Exclusive Use By-Law, Strata Plan of Subdivision, Licence or Lease – Which Is Better? Part 1

There are generally four ways for a lot owner to gain use of a common property space such as a parking space, courtyard or roof space. These are by way of:

1. an exclusive use by-law,
2. registering a strata plan of subdivision,
3. entering into a licence of the common property, or
4. entering into a lease of the common property,

In this article we deal with the first two methods, obtaining an exclusive use by-law and subdividing the common property and lot property to create a new and extended lot.

Exclusive use by-law

Just like the name suggests, an exclusive use by-law will give you exclusive use of a common property area. The area will remain common property and will not form part of your lot. As such, it does not affect the unit entitlements for your lot.

An exclusive use by-law must be passed by special resolution at a general meeting of the Owners Corporation and will need your written consent. On the same token, it can only be repealed by a special resolution and your written consent or by orders of the NSW Civil & Administrative Tribunal.

The exclusive use by-law will set out your rights and responsibilities in respect of the common property space, including the responsibility of repair and maintenance. The Owners Corporation may also require payment for your use of the common property space.

Note that if you intend to carry out work in the common property space, this must be authorised by the by-law.

This option is relatively straightforward, quicker, and much cheaper than obtaining a strata plan of subdivision, however you will not own the common property space.

Strata plan of subdivision

For a strata plan of subdivision, you will need to buy the common property space to be added to your lot title and register a strata plan of subdivision. The space will then form part of your newly extended lot. Generally, the process involves:

1. a valuer advising on new unit entitlements for the scheme based on market values,
2. obtaining development consent for the strata plan change – you may need a town planner to do the documentation and you will need the Owners Corporation’s consent to make the application,
3. a surveyor preparing the strata plan of subdivision,
4. the Owners Corporation passing a series of special resolutions authorising the transfer of the common property, the schedule of unit entitlements and the new strata plan of subdivision,
5. your mortgagee providing their written consent, and
6. all the consents and the new plan must be registered and new certificates of title for the common property and your new lot must be produced by the NSW Land Registry Services.

This option is less straightforward, can be lengthy and costly, however you will end up owning the common property space rather than just having exclusive use of it. It can also mean that the unit entitlements for your new lot are different to those of your old lot.

Which option should you choose?

This will depend on you. Both options will give you use of the common property space, however there are pros and cons to both as we have explained above. We recommend obtaining legal advice for your specific situation.

This is general information and should not be considered to be legal advice. You should obtain legal advice specific to your individual situation.

Authors: Jasmin H.Singh and Allison Benson