in terms of strata legislation in Cayman. Comments on the draft law need to be sent to the Law Reform Commission by 31 July 2013. The draft law is a lot longer than the current legislation and addresses many new concepts in Cayman regarding strata title.
This article will prove useful for readers, as it explains the difference between residing in a strata scheme as opposed to owning a freehold house. I have also provided examples of frequently asked questions about strata schemes that I have been asked by clients throughout the past few years as well as my answers to those questions.
What is different about living in a strata scheme?
The key features are:
(a) You own your apartment as well as sharing ownership and responsibility for 'common property';
(b) If you own your apartment you are automatically a member of the 'strata corporation', which has responsibility for common property;
(c) You have to contribute toward the costs of running the building through paying strata fees;
(d) You also have to pay money into a sinking fund, for future long term expenses, such as painting the building or replacement of guttering, etc; and
(e) Compared to living in a free standing house, there will be lifestyle restrictions in a strata scheme. For example there are rules (called 'by-laws') which may affect you renovating your unit, the areas where you can and cannot park your car, where you can dry laundry or whether or not you can keep pets.
What is a strata corporation?
The strata corporation is the body made up of all the owners in the strata scheme, and has a responsibility (amongst other matters) for:
(a) maintaining and repairing the common property of the strata scheme;
(b) managing the finances of the strata scheme;
(c) taking out insurance for the strata scheme;
(d) keeping records and accounts for the strata scheme; and
(e) administering the by-laws for the strata scheme.
Each lot owner is part of the strata corporation and has the right to participate in the corporation's decision making. The strata corporation comes into existence immediately, once a strata plan is registered with the Land Registry.
At first it may only be made up of the original owner (usually the developer), but as individuals buy into the scheme, the strata corporation gains more members. The strata corporation has an executive committee which can make many of the necessary decisions on its behalf. The strata corporation may also employ a strata managing agent and/or caretaker to carry out some or all of its functions.
For those intending to buy a strata unit or those that have bought one I have set out below some of the frequently asked questions along with my answers about strata schemes.
Questions regarding common property
The major difference between owning a house and owning a unit or apartment (otherwise known as a 'lot') in a strata scheme is that the external walls, the floor and roof do not usually belong to the lot owner. These areas are usually called common property and generally are the responsibility of the owners corporation.
Q. Who is responsible for pruning trees on the property?
A. If the trees are common property, it is the strata corporation's responsibility. If the trees are part of your lot, you are responsible as the owner.
Q. I want to use the garden area outside my unit just for myself, can I do this?
A. If it is part of your lot, yes. If it is common property, you will need to get the permission of the strata corporation, which usually requires a by-law to be passed by special resolution at a general meeting.
Q. I want to park in a section of the driveway that is common property, can I get permission to do this?
A. Send a written request to the secretary of the strata managing agent. Permission should then be voted on at a general executive committee meeting.
Q. Can I do my own repairs to common property?
A. Only if you have the permission of the strata corporation. If common property needs repair or maintenance, the strata corporation should undertake that work, not an individual owner.
Q. Do I have to insure the contents of my strata unit?
A. Whilst there is no obligation to do so, it is highly recommended that you take out adequate insurance on the contents of your unit. The insurance that the owners of the strata corporation organise covers the structure of the building and any fixtures inside lots (for example, sinks, baths, shower trays, etc.).
However, other contents such as your furniture, electrical appliances, curtains and carpets would not be covered. Owners can suffer major loss if their personal property is not insured in the event of a hurricane or other form of damage. In addition, contents insurance usually covers your paint finishes on walls and ceilings.
Strata corporation by-laws
The strata corporation is made up of all the owners in the strata scheme. By-laws are made or changed to meet the needs of all owners and to assist with the running of the strata scheme.
Q. What if I do not want to be part of the strata corporation? Can I manage my unit myself?
A. All owners are always members of the strata corporation. They have voting rights and obligations to pay levies and comply with by-laws. Owners cannot resign from the strata corporation.
However, you are free to manage your unit as you see fit. You can enter into a contract with a managing agent or caretaker to manage your unit if you wish.
Q. I want to get a dog. Do I need the strata corporation's permission?
A. Check your by-laws first. Some schemes allow pets with the permission of the strata corporation – the executive committee can give this approval. Other schemes do not allow pets at all. If your by-law allows for pets then make a written request to the strata corporation and include any information to support your request, for example, information on the type of dog, how you will look after it and so on.
Repairs and maintenance
The strata corporation is responsible for repairs to common property; owners are responsible for repairs within their individual lots.
Q. Where does the money for repairs and maintenance of common property come from?
A. Levies must be raised to do repairs. A motion is put to a general meeting to raise levies to cover the cost of the work. The amount that needs to be paid by each owner is paid on their unit entitlement.
Q. What if the damage was accidental rather than caused by negligence? Is there a difference in who has responsibility to fix it?
A. The owners corporation must repair common property and an owner must repair their lot – it does not make a difference how the damage occurred (whether accidental or negligent). If someone else damages your property, then like any damages claim, you may take legal action to recover the cost of damages from that person.
The above are a sample of questions (and my previous answers) to various client queries received over the years. If you have any queries in relation to your individual strata corporation, you need to seek the advice of a lawyer or go directly to your strata corporation. Maples and Calder can assist in arranging that advice.