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“One development of the strata legislation involved the creation of Community schemes.  While these can take on a variety of flavours the most commonly known is the Neighbourhood scheme where a group of properties share some common property or facility such as a private road or a security gate which then needs to be maintained by all the lot owners.  Even though Community schemes are very similar to Strata schemes in many ways there are some important differences.  If you'd like or need to know more, read on......”

COMMUNITY SCHEMES & NEIGHBOURHOOD SCHEMES

• What are Community Schemes?
• What are the types of Community Schemes?
• Upon Registration
• Association Property
• The Association
• The legislative differences
• Management Statements
• Special provisions for Strata Schemes in Community Schemes
• Initial Period
• Community Search
• Extra information resources

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What are Community Schemes?

In very simplistic terms, the Community Schemes legislation provides for subdivisions where a lot owner owns and maintains any buildings constructed on that lot and also shares the use (and the maintenance costs) of common property facilities which could include:

• gymnasium
• swimming pool and spa
• tennis court
• marina
• sporting facilities
• golf course and clubhouse
• bowling green
• recreation club
• parklands and gardens
• roadways
• communal amenities like showers and toilets
• security systems, etc.

On the surface, there would seem to be very little difference between Community schemes and the more common Strata schemes you see everywhere, especially in and around Sydney - and in some cases there IS very little difference while, in others, the differences can be large.

The differences explained....

Generally, Strata schemes are aimed more towards your 'typical' block of home units which share facilities like landscaping, driveways, underground garages, a pool, a lift and so on, while Community schemes tend to be for the more complicated structures sometimes involving different building types (like units, townhouses, villas, townhomes, free-standing homes, etc) which can also then be under different title types (such as Freehold torrens title as well as Strata title) - and all in the one estate!

So again, explaining "who is responsible for what" in simple terms.....the lot owners in a Strata Scheme are responsible for maintaining everything within the airspace of their lot (but not the actual structure of the building) as well as for the upkeep of the scheme's common property (which includes the structure of the building).  In contrast, the lot owners in a Community scheme are generally responsible for maintaining any structures on their lots (including the buildings), everything inside those structures as well as the upkeep of any common property.  Now, while the differences seem subtle they can have a very large effect on 'who pays for what' when something needs fixing or replacing.

One example....

Some of the approximately 1,500 Community schemes in New South Wales are based around rural lifestyles, golf courses, vineyards, hotel and holiday resorts, and so on while others provide a particular theme or style of housing such as cabins, mobile homes, caravan parks, retirement villages and the like.  However, the majority of Community schemes would be the more common estate-style schemes (usually known as Neighbourhood schemes) where you might have, say, 100 townhomes in a walled-off estate sharing a common:

• security gate and perimeter wall
• access roadway
• manicured gardens
• swimming pool

In this case, the owners of the townhomes would be responsible for looking after their own property in entirety (ie the inside AND outside of the property on their small plot of land including a driveway, a garage, fences, a gate, a mailbox and so on) while contributing financially towards the upkeep of the 'jointly owned' facilities being the main security gate, the perimeter wall, the access road, the gardens and the pool.

Under this setup we get a sort of 'pseudo-Strata Scheme' that IS a little different to the typical 'block of units' Strata scheme where each unit owner is responsible for maintaining only the INSIDE of their unit whilst paying a levy towards the upkeep of everything else within the complex including:

• main building structure (which contains the units)
• stairwells allowing access to the units
• pool, lifts and any other facilities present
• gardens and landscaping for the entire complex
• driveways, garages and other parking areas (such as visitor parking)
• mailboxes, intercomms, garbage areas and so on

Home v Neighbourhood v Strata

With typical home ownership (ie under a freehold torrens title), the home owner maintains everything to do with the home - inside and out - with no additional outlay for any commonly-owned property - as there is none.  Compare this to the Neighbourhood scheme lot owner who must maintain the property - inside and out - PLUS contribute to the upkeep of a (generally) small amount of common property.  And finally there's the Strata scheme lot owner who must contribute to the upkeep of a substantially larger amount of common property while maintaining just the INSIDE of the unit.

So what's the bottom line? The Neighbourhood scheme lot owner tends to be much closer to typical home ownership than the Strata scheme lot owner.  Which is better?  It depends on your situation, stage of life, financial position and point of view.

Please note also that both the Strata scheme lot owner AND the Neighbourhood lot owner must comply with the rules (by-laws) of their schemes while typical home owners, usually, do not have any such requirements other than those set down by the local council for all rate payers.

Mix and match....

Community schemes can have a mix of plan types.  For example, part of an estate might contain a block of 20 units (which falls under the Strata plan banner), another part of the same estate might consist of 30 townhouses that share just a common roadway and some landscaping (a Neighbourhood plan) and the whole estate might have a common access driveway with a security gate and fence system (the Community plan).  In this example there'll be a multi-tiered management structure with one management 'group' looking after the unit block, another looking after the townhouses and yet another overlooking the entire estate.

