Tag Archives: strata law

NSW FACT SHEET 9: Strata Committee Membership – What is it and who is eligible?

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What is a Strata Committee?

As of 30 November 2016, an Executive Committee is now known as a Strata Committee. It has the ability to make decisions on behalf of the owners corporation. Its powers to do so may be restricted by the owners corporation at general meeting.

 Who is ineligible to be a Strata Committee Member?

Generally, lot owners are eligible for appointment to the Strata Committee and they may nominate non-lot owners for appointment providing they are financial and entitled to vote at the meeting where the election is held. Section 61 of the Strata Schemes Management Act 2016 sets out the specific criteria.

Section 32 of the Strata Schemes Management Act 2015 sets out categories of people who are not eligible for election or appointment to the Strata Committee (or able to be acting members). These are:

(a)  the scheme’s building manager,

(b)  an agent who leases a lot or lots in the scheme to tenants,

(c)  a person connected with the original owner of the scheme or the building manager for the scheme, unless they disclose the connection at the meeting at which the election is held and before the election is held or before they are appointed to act as a member,

(d)  an owner of a lot in a strata scheme who was an unfinancial owner at the date notice was given of the meeting at which the election of a strata committee was to be held and did become financial prior to the meeting.

What happens if you are no longer eligible to be a Strata Committee member?

Although there is a general presumption against retrospectivity in law, sections 32(3) and 35 of the Strata Schemes Management Act 2016 makes it clear that if a Committee member was previously eligible to be a Committee member but became ineligible to be appointed or elected after 30 November 2016 due to the requirements of section 32(1) they:

–       must disclose their ineligibility as soon as possible after they become aware that they are ineligible; and

–       have vacated their office as a Strata Committee member (note this does not apply if the only reason the Member became ineligible was because they were unfinancial).

Any further questions about strata or community titles law?

Call Kerin Benson Lawyers on 02 8706 7060 or email allison@kerinbensonlawyers.com.au or enquiries@kerinbensonlawyers.com.au

NSW FACT SHEET 5: Strata Renewal under Part 10 of the Strata Schemes Development Act 2015: What is the process?

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Although the Strata Schemes Development Act 2015 does not yet have a commencement date, Part 10 of the Act, the part dealing with strata renewal is the topic of much discussion. Specifically, lot owners and owners corporations have been asking what is the process for strata renewal?

Note: we use the term strata renewal for both a collective sale (lot owners agreeing to sell to a developer) and a collective redevelopment (lot owners agreeing to refurbish the building and potentially build additions).

Once Part 10 of the Act comes into effect the process is as follows:

  1. Anyone (it does not have to be a lot owner) can give a written proposal to the owners corporation (OC) for a collective sale or redevelopment of the strata scheme. The proposal cannot be the same as, or substantially similar to, a proposal that lapsed within the previous twelve months.
  2. The executive committee (soon to be the strata committee (SC)) must consider the proposal at a meeting no later than 30 days after it is received. There are two options at this meeting:
  3. If the SC decides the proposal warrants further consideration it must no later than 30 days after the meeting convene a general meeting to consider the proposal.
  4. If the SC decides the proposal is not worthy of consideration the proposal will lapse unless lot owners with at least 25% of the unit entitlements of the scheme request the proposal be considered at general meeting.
  5. Assuming the proposal has been deemed worthy of consideration or there has been a qualified request, the OC at general meeting must decide whether the proposal warrants further consideration. This is an ordinary resolution meaning a simple majority is required to pass it.
  6. If the OC decides the proposal is worthy of consideration it:
    1. Must establish a strata renewal committee to prepare a strata renewal plan (ordinary resolution required);
    2. Must elect members of the strata renewal committee (ordinary resolution required & note there are eligibility requirements);
    3. May provide the strata renewal committee with a budget to develop the proposal; and / or
    4. May authorise the strata renewal committee to engage professional advisers to assist it in developing the proposal;
  7. If the OC decides the proposal is not worthy of consideration it lapses.
  8. Assuming the OC decided the proposal was worthy and elected a strata renewal committee, that committee is to prepare a strata renewal plan. The committee will operate for one year unless it is either dissolved by the OC or the OC by special resolution, votes to extend its time frame. The contents of a strata renewal plan are prescribed and include provision for compensating dissenting lot owners.
  9. Once the committee has a strata renewal plan to its satisfaction it must put it to the OC at general meeting for approval. The OC must, by special resolution, decide whether or not to give the plan to lot owners for their consideration.
  10. If the OC specially resolves to put the plan (or an amended plan) to lot owners for their approval:
    1. A copy of the strata renewal plan must be provided to all lot owners within 14 days plus any information prescribed by the regulations, then
    2. A minimum of 60 days after receipt of the strata renewal plan, lot owners may provide a support notice stating they support the plan. It must be signed by each owner and registered mortgagee or covenant chargee of the lot.
  11. A minimum of 75% of lot owners must return a support notice (and not withdraw it) for the strata renewal plan to proceed. If the required support is not received within three months the plan lapses.
  12. If the OC decides not to put the strata renewal plan to the lot owners then it may either:
    1. resolve (ordinary resolution) to amend the strata renewal plan and put that plan to the lot owners instead: or
    2. resolve (ordinary resolution) to return the strata renewal plan to the strata renewal committee for amendment; or
    3. if it does neither and does not pass the special resolution to put the strata renewal plan to the lot owners, the plan lapses.
  13. Assuming 75% of lot owners return (and do not withdraw) a valid support notice within the three month period the OC must:
    1. provide notification to the Registrar General and each lot owner within 14 days of being advised the required support has been obtained.
    2. meet and resolve to apply to the Land and Environment Court for orders to give effect to the strata renewal plan.
  14. If the OC decides (by ordinary resolution) to apply to the Land and Environment Court the OC must provide notice of the decision to do so to all tenants within 14 days.
  15. The Land and Environment Court must review the strata renewal plan and go through a hearing process to consider whether to make orders to give effect to it. The Act prescribes factors that the Court must consider including the relationship between the owners of lots and the purchaser or developer, steps taken in preparing the plan including whether the required notices were served, the compensation value to be paid to dissenting lot owners and the proposed distribution to supporting lot owners. Lot owners (and specified others) may file objections to the application to the Land & Environment Court and be joined to the proceedings.

