Unit Entitlement – How is it calculated ?

If you are an owner of a strata unit you would more than likely come across the term “Unit Entitlement”. Many people believe that it is based on the size of the lot, it’s not! The haphazard way of determining the entitlement on smaller schemes may have put you at a disadvantage.

When developers register a strata plan, each lot is given a unit entitlement based on what the developer believes is an estimate of the market value of that lot at that time. They are not necessarily required to have a formal valuation although typically, large staged strata schemes do.  Allowing a developer to make the decision has left the door open for potential mistakes to be made or worse, gives shady characters the power to disproportionately allocate the unit entitlement (they may have kept a unit for themselves).

The unit entitlement is generally used for:

The amount you have to pay for levies

The voting power you have in the strata scheme

Your share in common property

Right to share in compensation monies paid by any public authority resuming the whole or part of the common property

Right to share in distributions of surplus monies in the owner’s corporation’s administrative or sinking fund

As you can see, the unit entitlement is a very important number. If it was incorrectly apportioned,  you could be paying higher-than-necessary strata fees, or on the other hand your voting power and possible share proceeds could be significantly lower than what you would actually be entitled to.

The NSW Civil and Administrative Tribunal (NCAT) can make an order to reallocate the unit entitlements of a scheme if at the time the plan was registered they were unreasonable or became unreasonable over time (for example the land was rezoned).

For more information, see section 183 Strata Schemes Management Act 1996.

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