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What are the types of Community Schemes?

Community schemes fall into 3 types which, in some ways, overlap each other - the main differences between them being what the scheme contains and what the developers of the plan can and can't do before, during and after the scheme has been built, the plan registered and the scheme made operational.  In general, Community and Neighbourhood plans are the most widely known and used.

The 3 types are:

• Community plan
• Precinct plan
• Neighbourhood plan

Community Plan

A Community plan is necessary where the developer proposes to create a large staged development with a multi-tiered management structure.  The plan subdivides the original parcel of land to create Association Property and lots that are usually intended for future development.  Within a Community there can be Precincts, Neighbourhoods and Strata schemes.

Precinct Plan

A Precinct plan, like a Community plan, is necessary only where a development is developed in stages and requires a multi-tiered management structure.  It subdivides the community development lot (or lots) to create a precinct property and lots proposed for further development.

This structure is interposed between a Community plan and a Neighbourhood plan or Strata plans and adds yet another layer of complexity to the overall structure.  Precinct plans are not usually used since essentially the same result (with less development restrictions) can be achieved through the use of a combination of Community plans, Neighbourhood plans and Strata plans.

Neighbourhood Plan

A Neighbourhood plan is the most widely used plan within this system and may be used in tiered, stand-alone and staged developments.  In a tiered or staged development, a Neighbourhood plan can subdivide Community or Precinct development lots and can also contain a number of Strata plans within its structure.

NOTE - Basically the differences between the types are primarily to assist developers structure their developments (and the associated Management Statements) in such a way as to allow them to continue the future development of the parcel(s) of land without unfair, complex and costly restrictions.  All this would appear to have little affect on the individual lot owner in a community-type scheme..

TIP - You can read a bit more about the differences between the types of community schemes at the NSW Dept of Lands Registrar General's Directions website in the section on Community Schemes Section - Types of Community Scheme Plans

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Upon registration

Each time a Community, Precinct or Neighbourhood plan is registered:

• lots are created
• association property is created
• an association is formed

Association Property

The NSW Community Land Development Act 1969 allows for certain land in a Community scheme to be owned jointly by all the lot owners in the scheme.  This certain land is known as the Association Property and is essentially everything that's shared by all the lot owners.  Association Property in a Community scheme is essentially the equivalent of Common Property in a Strata scheme.

The Association

The communal ownership of the Association property is achieved via an entity known as the Association and is formed as soon as the plan is registered.  The Association, comprising all of the scheme's lot owners, is very similar in structure and nature to the Owners Corporation in a Strata scheme.

The 3 types of Associations are:

• Community Associations
• Precinct Associations
• Neighbourhood Associations

In the eyes of the individual lot owner these 3 associations work in pretty much the same way with each one dictated by the by-laws contained in each particular scheme's Management Statement.  Please see the section on Management Statements below for more information on this vital document.

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The legislative differences

Even though a lot of the legislation for Community schemes overlaps with much of the Strata schemes legislation (due to the obvious similarities) there are some differences that those living (or thinking of living) in a Community scheme should be aware of.  What are those differences?  Please keep reading...............

Many of the differences are mainly changes in terminology - like Association property instead of Common Property, the S26 Certificate instead of the S109 Certificate and the Neighbourhood Association instead of the Owners Corporation - to name just a few.

While the NSW Strata Schemes Management legislation is, in most instances, very specific and exacting in the way it deals with the co-ordination, management and general running of Strata schemes, the NSW Community schemes legislation has deliberately been left very broad allowing total flexibility to be built into the scheme based on the individual requirements and theme of the Community.

This flexibility is very effectively handled via the Management Statement - the 'rule book' for every Community scheme - and the importance of the Management Statement cannot be stressed enough.

In essence though (and from an individual lot owner's viewpoint), the structures and functioning of both types of schemes are almost the same with any fundamental differences being well documented.  However, there's definitely a stronger dependence (and reliance) on the rules (ie by-laws) of Community schemes - more so than there appears to be in Strata schemes.

This increased dependence stems from the fact that Community schemes can be so varied in their structure and use (which can make the rules quite involved and complex) when compared to the relative 'simplistic' nature of Strata schemes.

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Management Statements

A Management Statement is a document which sets out all the by-laws necessary for the efficient running of a Community scheme and MUST be lodged with every Community, Precinct or Neighbourhood plan.

Because the Community Titles legislation allows for so much variation, there are NO model by-laws for Community schemes.  It's felt there aren't enough common issues within Community schemes for model by-laws to be successful.  One example sited in the Community Schemes section on the NSW Dept of Lands Registrar General's website regarding this situation states:

"The management provisions required for the effective administration of, for example, a retirement village, may be different to those applying to a tourist development, business park or rural farming development"

What's covered?

