What is a "strata lot"?

Question

In relation to real property, what is a "strata lot"?

Answer 1

A strata lot is a unit of real property resulting from the division of property into lots as per a "strata plan" under the Strata Property Act. This division may be stratified in that it can describe horizontal divisions of the property by reference to floors and/or ceilings of a building. This is a niche terminology only used in a few jurisdictions, like Australia, British Columbia, and Alberta.

The owners of the strata lots make up a "strata corporation" with responsibility for the care and management of the common property, common facilities, and corporation assets.

Many strata structures are like what are known as condominiums elsewhere (and even informally within B.C.), but stratas encompass more than just typical condominiums. A strata plan can be "duplexes, townhouses, fractional vacation properties—even single family homes in bare land strata corporations."

Answer 2

new-south-wales

A strata lot is a unit in a strata title - one way of multiple people owning land. In the USA, the closest equivalent would be a condominium.

Australia uses the Torrens Title system for registering land ownership where the title is held and guaranteed by the government- if the government register says you own it, then absent fraud on your part, you own it and anyone damaged by errors or fraud on the title gets compensation from the government, not you.

Forgive the diversion but I’m about to use the term “Torrens Title” to refer to a pice of land which is owned freehold which is a common usage even though “Torrens Title” also refers to the entire system of land ownership, including Strata, Company, and Community Titles.

Historically, when multiple people own land as tenants-in-common or joint tenants, they own the entire land collectively. This works fine for small family and similar groups but it doesn’t really work if you want to give different people different rights - like these people can use apartment 1 and those people can use apartment 2.

One workaround is a contract among the owners but it still leaves the property tied together - if one wants to sell then all have to sell (or not).

Another was to form a company that owned the land with different classes of shares that gave people rights to use different parts of the building - there are still a few company title buildings (so called) around. Then if one wants to sell, they only have to sell their shares. However, this was always a bit of a kludge because company law is targeted at companies that run businesses rather than a device for real estate ownership. It also meant that anyone that managed to get more than 50% of the shares would control the building - a patient property developer could buy units as and when they became available and then launch a takeover to force people out of their homes.

So, in the post-war era, Australian governments enacted Strata Title laws custom designed to manage apartment building ownership. The term strata comes from the fact that ownership is divided by floor (and by units within floors) forming a strata. When a strata title is registered, the surveyor assigns each unit a proportion of the whole in line with the amenity of the particular lot which determines their contributions to the strata title company that is formed and “owned” by the unit holders and that, in turn owns the land and the building. Each lot is registered along with the overall plan providing a permanent and government-backed record of who owns what. Units can change hands and that automatically gives the holder a say in the running of the strata.

Typically, the strata company owns the building and the unit holder owns everything inside the walls, up to and including the paint. The strata is run by the unit holders through a management committee who usually engage a professional strata manager. Operational and capital budgets are determined annually (with some statutory minimums) and each unit holder must contribute their proportion in quarterly instalments. In theory, the capital sinking fund should have enough money in it to replace the building at the end of its life.

It’s possible for units within a strata to themselves be a strata. I own a unit in a residential strata that is itself part of a strata that has a commercial part and a council-owned carpark.

Strata title has been very successful, however, at the end of last century, they were being used to try and cope with private subdivisions where the streets, utilities etc. were not owned by local government/public utilities but supplied by the developer. Because strata is customised for apartment buildings it sort-of didn’t work very well. So, the Community Title was developed which allows for the residents to own and operate the infrastructure and have titles within the community which can themselves be Torrens title, strata title, or community title like Matryoshka Dolls.