What is a Strata Scheme Initial Period?

20/08/23 03:00 PM Comment(s) By Precise Strata Reports

What does it mean if the Initial Period has Expired? And does it matter to buyers?

In the context of property and real estate, a strata scheme initial period typically refers to a specific period of time after a strata plan has been registered for a new development or building. 

During the initial period, which can also be known as the "initial period of the strata scheme" or "initial period of registration," the developer or builder still retains control of the management of the strata scheme. This period allows the developer to finalize any remaining construction or development works, and it provides an opportunity for the initial owners (usually buyers of the individual lots) to familiarize themselves with the strata property and the community.

The initial period typically lasts for a few months to a year, depending on local regulations and the specific terms set forth in the strata scheme's governing documents. As a general rule, the initial period will end once a third of the units have been sold. Up until such time, the developer is responsible for maintaining the common areas and facilities, collecting strata levies (fees) from the lot owners, and handling any issues related to the building's construction or defects.

In other words, early buyers in a new development may not have any say or control over decisions concerning the building (until the initial period expires).

Once the initial period ends, the developer is required to convene the first Annual General Meeting (AGM) of the Owners Corporation (also known as the Body Corporate or Strata Corporation), during which the lot owners elect an executive committee to take over the management of the strata scheme. From that point on, the owners have greater control over the management and decision-making processes of the strata property.

It's essential for buyers and owners to be aware of the strata scheme initial period and understand their rights and obligations during this time. Consulting with legal professionals or real estate experts can provide more specific and region-specific information related to strata schemes and their initial periods.

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