In most Management Statements, there'll usually be particular by-laws relating to:

• keeping of animals
• noise control
• garbage collection
• drying of laundry
• restrictions on the use of and access to facilities
• details on exclusive use of facilities
• visitor and/or disabled parking
• association meetings
• Executive Committees
• insurance
• traffic and parking laws
• other matters regarded as important in the running of the scheme

Some of the more exotic types of schemes, such as holiday resorts, hotels, caravan parks and the like may have quite an extensive set of very different by-laws due to the very nature of these schemes.

NOTE - it wouldn't be at all surprising for you to know that many Community schemes use the model by-laws available for the various types of Strata schemes as a guideline for the drafting of a Community scheme's actual by-laws.  Many standard by-laws are then changed with any extra 'special' by-laws being added as needed.

It would be highly unlikely for any 2 Management Statements to be exactly alike (unless of course they were purposely copied word-for-word)

To learn more about the model by-laws for Strata schemes read the By-laws information page.

More detailed information...

A wonderfully detailed section on Management Statements can be found on the NSW Dept of Lands Registrar General's Directions website in an area within the Community Schemes section titled Preparing the Plan - Management Statement. 

There's even sub-sections on preparing the Management Statement detailing things that must be included, various restrictions and so on.  Make sure you don't miss these.  For these lists see Preparing the Statement.  At the very least, this is a wonderful starting point for anyone involved in the setting or amending of a Community scheme's by-laws.

Changing Management Statements

Now, we are all faced with change every day of our lives and Management Statements can and will be changed at some time.  So, when you are faced with having to make some changes to your Management Statement, the appropriate forms will need to be used (no surprises here...)  Below is the main one you'll need along with instructions on what to do plus a short guideline.

NSW Dept of Lands Community Scheme Management Statement Changes

• Amendment of Management Statement: form 21CSM
• Amendment of Management Statement form 21CSM: Instructions for Completion
• Registrar General's Directions: Amendment of Management Statement
• Scheduled lodgment fee

Special provisions for Strata Schemes in Community Schemes

Community schemes deal with by-laws in a slightly different manner to Strata schemes so if a Strata Scheme happens to be within a Community Scheme, the Act makes reference to a couple of special provisions for this situation.  Therefore, if you happen to live in a Strata Scheme that is part of a Community Scheme or you intend to buy into one, you should familiarise yourself with these provisions by reading Sections 57 thru 60 - Special Provisions of the NSW Strata Schemes Management Act 1996.

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Initial Period

The term 'Initial Period' is almost the same for both Strata schemes and Community schemes with the Community scheme version acting a little differently depending on the type of Community scheme involved.

To save going into too much detail regarding Community Scheme Initial Periods here, you can find out pretty much all you need to know in the NSW Office of Fair Trading's publication called Living in a Community Scheme.  The section on the Initial Period begins around page 4.  It's good stuff.

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Community Search

In a Strata scheme there's something called a Strata Search which is officially known as an 'Inspection of the Records and Accounts under Section 109 of the Act'.  In a Community scheme there's the 'Inspection of the Records and Accounts under Section 26 of the Act' and while this could be known as a Community Search, I don't think it is.  These two are almost the same except for a few differences in the information provided.  Schedule 4 of the NSW Community Land Management Act 1989 details what's required.

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Extra information resources

The 1st link in the Information pages, booklets and publications section below takes you to a very comprehensive and relatively easy-to-read section on the Registrar General's Directions division of the NSW Department of Lands website which covers everything you should know involving Community schemes.  While it's primarily aimed at those wanting to develop Community schemes (with some very specific sections for developers) it also provides the A-Z on how Community schemes should be managed and run with lots of detail on what's required to get it done.  A very useful reference.

The 2nd link will take you to the NSW Office of Fair Trading website and the excellent PDF booklet titled "Living in a Community Scheme".  This is written in clear, simple terms and provides just about everything on the 'need to know' scale regarding Community schemes.  Definitely read this one thoroughly.

The last link of the 3 will direct you to the Consumer, Trader and Tenancy Tribunal's information page on dealing with disputes.  This department uses pretty much the same information for Community schemes as it does for Strata schemes since a dispute is still a dispute no matter what the source.

TIP - You can read more on disputes by having a look at the Resolving Disputes information page.

The other 2 sections in the 'extra information resources' section provide a number of links to the main legislative sections which deal specifically with Community schemes.

Information pages, booklets, publications

• Living in a Community Scheme(PDF booklet)
• Strata and Community Schemes (CTTT information page)
• NSW Dept of Lands Registrar General's information on Community Schemes

NSW Community Schemes legislation references

• Community Land Development Act 1989
• Community Land Management Act 1989
• Community Land Management Regulation 2007

NSW Strata Schemes Management Act 1996 (SSMA) references

• Section 46: How does a lessee get information about the by-laws?
• Section 58: What happens if by-laws are inconsistent with management statements?
• Section 59: Obligation of lessee to comply with management statements
• Section 60: How does a lessee get information about management statements?
• Section 109: Certificate by the OC as to financial and other matters relating to lot

The SSMA links directly above are the main sections that make reference to Community schemes.

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