Changing Unit Entitlements are applications made under section 236 – Strata Schemes Management Act. 2015.
Change of unit entitlements are a very important issue for owners of strata lots. They impact on levy contributions, voting rights, common property interests, distribution of surplus moneys and entitlements on termination of a scheme. They also impact on council rates and land tax.
The Strata Schemes Management Act 2015 (“SSMA”) makes provision for reallocation of unit entitlements which were initially allocated unreasonably. Our expert Strata valuation team prepares a compliant unit entitlement valuation.
Typical problem areas for unit entitlement allocations include:
- Mathematical and/or typographical errors.
- A developer having made an allocation resulting in lower levies for lots retained by the developer.
- A developer having made an allocation resulting in greater voting rights for particular lots.
- An allocation based on floor area only, not taking into account other factors relevant to value.
The process to prepare a unit entitlement valuation is complex and not all companies have the skill or experience to assist. The expert strata valuer must demonstrate clearly to the SSMA where the unit entitlements of a Strata Scheme are considered unreasonable. Section 236 of the Strata Schemes Act provides a mechanism for a re-allocation. To do this a unit entitlement valuation by a qualified and experienced valuer must be undertaken.
The Unit Entitlements are critical in that they establish the owners proportion of levy contributions, voting rights, interest in common property, distribution of surplus moneys, and Entitlements for an owner should the Scheme be terminated e.g. Collective Sale and Renewal.
Furthermore they are the basis on which the Valuer General apportions council rating and land tax values to each unit of the plan. Getting it wrong is simply not an option.
Should the Tribunal Member (adjudicator) consider the schedule unreasonable and the revised Unit Entitlement schedule adopted, costs and over payments (levies) for a period of up to six years can be recovered. However this is subject to the Tribunal Member’s discretion. The Strata Manager typically provides the information on over payments.
When preparing the unit entitlement valuation access to all units is preferable however this is often impossible, particularly in a large development. Consequently the valuer can rely upon those units available for inspection, the registered Strata Plan, original architectural plans, Common Property Title Search, original sales brochures or list prices and any other items that you may consider will the assist the valuer. In the case of Community Schemes, Schedule 11 of the Community Lands Development Act sets out the requirements for an initial Schedule of Unit Entitlements for a Community Scheme, Precinct Scheme or Neighbourhood Scheme.
Once again these schedules must be prepared by a registered valuer with suitable experience. The initial schedule of valuation must be based on market values as if the lots were vacant and must be presented in the approved table form. All Lots in the scheme receive a Unit Entitlement except the association property lot and / or lands intended for public reserves or utilities.