NSW FACT SHEET 1: Want to do work to your lot? You may need a by-law

Want to do work to improve your lot? If you do, you may need to get a by-law. In most cases, your strata manager or owners corporation will be able to tell you whether or not you need to do so but the general rule is if you are altering the common property in any way you will need to get a by-law passed before doing the work.

Why?

 The simple explanation is that you do not own the common property, the owners corporation (of which you are a part) does. In the same way that you can’t just go and make changes to someone else’s house without their consent, you generally can’t alter the common property without the consent of the owners corporation. In passing a by-law providing you with the special privilege to do the work, the owners corporation is providing that consent.

 The more detailed explanation is that by-law 5 of the model by-laws in Schedule 1 of the Strata Schemes Management Act 1996 prevents an owner or occupier from “damaging or defacing” any structure that forms part of the common property prior to the written consent of the owner’s corporation being obtained.

If the works are of “minor” nature an ordinary resolution motion can be passed at a general meeting of the owners corporation. An ordinary resolution requires a simple majority vote to pass. Minor works includes affixing nails or screws to hang pictures or cupboards.

If works involve alterations or additions to common property you must seek approval under section 52 of the Act for the creation of a new by-law.

Additions include the installation of enclosures and awnings, air-conditioners, flooring, fences and any other items that are affixed or attached to common property. Removal of items such as load bearing walls within a lot also affect the structure of the building and require the creation of a new by-law for the lot.

What is the process of obtaining a by-law?

 First, you need to be certain what work you want to conduct. This is because the proposed by-law will need to describe the proposed works in either words or by annexing plans or by a mixture of the two. This protects both you and the owners corporation as, once passed, the by-law will give clear authority to conduct the specified works.

Second, you should speak to a strata lawyer about your proposed works and provide them with a copy of any plans of the works, the by-laws for your scheme and a copy of the strata plan.

The strata lawyer will prepare a motion for your proposed works and send it to your strata manager for inclusion on the agenda of the next general meeting. If you want to do the work as soon as possible you should ask your executive committee meeting to call an extraordinary general meeting to allow your proposed by-law to be voted on. If they refuse, you will need to requisition a general meeting.

At the general meeting the owners corporation must specially resolve to pass your motion. This means not more than 25% of the unit entitlements (the voting rights that attach to a lot) can vote against your motion. If they do, your proposed by-law is refused.

 What will happen if I do not obtain a by-law before doing the work?

 If an alteration or addition is made to your lot that effects or changes the character of the common property, and you have not received the owners corporation’s consent for that alteration or addition, you may be in breach of the by-laws. The owners corporation may take action against you to have the alteration or addition removed and the common property restored back to its original condition.

 Once I get the by-law drafted can I start works?

 No. The by-law must be passed by special resolution at the general meeting of the owners corporation prior to any works being conducted. The by-law should also be registered prior to commencing works, as the by-law is not effective until it is registered on the certificate of title of the common property of the scheme.

 What if the owners corporation refuses to pass my proposed by-law?

If the owners corporation refuses to grant approval to carry out works, you should attempt mediation with the owners corporation. If that process is unsuccessful you can than file an application with the NSW Civil & Administrative Tribunal for a Strata Schemes Adjudicator seeking an order to approve the works and the proposed by-law.

 What information will we need to prepare the by-law?

 In order to assist us in preparing an improvements by-law for your lot we will need a copy of your strata plan, the current by-laws, specifications of works being done, any drawings or diagrams and the full name of the lot owner for the by-law consent form.

 How do I get a by-law for the purpose of making improvements to my lot?

Call Kerin Benson Lawyers on 02 8706 7060 or email allison@kerinbensonlawyers.com.au or sian@kerinbensonlawyers.com.au for an estimate to prepare and register this additional by-law for your strata scheme.

New Supreme Court Equity List for Strata Disputes

As of 1 June 2015 the NSW Supreme Court will have a specialist Equity Division list for Real Property matters. Importantly, the Real Property List will include claims in relation to the legislation regulating the creation and management of strata and community title schemes. Current Supreme Court proceedings in the Equity Division may be transferred to the list of considered appropriate to do so. This is good news as a specialist list will in effect create a panel of judicial members with expertise in strata and community title matters much like the introduction of the Technology and Construction list did. It also highlights the increasing importance of strata and community titles law.

 

When being unreasonable isn’t enough: NCAT’s discretion in the reallocation of unit entitlements

Section 183(1) of the Strata Schemes Management Act 1996 (NSW) (the Act) confers a discretion on NSW Civil and Administrative Tribunal to reallocate unit entitlements when the original allocation is found to be unreasonable. The recent case of Rita Sahade v The Owners Strata Plan No 62022 & Ors [2015] NSWCATCD 5 emphasises the discretionary nature of this power.

