The corporation you didn't know you joined

Somewhere in the paperwork, between the pest inspection and the bank's cheque, you became the member of a corporation.

If you own a unit, a townhouse or an apartment in South Australia, you almost certainly did. Buying the lot made you a member of the strata or community corporation that owns and runs everything past your front door. Nobody handed you a membership card. It happened at settlement, automatically, the way the electricity connection did.

Most owners find out what that means at the worst possible moment, when a quote arrives.

Two systems, and you need to know which one you are in

South Australia runs two regimes side by side. Older unit developments sit under the Strata Titles Act 1988. Most schemes created from 1996 onwards sit under the Community Titles Act 1996, which itself comes in two forms. In a community strata plan, lots sit above and below one another and the corporation maintains the building. In a primary community plan, the lot is a defined piece of land and the building on it is yours to maintain and insure.

Your certificate of title tells you which. Get it wrong and you can be underinsured without knowing, because a community lot owner who assumes the corporation is covering the structure is covering nothing.

You are a member, not a customer

The corporation is not a service provider you engaged. It is a body you belong to, made up of every owner in the scheme, including you. It owns the common property. It sets the levies. It holds the insurance. It can sue and be sued.

There is no landlord upstairs to complain to. When the corporation resolves something at a general meeting, it resolved it on your behalf, whether or not you were there. The owners who turn up decide for the owners who do not.

It also means that a strata or body corporate manager, where one is engaged, works for the corporation rather than for whichever owner shouts loudest. The manager holds delegated functions and the corporation remains the principal. It can take back what it delegated.

Mandatory fund, optional money

Two pots pay for everything.

The administration fund covers recurrent costs: insurance premiums, common area power, gardening, pest control, regular fire servicing, cleaning, management fees. If it finishes the year in deficit, the shortfall comes out of next year's levies, so the pain is deferred rather than avoided.

The sinking fund covers capital work: repainting, roof replacement, lift refurbishment, common area carpet, pool plant, fencing. This is where the trouble lives.

Whether your corporation must hold one depends on the Act. A community corporation must establish an administrative fund and a sinking fund. A strata corporation need not. The Strata Titles Act provides that a strata corporation may raise such funds, including reserve funds for future expenditure of a capital nature, as it thinks necessary. A strata corporation that has never set a dollar aside has broken no law.

And here is the part that undoes the protection even where the fund is compulsory: the contribution is not. A community corporation can maintain a sinking fund, resolve a token contribution to it every year, and remain entirely within the Act. The obligation is to have the fund. It is not an obligation to fill it.

There is a planning requirement, introduced in 2013 and applying to both systems above a certain size. Corporations of seven to twenty lots must prepare a three-year forward budget for maintenance and capital works, reviewed every three years. Corporations above twenty lots prepare a five-year budget on a five-year review cycle. Schemes of six lots or fewer are exempt, as are community corporations whose common property is insured for a hundred thousand dollars or less.

That exemption matters more than it sounds. A great many South Australian unit blocks are four, five or six units built in the sixties and seventies, now facing their first roof replacement. Nobody in those schemes is obliged to have planned for it.

So in most larger schemes, somebody has written down what the roof will cost and roughly when. In none of them is anyone compelled to fund it. That gap is where special levies are born. Levies stay flat for a decade because no owner wants to move the motion that raises them. Every owner banks the saving. Then the roofing quote arrives, the corporation raises a call that lands as a single number in a single letter, and the owner who settled six weeks ago pays the same share as the owner who has been voting the levies down since 2012.

What to ask before you buy

You have a statutory right to look before you leap. Section 41 of the Strata Titles Act entitles a prospective buyer or mortgagee to apply to the corporation, which then has five business days to deliver: levies payable on the unit including arrears, the corporation's assets and liabilities, expenditure it has incurred or resolved to incur, and copies of the minutes of general and committee meetings for a period of up to two years, the last statement of accounts, the articles and the current insurance policies. Community corporations have parallel obligations, and where a scheme has more than six lots you should also receive the scheme description and current by-laws.

Get the corporation search and read it rather than filing it. What is in the sinking fund. What the forward budget says is coming. Whether a special levy has been raised, discussed or foreshadowed. Whether the minutes record a defect, a leak or a quote that has been sitting unresolved for three years. Use your own conveyancer, not the vendor's.

Insurance, and the gap nobody notices until there is a fire

Where the corporation insures the building, it must insure it for full replacement cost. That is not market value. It is the cost of demolishing and rebuilding, including council approvals, engineering and professional fees, with land value excluded.

The common property boundary is not where most people assume. For walls and fences it is the inner surface, for floors the upper surface, and for ceilings and roofs the under surface. Kitchen cabinetry, tapware, benches and fixed air conditioning inside a unit are generally treated as part of the insured building rather than as contents. Improvements need to be declared: a pergola, a new barbecue area on common property, a kitchen renovation. An undeclared improvement is an uninsured one.

South Australian law sets two floors. Liability cover must reach at least ten million dollars, and most corporations must carry fidelity guarantee cover of at least fifty thousand dollars against theft from their own accounts, with exemptions for the smallest schemes.

The quiet failure is the annual bump. The insurer proposes a percentage increase at renewal, the committee accepts it, and the sum insured drifts away from reality. That is an adjustment, not a valuation. Adelaide building costs have moved sharply since 2020, and a scheme still riding a 2019 figure carries a shortfall that sits with the owners, divided by lot entitlement, payable in cash, at the moment they are least able to pay it.

Every owner and tenant still needs their own contents policy. The corporation's cover does not touch your belongings.

There is no umpire in South Australia

This is the part that surprises people who have owned strata interstate.

South Australia has no strata commissioner, no ombudsman, and no tribunal for strata and community title disputes. No government agency oversees how these schemes are managed. If your corporation makes a decision you consider unreasonable, oppressive or unjust, or if you believe the Act or the by-laws have been breached, your remedy is an application to the Magistrates Court.

The Court can do a great deal. It can review decisions, resolve disputes between owners, order a general meeting to be convened, appoint an administrator, and in some circumstances set aside a contract between a corporation and its manager or the developer. Those are real protections.

They are also slow, and they are a poor mechanism for deciding whether to reseal a driveway.

Which is why, in this state more than most, the annual general meeting is the cheapest dispute resolution available to you. An hour a year, in a room where the decisions are still reversible.

What to ask at the next meeting

What is actually in the sinking fund, and what does the forward budget say is coming. When was the building last properly valued for insurance, as distinct from indexed. What is the manager paid, and separately, what else does the manager receive: commission on insurance, contractor referral fees, charges for certificates and after-hours attendances. Are those payments disclosed in writing. What notice does the corporation have to give if it wants a different manager, and does leaving cost anything.

None of those are hostile questions. They are the questions a director of any other corporation would be expected to ask, and you are, in every sense that matters, one of the people running this one.

The meeting takes an hour. The special levy lasts longer.