As you can see, even a summary shows that this is a complicated process. We recommend seeking legal advice before embarking along this path.

Also please note that compensation is problematic. If the plan is for a collective sale it must provide for each dissenting lot owner’s lot to be purchased at not less than the compensation value for the lot. If the plan is for a redevelopment it must provide for each dissenting lot owner’s lot to be purchased at not less than the compensation value of the lot. The compensation value for a lot is based on section 55 of the Land Acquisition (Just Terms Compensation) Act 1991. This Act however primarily relates to compensating land owners for compulsory acquisition by statutory authorities which arguably has a different effect when used in valuing the lot of a dissenting owner. The “highest and best use” which is used to determine market value of the dissenting lot owners lot would likely not be the same as the highest and best use that a developer could put that lot to. Section 55 does however allow a component for disturbance in calculating the compensation value. This is likely to include stamp duty, legal costs and relocation fees but may not include costs such as the liability from terminated leases.  We believe this will be an area that is much disputed.

If you or your scheme are potentially looking at a strata renewal program you may find the report “Renewing the Compact City” by UNSW’s City Futures Research Centre of interest. The link to the report is here: httpss://cityfutures.be.unsw.edu.au/research/projects/renewing-the-compact-city/

Any questions about the strata reform process?

Call Kerin Benson Lawyers on 02 8706 7060 or email Allison Benson at allison@kerinbensonlawyers.com.au or enquiries@kerinbensonlawyers.com.au

 

Author: Allison Benson

Date: 5 October 2016

NSW: the Strata Schemes Management Regulation 2016 has been released

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The final version of the Strata Schemes Management Regulation 2016 (NSW) has now been released. It will soon be available on www.legislation.nsw.gov.au and Fair Trading’s website however it can also be found here: Strata-Schemes-Management-Regulation-2016

For more information keep an eye out for updates on our website and for Allison Benson’s next NSW Law Society Journal article.

NSW Owners Corporations, Security Systems and Privacy – What do you need to consider?

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 With increasingly sophisticated security systems having more capacity at a lower cost than ever before many strata and community title schemes are installing security systems and surveillance devices such as keyed swipe passes, smart lighting and closed circuit television (CCTV) systems. What many schemes do not consider is the use of these systems and their legality. Privacy is, rightly, a key concern of many lot owners and occupiers.

The Right to Privacy … is limited

Unfortunately, in NSW there is no general common law right to privacy. There have been two High Court cases where the existence of such a general right was discussed and held not to exist. Although the High Court in Australian Broadcasting Corporation v Lenah Game Meats [2001] HCA 63 left open the development of a concept of common law privacy a general right to privacy has not been established. There is however legislation that should be considered when an owners corporation wishes to install any surveillance system.

The Strata Schemes Management Act 1996 (NSW) (the Act) does not specifically address the power of an owners corporation to install security systems on the common property. However, an owner corporations can, and should, use its power pursuant to section 47 of the Act to pass a by-law regulating the installation, maintenance and operation of any security system (including any surveillance system).

The Surveillance Devices Act 2007 (NSW) (the SD Act) regulates the use of listening and surveillance devices. While there is a general prohibition on the use of listening devices to record private conversation, section 8 of the SD Act does not prohibit the use of optical surveillance devices (think CCTV) provided that there is either express or implied consent from the owner of the land on which the device is installed.

Note that if the common property, or part of it, is also used as a workplace say for a building manager, then the Workplace Surveillance Act 2005 (NSW) also applies and cameras must be clearly visible with signage warning of the surveillance at each entrance.

CCTV Systems

CCTV cameras that do not record sounds can be installed on the common property with the consent of the owners corporation however any recording of private conversations is not permitted. If your common property area is a workplace then all cameras need to be clearly visible and there must be signage advising of the system at each entrance. We recommend signage regardless as it can act as a deterrent.

