for everything you need to know about strata...

“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......”

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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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New Legislation In force on December 1st, 2021

The Community Land Management Act legislation has FINALLY been changed and came into force on December 1st, 2021.  Links to this new legislation are in the "NSW Community Schemes legislation references" section at the bottom of this page.  The Community Land DEVELOPMENT Act legislation links can also be found down there.  There may be some delay & changes to the information provided while the dust settles, so a little patience may be required.

NSW Fair Trading had its say on the "expected" reforms in their PDF document Community Scheme Law Reform Position Paper - so have a quick look at this to get a SUMMARY of what WAS proposed and even scroll down to Chapter 3 (around page 28) to see a TABLE which summaries the proposed changes. Makes fascinating reading to compare with what actually went through.  Then look at the SUMMARY of CHANGES they put together.

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 Association 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.  If you want to read the 'fine print' of the legislation for community and neighbourhood schemes then click on the links under NSW Community Schemes legislation references at the bottom of this page.

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 and community facilities such as a clubhouse) which can also then be under different title types - 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" - known as Association 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.  The Community Management Statement contains all the obligations and responsibilities of the lot owners.

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How Many...

NSW Fair Trading stated in their 2009 version of "Living in a Community Scheme" booklet there were 350 Community Schemes and 900 Neighbourhood Schemes in NSW and this was updated to 937 Community Schemes, 63 Precincts and 1,754 Neighbourhood schemes in New South Wales at the end of June 2019. Hopefully there'll be a NEW version of the "Living in a Community Scheme" booklet soon (with updated figures as well) and I'll provide a new link to it when it DOES appear.

These schemes are based around rural lifestyles, golf courses, vineyards, shopping centres, 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 where you might have, say, 100 townhomes in a gated estate sharing (in some cases) a common:

• security gate(s) and perimeter wall
• access roadway
• manicured gardens
• swimming pool
• gymnasium
• clubhouse

In this case, the owners of the townhomes would generally be responsible for looking after their own property in entirety (i.e. 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(s), the perimeter wall, the access road, the gardens, the pool, the gym and the clubhouse.

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

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Home v Community/Neighbourhood v Strata

With typical home ownership (i.e. 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 Community/Neighbourhood scheme lot owner who must maintain their own property - inside and out - PLUS contribute to the upkeep of any Association 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 Community/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 Community/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/Neighbourhood schemes can have a mix of types.  For example, part of an estate might contain a block of 20 units (which falls under the Strata Scheme banner), another part of the same estate might consist of 30 townhouses (another strata Scheme) that share just a common roadway and some landscaping , then add in a few houses on individual lots (a Neighbourhood Scheme) with the whole estate having a common access driveway with a security gate and fence system (the Community Scheme or "Association").

In this example there'll be a multi-tiered management structure each requiring its own management system with an overarching management system (i.e. the Community Association).  You could have one strata manager looking after the entire estate or a different strata manager for each sub-strata scheme with yet another strata manager for the Community Association. Whew...that can be a lot of fun [a dose of sarcasm here] in a number of ways and it's NOT really the ideal situation.   To reduce costs and to avoid lots of delays and confusion, it's better if one strata manager looks after the whole estate.

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What are the types of Community/Neighbourhood Schemes?

Community and Neighbourhood 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 scheme can and can't do before, during and after the scheme has been built, the plan registered and made operational.  In general, Community and Neighbourhood schemes are the most widely known and used.

The 3 types are:

• Community Scheme
• Precinct Scheme
• Neighbourhood Scheme

Community Scheme

A Community Scheme 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 Scheme

A Precinct Scheme, like a Community Scheme, 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 with other lots proposed for further development.

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

Neighbourhood Scheme

A Neighbourhood Scheme is the most widely used within this system and may be used in tiered, stand-alone and staged developments.  It commonly consists of freestanding houses or terrace-style homes with the only shared property being a driveway.  This is very popular and is an ideal combination of a home on a smaller piece of land with a minimal contribution in the form of levies.  With this there's no 'visual' difference to houses under freehold torrens title in a residential street.  There is one MAIN benefit though - there can be architectural standards in the Management Statement which ensures the properties are maintained to a certain standard and style - and this is something you have NO control over in a 'regular' neighbourhood.

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 scheme plans at the NSW Land Registry Services' Registrar General's Guidelines website in the section on Community Schemes Section - Types of Community Scheme Plans.
Don't forget to check out the MENU down the left side (in RED) for even more info on these.

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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 2021 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 similar but not exactly the equivalent of Common Property in a Strata scheme.

Read the LATEST version of the Act that I could find (as at Dec 8) but you'll need to scroll down the INDEX till you get to Part 6 on Property Management. Click on "Part 6" & you'll be taken to the information on Association Property NSW Community Land Management Act 2021 - Table of Contents for all the details.

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.

Everything you need to know about the different Associations and their responsibilities can be seen in the latest PDF version of the Act that I could find and, again, you'll need to scroll till you get to Part 2 Management of Schemes and click on "Part 2" NSW Community Land Management Act 2021 - Table of Contents

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 below on Management Statements for more information on this very 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 or Neighbourhood scheme should be aware of.  What are those differences?  Please keep reading.......

There are a lot of terminology differences - like Association Property instead of Common Property and the Community Association or Neighbourhood Association instead of the Owners Corporation - to name just a couple.

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 or Neighbourhood.

