1. Section 37 STA
The unit entitlement of lots in strata titles schemes has an important role in determining a lot owner’s:
- share in common property in the scheme,
- levy contribution payable and
- voting rights.
There is often confusion both in the industry and by lot owners on the valuation a licensed valuer undertakes when calculating unit entitlement. Basically, unit entitlement is a comparison of relative values between the lots in the scheme in proportion to the aggregate. The tolerances of these values can be no greater than 5% more or less. The STA contains provisions which in certain circumstances allow unit entitlements to be varied from time to time to ensure that owners and mortgagees’ interests are protected. In strata schemes a proprietor may improve his lot with building additions and alterations which may result in a higher property valuation. Steps should be taken to amend the unit entitlement to reflect these changes if they mean the relative value of the lot to other lots is greater than the tolerance.
Schemes registered between 1966 and June 1985 had unit entitlements allocated by the surveyor or developer, not by a licensed valuer. Consequently, they do not always reflect the proportion of the valuation of the lot to aggregate value of all of the lots. The STA provides for a licensed valuer to allocate unit entitlement of each lot based on the value of the lot in proportion to the total value of all lots in the scheme. As previously mentioned, this proportion must not vary by more than 5% more or less from the value the lot bears to the aggregate value of all of the lots. Unit entitlement must be expressed in whole numbers. The valuer’s certificate for a strata titles scheme is valid for a period of 2 years from the date of the valuer signing the certificate. If the scheme plan is not registered within this time frame, then the valuer’s certificate lapses. The status of the scheme plan will indicate this and a new certificate will be required before registration can proceed.
Note: A fee is required when lodging a replacement Schedule of Unit Entitlements for a strata/survey-strata plan that has a status of “Lapsed”.
The Schedule of Unit Entitlements is to be lodged with the scheme plan or amendment of scheme plan (if applicable).
1.1. Valuers Certificate for a Strata Plan
A licensed valuer must certify unit entitlement for a strata plan based on capital value within the meaning of the Valuation of Land Act 1978. This means valuing the buildings and improvements on the lots together with the land content. Once the strata plan is registered the unit entitlement will remain in force until action is taken to amend it. A Schedule of Unit Entitlements form should be used.
An anomaly occurs when the strata titles scheme contains a “vacant lot”, a lot that has no building constructed on it. The strata plan will contain a certificate from a licensed valuer that certifies that the unit entitlement is based on the value of the lots containing buildings compared to those not containing a building. This is satisfactory until buildings are constructed on the vacant lots. Unless a Type 4 subdivision (re-subdivision), merger or reallocation of unit entitlements is affected, the various unit entitlements will be out of proportion to the unit entitlements which should apply on completion of the construction of the building on the lot. Should the scheme be terminated, the resultant title will be issued in the name of all the lot owners in undivided shares proportional to their unit entitlement. An owner whose unit entitlement is incorrect or not up to date may therefore be seriously disadvantaged.
1.2. Valuers Certificate for a Survey-Strata Plan
A licensed valuer is required to certify that unit entitlement is derived from site value within the meaning of the Valuation of Land Act 1978. This means the value of the buildings and improvements on the lots are not taken into consideration when calculating unit entitlement.
Staged Subdivision Schemes
For staged subdivision strata titles schemes, the determination by a licensed valuer as to whether the variation between the unit entitlement for each lot on the schedule of unit entitlements and the staged subdivision by-laws is significant or not (see STP-09 Scheme Plans) will be required to be included on the valuer’s certificate. See the example below for the wording.
I have determined that the unit entitlement calculation is / is not a significant variation to staged by-law(s) no(s) ____________ registered on ______________________ in compliance with regulations 49, 50 and 55(4) of the Strata Titles (General) Regulations 2019 (ST(G)R 2019).
2. Amendment to the Schedule of Unit Entitlements
An amendment of a schedule of unit entitlements may only be registered —
SAT may, on the application of a strata company or the owner or registered mortgagee of a lot in a strata titles scheme, authorise the amendment of the schedule of unit entitlements for the scheme if satisfied that, if unit entitlements were to be allocated at the time of the application, the schedule of unit entitlements would require amendment for compliance with section 37(2) STA (that is, the proportion that the unit entitlement of a lot bears to the sum of the unit entitlements of all the lots in the scheme must not be greater than 5% more or less than the proportion that the value of the lot bears to the sum of the value of all lots in the scheme ).
If SAT makes an order under this section, the applicant for the order must lodge a copy of the order certified by SAT with the Registrar of Titles for registration of the amendment of the schedule of unit entitlements.