How strata schemes are formed and the initial period

Published: 11 August 2023

Find out what strata schemes are required to do during the initial period, what they are exempt from doing, and what happens when it ends.

Key information

The developer or builder (known as the 'original owner’) acts as the owners corporation during an initial period of time.
The initial period ends when the original owner sells more than one third of the total unit entitlement.
The original owner must hold the first annual general meeting within 2 months.

Three men and one woman sitting around a table with papers discussing their strata committee

What is the initial period?

The initial period starts the day the strata plan is registered with the NSW Land Registry services and ends when the original owner sells more than one third of the total unit entitlements.

The owners corporation is formed the same day as when the strata plan is registered. During the initial period, the builder or developer is the original owner that makes up the owners corporation.

Restrictions on the original owner

There are restrictions in place on the original owner.

The original owner cannot:

change, cancel or make new by-laws that do not give a right or obligation to all owners or all lots
alter common property (except under a development contract)
incur a debt for more than what is set aside in the owners corporation’s funds to repay
borrow money or give securities
appoint a strata managing agent or building manager/caretaker after the first annual general meeting (AGM)
sell any common property.

Owners corporation responsibilities during the initial period

Once the strata plan is registered, the original owner must estimate the amount of money it will need to credit to its administrative fund within 14 days.

This fund manages the day-to-day costs of the strata scheme.

An owners corporation during the initial period is still required to hold meetings and raise levies during the initial period. It must:

take out building insurance
manage the finances
keep the accounts and records
maintain and repair common property.

End of initial period and first annual general meeting

Once the initial period ends, the original owner must hold the first annual general meeting within two months.

Find out more about holding the first annual general meeting.

Strata annual reporting

An owners corporation in the initial period is not required to complete the strata annual reporting.

If your strata scheme is not in its initial period, you will need to complete strata annual reporting within three months of the AGM each year.

Find out more about your obligations and strata annual reporting.

Examples

Scenario 1 – strata scheme with 4-lots

A strata scheme is registered as 4 lots in total and 1 lot is sold.

This scheme is in the initial period since the original owner has not sold more than one third of the total unit entitlements.

It is still required to hold meetings and raise levies but is not required to hold the first AGM or complete the strata annual reporting.

Scenario 2 – strata scheme with 2-lots

A strata scheme is registered as 2 lots and 1 lot is sold.

This scheme is not in the initial period since the original owner has sold more than one third of the total unit entitlements.

It must hold the first AGM within two months of the initial period ending and complete the strata annual reporting within three months of the first AGM.

Need more help?

Contact Fair Trading

If you have any further questions about strata, you can contact Fair Trading via phone or in-person at a Service NSW centre.

Phone: 13 32 20 8:30am to 5pm, Monday-Friday
In person: Find your nearest Service NSW Centre

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