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Strata Management Systems

Wednesday, 20th June 2012

More developments are now being governed by strata management statements (SMS) as development projects grow increasingly more complex and residents require increased amenities. This means it is essential that owners and strata managing agents are aware of what an SMS is, what requirements it may impose and when and how it can be changed.

What is an SMS?
The main purpose of an SMS is to identify the facilities servicing the building or the site that are shared between one or more strata schemes or between strata schemes and one or more stratum lots that are not the subject of, or part of, a strata scheme. These facilities are known as Shared Facilities. An SMS apportions the shares of the costs of maintenance, repair, renewal and replacement of those Shared Facilities (Shared Costs)
Each SMS provides for a building management committee (BMC) to be formed from representatives of each strata scheme or stratum parcel governed by the SMS. The BMC’s task is to manage the Shared Facilities.

When is an SMS Required?
An SMS needs to be registered when land or a building is sub-divided in a staged development. The staged development may have two or more strata schemes or a combination of strata schemes and a stratum lot or lots.

Can an SMS be Amended?
The simple answer is yes - depending on the circumstances. One common allegation, and reason for an application to change an SMS, is that the proportions of Shared Costs are unfair and should be adjusted.

The NSW Supreme Court considered the adjustment of Shared Costs recently in The Owners Corporation - Strata Plan 70672 v The Trustees of the Roman Catholic Church for the Archdiocese of Sydney [2011] NSWSC 973 which we will simply refer to as The Cove.

Common Property
What is an SMS, when is it required and can an SMS be changed?
The SMS in The Cove, which was drafted by Makinson & d’Apice, was upheld by the Supreme Court. In coming to that conclusion, the Court dealt with a number of questions, the most important of which, in the context of settling arguments over apportionment of Shared Costs were:

 Whether the Contracts Review Act 1980 applies to an SMS so that the SMS could be set aside as being unjust under that Act;
 Whether an expert appointed under the SMS can reapportion the ratios of Shared Costs in the SMS;
 Whether the Court can amend the SMS under section 28U of the Strata Schemes (Freehold Development) Act 1973 (the Freehold Development Act).
Each of these questions and the Court’s reasoning are dealt with in further detail in the following series of articles.

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Comment from itsemadra on Friday, 26th May 2017

One regular assertion, and purpose behind an application to change a SMS, is that the extents of Shared Costs are out of line and ought to be balanced.

Comment from Elliemalan on Friday, 19th May 2017

This post is very impressive for me who is about Strata Management Systems and I must recommend others to visit here :


Comment from Shelley Winters on Monday, 08th May 2017

It was really informative reading about the Strata Management Systems and the topamericanwriters. Now I know that, An SMS needs to be registered when land or a building is sub-divided in a staged development. Thank you

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