Understanding Strata Schemes: A Guide for Owners in NSW

Last Updated on 31/07/2026 by Damin Murdock

In multi-unit developments such as townhouses and apartment complexes, strata plans are the standard framework for property ownership. Buying into a strata scheme means your ownership is intertwined with collective governance regulations.

Whether you are a new owner or a long-term resident navigating a dispute, it is essential to understand your rights, your financial obligations, and the pathways available for conflict resolution.

The Anatomy of a NSW Strata Scheme

A strata scheme fundamentally divides property into two categories: individual lots and common property. As an owner, you hold title to the airspace inside your specific unit. However, the structural walls, roof, lobbies, stairwells, and shared amenities are legally classified as common property.

These boundaries and responsibilities are regulated under the Strata Schemes Management Act 2015 (NSW) (the Act). The Act is designed to protect individual property rights while enforcing the community’s collective obligations to maintain the building’s infrastructure.

The Legal Duties and Discretionary Powers of The Owners’ Corporations

The moment you settle on a strata-titled property, you automatically become a voting member of the Owners’ Corporation.

The Owners’ Corporation exists as a distinct legal entity separate from the individual owners, and it carries strict statutory obligations. Under section 106 of the Act, the corporation has an absolute duty to maintain and repair common property. If they fail to do so, and your private lot suffers damage as a result, such as from a neglected roof leak, the corporation can be held legally liable for financial damages.

To fund these maintenance duties, the corporation determines and collects strata levies. These administrative and capital works funds are legally binding debts. Failing to pay them on time can result in a mandatory 10% annual interest penalty and debt recovery proceedings.

Duties and Boundaries of Strata Committees

Because a large group of owners cannot easily manage daily operations, the Owners’ Corporation elects a smaller Strata Committee annually to handle administrative tasks.

Once elected, committee members owe a fiduciary duty of care to the collective owners. Section 37 of the Act mandates that committee members must carry out their duties with honesty, health, and due diligence.

One of the most common issues in strata schemes is when Strata Committees exceed their authority. While they can approve minor operational spending, major capital works, changes to by-laws, or terminating building managers require a special or ordinary resolution passed at a general meeting of the entire Owners’ Corporation.

Statutory Term Limits

Navigating the administrative burden of a strata scheme can be exhausting, which is why many schemes delegate day-to-day operations to licensed Strata Managing Agents or Building Managers. Because these contracts involve significant financial commitments, the Act enforces strict statutory caps to prevent schemes from being locked into predatory, long-term agreements.

Role / Appointment Context	Maximum Statutory Term Limit	Legal Caveat Under the Act
Strata Managing Agent (Appointed at 1st AGM)	12 Months	Designed to prevent developers from locking in preferred managers.
Strata Managing Agent (Subsequent Appointments)	3 Years	Can be renewed, but requires a formal resolution at an AGM.
Building Manager (Appointed before 1st AGM)	Expires at 1st AGM	Automatically terminates to allow new owners to vote on management.
Building Manager (Subsequent Appointments)	10 Years	Long-term contracts require rigorous legal vetting before signing.

These agency agreements grant significant operational control over your funds and building assets. If an agent fails to perform or mismanages funds, the termination process will depend entirely on the specific legal triggers outlined within that contract.

Navigating Disputes

When disputes arise, the dispute resolution process typically starts with internal mediation, then applying for a formal NSW Fair Trading mediation, which is usually mandatory before escalating further. If mediation fails, owners or the corporation can apply to NCAT, which has the jurisdiction to make a legally binding order, overturn invalid by-laws, compel repairs, and award financial compensation. Further, pursuant to s 72 of the Act, an Owners Corporation can apply to NCAT for an order to terminate the building manager’s contract early on grounds of poor performance, unfair charges or oppressive terms.

Challenging an overreaching strata committee, removing an underperforming manager, or auditing misallocated funds requires a precise legal approach. If you find yourself facing these hurdles, ensuring you have documented evidence and a clear strategy is critical.

If you think your scheme is operating outside the boundaries of the Strata Schemes Management Act,  feel free to contact Damin Murdock at Leo Lawyers via our website, on (02) 8201 0051 or at office@leolawyers.com.au. Further, if you liked this article, please subscribe to our newsletter via our Website, and subscribe to our YouTube, LinkedIn, Facebook and Instagram. If you liked this article or video, please also give us a favourable Google Review.

DISCLAIMER: This is not legal advice and is general information only. You should not rely upon the information contained in this article, and if you require specific legal advice, please contact us.