A Strata Management Statement, often called an SMS, is a document that sets out how different parts of a building will operate when ownership is shared. You’ll see it used in places like mixed-use developments, where residential, commercial, and retail spaces rely on the same lifts, driveways, or essential services. Because these areas are shared by more than one party, the law requires a clear agreement on how everything is managed.
The SMS outlines who can use each shared facility, who pays for what, and how responsibilities are divided. When the information in the statement is accurate and well-structured, it helps prevent misunderstandings and keeps the building running smoothly. For owners, tenants, and even developers, understanding what belongs in a Strata Management Statement is key to avoiding issues down the track.
When a Strata Management Statement Is Required
A Strata Management Statement is not used for every strata scheme. It’s specifically required when a building contains separate ownership components that rely on shared areas or shared services. This usually happens in mixed-use developments, where different parts of the building are created under separate titles but still need to function as one.
For example, an apartment tower built above a row of shops will often share the same carpark, lift lobby, fire systems, and waste rooms. Because these spaces serve multiple owners, the development must have an SMS in place before it can be registered. The same applies to commercial buildings that include basement parking owned by another party, or large complexes designed with shared driveways and access points.
In simple terms, if two or more owners need to use and maintain the same part of the property, the law requires a Strata Management Statement to define how everything will work. This helps prevent disputes and ensures all parties understand their obligations from the beginning.
Core Information Every Strata Management Statement Should Include
A well-prepared Strata Management Statement follows a clear structure so every party understands how the shared parts of the building will operate. Below are the essential details that must be included.
Details of the Strata Scheme
The statement begins with the basic information about the development. This includes the name of the strata scheme, its address, and the specific building components or lots that the SMS applies to. This section sets the foundation so there is no confusion about which parts of the property are covered by the agreement.
Shared Facilities and Common Areas
One of the main purposes of an SMS is to describe the areas that multiple owners use. This may include lifts, stairwells, driveways, loading docks, garbage rooms, services, or basement parking. The statement explains how these areas can be used, who has access, and any rules or limitations. Clear definitions help avoid disputes and ensure every party understands their rights.
Cost-Sharing Arrangements
Shared facilities come with shared expenses. The SMS must outline how costs are divided between the different components of the building. This can include maintenance, repairs, utility charges, and operational costs. The allocation is usually expressed in percentages, and the statement should also include rules for how future changes to cost apportionment can be decided.
By-laws and Behavioural Rules
Some buildings have unique requirements that don’t fit within standard strata by-laws. The SMS can include additional rules tailored to the shared facilities. These might relate to noise management, waste disposal, parking protocols, hours of loading dock use, or other operational guidelines. These rules help keep the building running smoothly, especially when residential and commercial spaces overlap.
Maintenance and Repair Responsibilities
To avoid confusion, the SMS must clearly set out who is responsible for maintaining each shared facility. It should cover day-to-day upkeep, repairs, and emergency procedures. This clarity ensures that issues are handled quickly and prevents disputes about who needs to take action or pay the bill.
Insurance Requirements
An SMS must specify what types of insurance each party is required to hold. This may include building insurance, public liability insurance, or coverage for shared services. The statement should also explain how premiums are shared and who bears responsibility in the event of damage or loss.
Dispute Resolution Processes
Even with clear rules, disagreements can still occur. The SMS needs to outline the steps for resolving disputes between the different building components. This usually starts with internal discussions and, if needed, can progress to mediation or external resolution through a tribunal. Having a defined process makes it easier to manage conflicts fairly.
Additional Information That May Be Included
While a Strata Management Statement must cover the core operational details, many developments include extra information to make future management clearer and more predictable. These additions aren’t always required by law, but they’re often helpful for avoiding complications later on.
Some SMS documents include guidelines for how future upgrades or redevelopment work should be handled. This might cover things like replacing shared equipment, updating building services, or carrying out large-scale improvements. Clear rules make it easier for different owners to coordinate and approve major works when the time comes.
Other developments choose to include environmental or sustainability practices. This can involve energy-efficient systems, water-saving measures, waste separation, or recycling protocols. These guidelines help keep the building running in a consistent, environmentally responsible way.
The SMS may also outline service level expectations, such as cleaning schedules, security requirements, or maintenance standards. By spelling out how these services should operate, owners and managers have a common reference point for quality and performance.
Including these additional details creates a smoother management process and helps ensure the building remains efficient, safe, and well maintained for everyone who uses it.
Why Accurate Information Matters
The Strata Management Statement is more than just a technical requirement. The accuracy of its details has a direct impact on how smoothly the building operates day to day. When the information is clear, up to date, and well structured, everyone involved knows exactly what they’re responsible for and what they can expect from others.