Background

 The case was originally brought by the applicant before the Consumer, Trader and Tenancy Tribunal in 2012. The Tribunal dismissed the application. The applicant appealed to the District Court, and its decision was then the subject of appeal to the Court of Appeal, who remitted the case back to the Tribunal in respect of the following issues:

  • Whether the original allocation of unit entitlements (UE) was unreasonable;
  • If so, whether the UE should be reallocated; and
  • If so, the appropriate allocation of UE.

Relevant Considerations

 In making its determination, the Tribunal identified several considerations relevant to the decision to alter UE:

  • Market value of the lots (noting this is a mandatory and primary consideration, though not the only consideration);
  • UE forms part of bundle of rights as part of realty and ownership of unit;
  • UE forms part of market value due to the degree of control and fees/responsibilities associated with UE;
  • Units are sold and bought on the basis of known rights (i.e. known UE);
  • UE forms basis for liabilities and payments; and
  • UE controls power of management of OC and determines quorum.

The Tribunal found that the original UE allocation was unreasonable based on market value yet decided not to exercise its discretion to alter UE on the basis that:

  • Control of the scheme would change fundamentally with an altered UE;
  • By purchasing the property with 40% of the schemes UE, it was clear to the applicant at the time of purchase that she wasn’t buying a controlling share;
  • It was likely to result in compulsory management and/or deadlock if one unit given such control – which was not the legislative intent of the Act; and
  • The unopposed evidence of original owner showed the original reason for UE allocation was to prevent one lot acting without the support of at least one other lot.

The Tribunal also reaffirmed that in such matters it is the applicant who bears the onus not only to demonstrate that there was unreasonableness in the original UE allocation, but also to persuade the Tribunal why it should order a reallocation of UE, with the Act conferring a discretion and not an obligation on the Tribunal to alter UE allocation.

For information about unit entitlements generally or responsibilities of lot owners in relation to their unit entitlements, please contact our office.

Allison Benson Angie Rennie
Legal Practitioner Director Lawyer
Ph: (02) 4032 7990 Ph: (02) 8706 7060
E: allison@kerinbensonlawyers.com.au angie@kerinbensonlawyers.com.au

Renovations in Strata & Community Title Lots: New Planning “One-Stop-Shop” Website to Fast Track Development Approvals

This is a caution that the new website https://hub.planning.nsw.gov.au/ for home owners wanting to renovate their properties launched by the Dept. Planning & Environment to fast track development approvals is not a one-stop-shop. Home owners in strata & community schemes should remember that they may need the approval of their owners corporation, building management committee or relevant association.

Why is this important to remember?

Strata Schemes

For owners of a strata property, if the work you intend to do affects the common property then, in addition to considering whether you need development approval for the work, you must have the approval of your owners corporation to conduct the work. As the owners corporation owns the common property you cannot alter the common property without its permission.

If your planned work is major renovation work, then any approval will by way of a motion passed at a general meeting for a by-law under either section 65A or 52 of the Strata Schemes Management Act 1996 (NSW) authorising the works. If a development consent is required then the owners corporation as the owner of the common property affected by the renovations will also have to consent to the development application.

If development consent is not required as your planned work is minor, such as installing new cupboards or new shelving along a common property wall, then model by-law 5 applies. This means you must request written approval from your executive committee prior to doing this work. If your scheme is not governed by the model by-laws check for an equivalent by-law.

You should also consider if there are any by-laws setting standards. Model by-law 17 provides that you must not maintain anything in a lot that is not in keeping with the appearance of the building. Installing a trellis may breach this by-law. If your strata scheme is only part of a building, you must also comply with any architectural guidelines in the strata management statement.

Community Associations

If you live in a community association you should keep in mind the architectural guidelines for your association. These guidelines will often provide for the approved shades of paint or material that must be used. For instance, installing an ochre coloured roof or a tin roof instead of a charcoal slate roof may breach your association’s architectural guidelines. You should also consider whether the work you are doing will affect any community property such as piping or cabling for services or even footpaths. These sort of mistakes are costly to remedy, can cause bad feelings in the community and are easy enough to avoid with a bit of prior research.

For further information, or for a quote on preparing any necessary by-law, please contact Kerin Benson Lawyers on 02 8706 7060.

Kerin Benson Lawyers

Author: Allison Benson

Office: Sydney & Newcastle

Email: allison@kerinbensonlawyers.com.au

Date: 13 March 2015