When owners purchase a lot within a strata-titled scheme, in addition to the lot they purchased, they also own part of the share of the common property. In some survey-strata schemes, that may be nothing more than a driveway. However, in larger schemes, it can include all the grounds, infrastructure items such as lifts, the roof, windows, and anything else which is not denoted on the strata plan as lot owner property.
The unit entitlement is used to calculate the percentage of levies that the lot owner must pay towards the maintenance and running of the common property, and what they must contribute in reserve funds which are savings that help owners pay for future repairs and replacement of the common property.
The unit entitlement represents the value of the lot as a percentage of the entire scheme. This UE can be used to gain an advantage in a voting scenario. Where an owner has the larger UE (they may own the Penthouse), they may call a Poll vote during a meeting. This enables a vote to be counted on UE total, rather than each lot owner having one vote.
When the scheme reaches its "use by" date, i.e the land value is high and the costs to maintain a repair the old buildings exceed the point of being financially viable, the scheme may be terminated. A developer may purchase all units to redevelop the site. Each owner will receive a percentage of the sale figure equal to their UE. An owner with a UE of 100 would receive double the amount of money that an owner with a UE of 50, would be entitled to.
So how is UE assigned?
Well, this occurs early on and is determined by a surveyor. It is not based on the size of the unit - but on its market value.
Let's look at an example.
A 4-lot single-level scheme with each priced at $500,000. Each lot could be assigned a UE of 1 out of 4 (or 25 out of 100). Let's now imagine a 4 lot scheme that has ground floor units and 2 first floor units (with ocean views). The 1st-floor units sell for $600,000 each and the ground floor for $400,000 each. In this scenario, the lot footprint is the same, but the UE could be 60 out of 200 (1st floor) and 40 out of 200 (for the ground floor).
How does the UE determine my levy contribution?
When levies are set at the AGM, the calculated figure is $X per unit entitlement, so owners with a larger UE contribute a larger share of the funds.
So where can I find my UE?
Your UE is on the Strata Plan. You will need to know your lot number (which isn't always the same as your unit number). Depending on the age of the scheme, the table will be on the front or the back of the document and looks like this.
More info:
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