Ask the expert: Strata corporation basics

As attorneys, we are often asked questions about strata in the Cayman Islands. Below are some of the most common questions asked.

What is a strata?
A strata is a form of property ownership where a parcel of land is divided between various owners with each owner holding a separate, registered title. If you buy a property that is part of a strata, you will own a share in and have voting rights in the strata corporation that owns the common areas. Strata schemes are typically seen in condominium developments, but also in residential developments as it is an effective way to ensure that the common grounds and services are properly maintained and paid for.

What is the strata corporation responsible for?
The strata corporation usually covers services such as cleaning, gardening and general maintenance of building exteriors, common grounds and amenities such as swimming pools, gyms and parks.

A strata may also deal with the provision of a sinking fund for use in emergencies — for example, if there was substantial damage to the roof of a condominium block and the cost of such damage is not covered by insurance or a warranty. Strata corporations will also be responsible for insuring the common areas.

How much do strata fees cost and how often are they due?
Owners pay a regular (often monthly or quarterly in advance) fee to the strata corporation to cover costs for carrying out the services mentioned above and for insurance. Strata fees vary from development to development and the fees are often based on the size of a particular unit in comparison to the size of the development — a figure commonly referred to as "unit entitlement."

How are stratas governed?
All stratas adopt a set of by-laws. There is a statutory set of by-laws that some stratas use, but many stratas adopt a unique form of by-laws that are drafted to include requirements relevant to that particular strata development. The by-laws will usually deal with the obligations of the strata lot owners, rules and regulations (for example, whether the strata permits pets), the collection of strata fees, requirements for annual meetings and the appointment and powers of the executive committee.

When purchasing a property in a strata, what documents should a purchaser’s attorney request?
As a minimum, a purchaser’s attorney should request a copy of the by-laws as this sets out what you can and cannot do with your property, together with your obligations. It is recommended to request a copy of the strata’s financial records to ascertain whether the strata is well managed and in good financial shape. The purchaser’s attorney should also request what is known as a 6(4) certificate that sets out whether the seller has any arrears and whether there are any upcoming special assessments for items of major expenditure.

This article originally appeared in the January 2021 print edition of Camana Bay Times.

About the author

Michael Sharvin is a senior associate on the real estate team of the law firm Bedell Cristin in Camana Bay.