This flexibility is very effectively handled via the Management Statement - the 'rule book' for every Community or Neighbourhood 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 (i.e. by-laws) of Community/Neighbourhood schemes - more so than there appears to be in Strata schemes.  This is especially so in relation to the appearance and maintenance of the properties in the scheme.

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

SPECIAL NOTE:
The Management Statement takes precedence over any by-laws of any Strata Schemes which form part of a Community or Neighbourhood Scheme

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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/Neighbourhood 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.  The most important thing is that the developer and their solicitor draft the Management Statement so that it's totally suited and adapted for the particular development rather than using an "off-the-shelf" document.  This makes for a better long term experience for the owners as well as for ease of management.

One example sited in the Community Schemes section on the NSW Land Registry Services - Registrar General's Guidelines website regarding this situation states:

"The management provisions required for the effective administration of, for example, a retirement village, may be totally 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
• The controlling Committees
• insurance
• traffic and parking laws
• architectural standards and landscaping
• 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 of these model 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.

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More detailed information...

A wonderfully detailed section on Management Statements can be found on the NSW Land Registry services - Registrar General's Guidelines website in an area within the Community Schemes section titled Management Statement.  It's all in here guys - including the 3 types of Management Statement Forms required and don't forget to look at the left side menu items (in red) for all the other juicy topics.  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.

There's even sub-sections on preparing the Management Statement detailing things that must be included, various restrictions and so on. AND, believe it or not, the Management Statement is divided into 5 (yes 5) different parts. So, make sure you don't miss these.  For these specific sub-sections see Preparing the Statement - Management Statement.

Changing Management Statements

As we all know, we are constantly faced with change every day of our lives and Management Statements can and will be changed from time to time.  So, when you are faced with having to make some changes to your Management Statement, the necessary meeting will need to be held AND the appropriate forms will need to be used (no surprises here...)

Below are 2 references giving you the main form(s) you'll need along with instructions on what to do plus a short guideline.

NSW LRS Community Scheme Management Statement Changes

• Registrar General's Guidelines: Consolidation/Amendment of management statement
• Registrar General's Guidelines: Amendment of Management Statement or Development Contract

Special provisions for Strata Schemes in Community Schemes

Community schemes deal with by-laws and some other items in a very different manner to Strata schemes so if a Strata Scheme happens to be within a Community Scheme, the Strata Schemes Management Act 2015 makes reference to a couple of special provisions for this situation.

To cut a long story short - essentially it's about how the Management Statement overrides any Strata Scheme by-laws in place.  (See Section 139 - Restrictions on by-laws: Part 7).  AND how there must be EXTRA information on the S184 Strata Information Certificate.  (See Section 184 - strata information certificate: Part 5).  AND how the tenant's of a strata scheme WITHIN a Community scheme do NOT need to be sent the strata scheme's by-laws.  (See Section 186 Part 3 - Provision of strata scheme information to tenants).

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 following the links just above.

NOTE - There's actually very little information on Community Schemes in the latest legislation brought down on 30th Nov, 2016.  This might change over time especially now that the new Community legislation is in place but, for now, we have to make do with what's there

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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 Fair Trading's publication called Living in a Community Scheme.  The section on the Initial Period begins around page 4.  It's good stuff BUT just be aware that the Community Land legislation HAS changed (as of Dec 1st, 2021) so this IS out-of-date BUT I'm sure Fair Trading will bring out a new version now that the new legislation is in place - so stay tuned & watch out for the NEW link.

Fair Trading also has another PDF Booklet covering Moving into a Land Lease Community which has a few other interesting aspects to Community Living not covered in the other guide. AGAIN, this is an OLD outdated version (due to the Dec 1st 2021 legislation changes) so I'll change the link once the NEW version is produced. I don't anticipate MANY changes to THIS document though.

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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 182 of the Act'.  In a Community scheme there's the 'Inspection of the Records and Accounts under Section 171 of the Act' and while this could be known as a Community Search, I don't think it is - well not officially anyway, but it will do for now.  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 gives a good genric overview of what is required.
Watch out for an update on this now that the legislation has changed.

NOTE - Schedule 1 In the Community Land Management Act 2021 has the list of FEES associated with doing the search.
I'll provide links & more references once I fully check it out.

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Extra information resources

The 1st 2 links will take you to the NSW Fair Trading website and the excellent PDF booklets titled "Living in a Community Scheme" AND "Moving into a Land Lease Community".  They are written in clear, simple terms and provide just about everything on the 'need to know' scale regarding Community schemes.  Definitely read these thoroughly BUT BOTH ARE OUT-OF-DATE (as at Dec8). NEW links will be done once Fair Trading updates its booklets.

The next 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 Guidelines division of the NSW Land Registry Services 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 - if you follow the menu items listed on the left (in RED) on the page.

TIP - You can read more on how to handle disputes by having a look at my Resolving Disputes information page.

Information pages, booklets, publications

• Living in a Community Scheme(PDF booklet)- but a new version for the latest legislation should be on its way soon
• Moving into a Land Lease Community(PDF booklet) - a new version of this should also be coming soon
• NSW Land Registry Services Registrar General's Guidelines on Community Schemes
• NSW Fair Trading: Changes to Community Land Laws
• NSW Fair Trading: Transitioning to the new Community Land Laws
• NSW Fair Trading: Community, Precinct & Neighbourhood Schemes
• NSW NCAT Fact sheet: Community Schemes

NSW Community Schemes legislation references

• Community Land Management Act 2021
• Community Land Management Regulation 2021
• Community Land Development Act 2021
• Community Land Development Regulation 2021

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