Strata 'runnings' versus the regulator, the law prevails

Strata 'runnings' versus the regulator, the law prevails

Friday, August 07, 2020

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Whether by high rise or low rise, bodies incorporated in relation to registered strata plan, more popularly known as strata corporations (stratas), certainly appear to be on the rise throughout Jamaica.

Although regulated by statute, The Registration (Strata Titles) Act, since the late 1960's, strata operations may at times be a bone of contention between proprietors and the executive committees they put in place to manage properties on their behalf.

This article highlights statutory provisions in relation to strata corporations, proprietors (owners), executive committees, and the Strata Commission (the regulator) and how the law aims to have them work in tandem for the greater good of all concerned.

UNIT ENTITLEMENT IS NOT A

Under the Act, a unit entitlement is a number assigned to each strata lot that determines the share of common property and assets of a strata that belong to each strata lot. It is a main factor in the determination of strata corporation expenses and liabilities of each proprietor.

Also, it is possible that proprietors with greater unit entitlements than others may be of the mistaken belief that their entitlements allow exclusive rights and privileges whether negatively affecting other proprietors, or not. For example, arbitrarily decommissioning amenities or cutting down trees and the like, without the requisite permission or authority, in most cases would be unheard of, but there are reports that such acts by proprietors do occur.

One can only imagine how problematic things may become if such proprietors were to control the executive committees.

The Act stipulates that the control, management, administration, use and enjoyment of strata lots and the common property shall be regulated by by-laws which include those set out in the Act and which cannot be amended or varied except by a resolution passed by at least 75 per cent of the proprietors. It requires, among other things, that:

- Proprietors pay various rates and charges (such as maintenance and taxes) in respect of their strata lots. They are required to keep their units in a good state of repair and refrain from being a nuisance or hazard to occupiers of other strata lots. Proprietors are also expected to use and enjoy the common areas in a manner that does not interfere with the use and enjoyment of the same common property by other proprietors.

- A strata corporation shall control, manage and administer the common property for the benefit of all proprietors. A corporation shall also keep and maintain the fixtures and fittings used in connection with the common property in a state of good and serviceable repair. It shall also maintain and repair pipes, wires, cables and ducts existing on the property and capable of being used in connection with the enjoyment of more than one strata lot or common property. Interestingly, the corporation shall also fix the rate of interest which shall be charged on arrears of proprietors' contributions.

- A general meeting is to be held within three months of registration of a strata plan. Thereafter, a general meeting is to be held once each year (the annual general meeting), and a period of 15 months should not elapse between annual general meetings. Every proprietor should receive written notice of a general meeting, setting out the place, date, and time of the meeting and in the case of special business, the general nature of the business. It should be noted that accidental omission to provide notice to any proprietor or non-receipt of notice shall not invalidate any proceedings at a general meeting.

- A corporation shall have an executive committee (comprised of three to nine proprietors) elected at a general meeting, empowered to exercise the powers and perform the duties of the corporation, subject to any restrictions or directions given at a general meeting. The chairman is elected for each meeting. At executive committee meetings, all matters are to be determined by a simple majority with the chairman having a casting vote, in addition to his or her original vote. The executive committee has the power to employ anyone it deems fit to carry out the management and administration of the common property and may even delegate powers and duties to one or more of its members, and also revoke them at any time.

Interestingly, the executive committee must not only keep minutes of its meetings, it must ensure proper accounting in respect of all monies received and spent by it, prepare proper accounts for each annual general meeting and upon a written request by a proprietor, make the books of account available for inspection at all reasonable times.

Although this article does not address the intricacies of voting at a general meeting, it is important to consider that, aside from circumstances where a unanimous resolution is required, no proprietor shall be entitled to vote at a general meeting, unless all contributions are paid up in respect of his or her strata lot/s.

THE REGULATOR AND ITS POWERS

Proprietors need not become alarmed because the regulator of stratas, the Strata Commission, established by the Act, is the entity charged with responsibility among other things, to monitor, regulate and supervise stratas; facilitate the resolution of disputes between a corporation and a proprietor; and enforce by-laws.

The commission has the power to issue an order to an executive committee or proprietor to demolish, remove structures or things which may be contrary to the by-laws. It may also order that interest payable in respect of late payment of contribution be varied and that contributions be adjusted if in the commissions view they appear excessive or inadequate. The commission can even make enquiries and collect information it deems necessary or desirable for the purpose of carrying out its mandate.

The power to act goes further. In the event a proprietor fails to comply with an order of the commission, the strata corporation may take steps to restore common property to its original state and in recovering expenses incurred, in addition to other remedies, place a first charge on the strata lot concerned.

A decision of the commission is binding on a corporation, proprietor or other person, and although the Act allows for an appeal against a decision, it remains binding until the appeal is determined.

It appears the Strata Commission has anticipated some of its challenges ahead and has even published a user-friendly booklet called the New Strata Booklet in which it states, “Being a proprietor in a strata corporation is significantly different from owning any other type of property investment. There are limitations to what an owner can or cannot do. As part of a 'collective' the proprietor may be required to pay for repairs or improvements to common facilities that he may never have utilized. The scheduling of repairs is not dictated by his individual needs but based on the collective good.”

As the number of strata communities expands across the island, it is expected that the need for regulation will also grow. It is likely that proprietors, individually or as a collective group, may from time to time need to rely on the regulator to monitor strata management matters, and ensure that statutory provisions are adhered to, when necessary.

Rachel McLarty is an associate at Myers, Fletcher & Gordon, and is a member of the firm's Property Department. Rachel may be contacted via rachel.mclarty@mfg.com.jm or www.myersfletcher.com. This article is for general information purposes only and does not constitute legal advice.


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