Strata Management Statements
A Strata Management Statement (SMS) is an individually drafted document governed in New South Wales under the Strata Schemes (Freehold Development) Act 1973 and is used to regulate the relationship between individual owners corporations and lots in deposited plans in mixed use, commercial and retail developments.
An SMS frequently regulates:
* the use of shared facilities that might be owned by one of those entities that will be shared with others in common (e.g. swimming pools, gymnasiums, barbecue areas, gardens, etc)
* the management of the buildings on title
* meeting procedures and voting rights of the building management committee, owners corporations and owners of lots
* the use of approved contractors for works on shared facilities
* the apportionment of costs for the maintenance and management of shared facilities by the parties to the SMS
* disputes between the parties to an SMS
Quite often, usually by sheer luck, you will come across an SMS that has been drafted poorly or you will find that some of its important provisions don’t work at all as intended – or worse still – do not even exist! A poorly drafted SMS can lead to significant and costly legal disputes between the parties to the SMS. Further, it does not help when most SMS’s are drafted well prior to owners corporations and lots being established and becoming operational which can sometimes lead to an inequality of rights and responsibilities between the parties to the SMS.
If you believe that something might become the cause of dispute between the parties to the SMS down the track, you should first read the SMS as a whole and follow its provisions. However, if the SMS is unclear on the issues or if you are unsure about its effect, you should obtain legal advice.
Please note that the information contained in this article is not legal advice and should not be relied upon. You should obtain legal advice before you take any action or otherwise rely upon the contents of this article.