Accurate information helps prevent disputes, especially in developments where residential and commercial occupants share the same spaces. Simple misunderstandings about access rights, maintenance duties, or cost-sharing can quickly turn into bigger issues if the SMS isn’t clear.
A well-prepared SMS also helps ensure the building complies with the Strata Schemes Development Act and other relevant regulations. This protects owners, tenants, and investors, and it provides certainty for future buyers who rely on the document to understand how the building works.
In short, an accurate SMS builds trust, reduces conflict, and supports smooth, long-term building management. It sets the standard for how shared areas are maintained, used, and funded, making it an essential document for any development with more than one ownership component.
Common Problems When the SMS Is Poorly Written
When a Strata Management Statement lacks clarity or detail, it often leads to practical problems once the building is occupied. One of the most common issues is confusion around cost-sharing. If the percentages or responsibilities are vague, owners may disagree about how much each party should contribute to maintenance, repairs, or shared services.
Another frequent problem is unclear maintenance duties. If the SMS doesn’t specify who is responsible for particular shared areas or equipment, tasks can be delayed, ignored, or disputed. This is especially challenging in mixed-use buildings where commercial and residential needs can be very different.
Access disputes also occur when the statement doesn’t clearly outline who can use certain spaces, such as loading docks, carparks, or secure entry points. Without clear guidance, it becomes harder to manage day-to-day operations and enforce rules.
Insurance gaps are another risk. A poorly drafted SMS may fail to explain who must insure what, leaving owners exposed in the event of damage or an incident in shared areas.
These issues often surface months or even years after a development is completed, and they can be expensive to resolve. A well-drafted SMS helps prevent these problems by providing clear expectations right from the start.
Tips for Ensuring a Well-Drafted SMS
A strong Strata Management Statement doesn’t just meet legal requirements — it makes the building easier to manage long term. Here are a few practical steps that help ensure the SMS is accurate, clear, and useful for everyone involved.
Start by working with professionals who understand how mixed-use buildings operate. Developers, strata managers, and legal advisors each play a role in drafting a document that reflects the building’s real needs. Their experience helps identify shared areas, cost allocations, and operational rules that might otherwise be overlooked.
It’s also important to review the SMS carefully before registration. This is the best time to catch unclear wording, missing responsibilities, or cost-sharing arrangements that don’t make sense. Once the building is operating, these issues become harder to change.
Updating the SMS when building conditions change is equally important. Shared facilities may be modified, new equipment installed, or access arrangements adjusted over time. Keeping the document current ensures it continues to function as a reliable guide.
Finally, make sure owners and building managers can easily access the SMS. When everyone understands the rules and responsibilities, day-to-day coordination becomes simpler and disputes are less likely to occur.
These steps help create an SMS that supports the building effectively, protects all owners, and promotes smooth long-term management.
How a Professional Strata Manager Can Help
A well-drafted Strata Management Statement can make the difference between a building that runs smoothly and one that constantly faces disputes. This is where an experienced strata manager becomes invaluable. They understand how shared facilities, mixed-use components, and multi-owner developments operate in real life, not just on paper.
A strata manager can assist during the drafting stage by identifying the shared areas, access points, and services that need to be covered in the SMS. Their practical knowledge helps ensure nothing important is missed, especially in complex developments with multiple parties involved.
They also help define cost-sharing arrangements, maintenance responsibilities, and operational rules in a way that is fair and easy to follow. Because they handle these issues every day, they know what works, what causes friction, and how to avoid common pitfalls.
Once the SMS is in place, a strata manager plays a key role in implementing it. They coordinate maintenance of shared facilities, oversee compliance with the rules, manage insurance needs, and help resolve disagreements between owners. If building conditions change over time, they can guide the process of updating the SMS so it continues to reflect how the property operates.
For owners and developers, having a skilled strata manager involved means greater peace of mind and a more organised, efficient building.
Conclusion
A Strata Management Statement is a crucial document for any development where different owners share facilities, services, or access areas. When it’s drafted with clear, accurate information, it becomes a reliable guide that helps the building operate smoothly from day one. It sets out who is responsible for each area, how costs are shared, and what rules everyone needs to follow.
A well-prepared SMS also reduces misunderstandings, prevents disputes, and ensures the property stays compliant with NSW strata legislation. Whether you’re an owner, developer, or part of a mixed-use building, understanding what belongs in this statement is essential.
If your building is preparing an SMS or reviewing an existing one, working with an experienced strata manager can make the entire process easier, clearer, and more effective in the long run.