We also recommend that the placement of any CCTV cameras is carefully considered. In one scheme, while there were genuine security concerns giving rise to the need for surveillance, one of the external cameras unfortunately captured a bedroom window which impacted on how the occupier used the room and caused the occupant serious (and justified) concern about why that camera had been positioned in that way. The moral is that camera placement should be carefully considered.

When installing a CCTV system, we recommend that the owners corporation needs to consider who has access to footage, where the footage is kept, how it is kept (i.e. is it securely held?) and the process for obtaining access to the footage and then to ensure this is encapsulated in a by-law in addition to authorising any necessary services agreements required to install, maintain and operate the CCTV system.

Swipe or Key Cards

While swipe cards or keys may not seem like a controversial security system, they can be. Take for example a strata scheme where the Chairperson decided to “police” the use of car parking lots and where the car spaces were held separately to residential lots with no restrictions on the use of the car space lots. In breach of the Act, the Chairperson decided that if the owners of the car space lots were not residents then they should not be allowed to use their car spaces. The Chairperson instructed the security firm to deactivate the key passes of the car space lot owners who were not residents preventing them from accessing their lots and any common areas of building.

In this instance a clearly worded by-law could have assisted by either setting out a process by which security cards could be de-activated or by establishing who had authority to instruct that security cards / keys be deactivated or restricted (preferably the strata manager or the building manager). Provided adequate controls were established in the by-law it should have been sufficient to prevent the misuse of the security keys.

If your strata scheme is considering installing a security or surveillance system then we recommend they seek legal advice tailored to its needs.

Allison Benson

Legal Practitioner Director

P: 02 4032 7060

E: allison@kerinbensonlawyers.com.au

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

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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

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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

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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

NCAT Applications: Exclusive use by-laws, the interests of all owners, rights and reasonable expectations

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Do you want to renovate your unit but your proposed exclusive use by-law has been refused by the Owners Corporation? Or, do you believe that the terms of a works by-law that has been made are unreasonable? In either case you may be able to make an application to the NSW Civil & Administrative Tribunal (NCAT) for Strata Schemes Adjudicator’s orders under section 158 of the Strata Schemes Management Act 1996 (NSW) (the Act) for the making of the proposed exclusive use by-law or the repeal or amendment of an existing exclusive use by-law.

The key consideration in the first instance is whether the owners corporation has unreasonably refused to make the exclusive use by-law and in the second whether the terms of the by-law providing for maintenance and upkeep of the affected common property are unjust. A related type of application under section 158 can be made if a lot owner has unreasonably refused to consent to the terms of a proposed exclusive by-law or has unreasonably refused to consent to the amendment or repeal of an existing exclusive use by-law.

The purpose of a section 158 application is to ensure so far as possible in a strata scheme that the interests of all lot owners, including the lot owner wishing to do works or having the benefit of an existing exclusive use, and the owners corporation are protected. Why is this important? In a recent matter, one of our clients, a long term owner in the strata scheme wanted to renovate his lot obtain exclusive use of the common property roof space directly above his lot to add an attic room to make room for a growing family. The simple majority of lot owners supported our client. However, a special resolution was required and three investor owners holding a just over 25% of the unit entitlements blocked the motion for an exclusive use by-law that would have authorised our client’s planned renovations. In this case our client had offered to pay a significant sum of money to the Owners Corporation by way of compensation for the use of the unused roof space.

As the motion failed to pass our client would have, without section 158 of the Act, been without recourse and been unable to conduct the works. As it was with our assistance they obtained orders that the proposed by-law be made. NCAT, in considering an application under section 158 must consider the interests of all owners in the use and enjoyment of their lots and the common property and also the rights and reasonable expectations of the lot owner who anticipates a benefit from the proposed by-law (or in the case of an existing by-law derives a benefit from it). In this case it was in the interests of all lot owners and the owners corporation for the by-law to be made.

A section 158 application can be an invaluable second chance to have their proposed by-law made or an existing by-law amended or repealed through an objective third party making a determination. It is a tool for ensuring fairness within divided schemes. Before making an application we strongly recommend that you seek legal advice.

Kerin Benson Lawyers

Author: Allison Benson

Office: Sydney & Newcastle

Email: allison@kerinbensonlawyers.com.au

Date: 14 October 2014

Case Note: Are you obliged to allow the original builder to repair building defects? Not always

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In a win for Owners Corporations (and home owners) in NSW, a recent Supreme Court decision has validated the right of the Owners Corporation, in certain circumstances, to refuse an offer by the original builder to conduct remedial work where there are agreed building defects.

The case arose after the builder met with the Owners Corporation’s expert on site. Although the builder agreed to repair some items, including some bathrooms, the builder did not admit there was a systemic defect involving the construction of the bathrooms. Nor did the builder, despite requests by the Owners Corporation’s expert and lawyer, provide a detailed programme of works for the remedial repairs that was acceptable to the Owners Corporation’s expert. The Owners Corporation sought rectification orders through the NSW Office of Fair Trading and these orders were made. Unfortunately, the orders did not provide for a detailed scope of remedial work. Following the orders being made, the builder contacted the Owners Corporation directly and sought access to the property to conduct works. Despite further requests for a detailed scope of remedial works none was forthcoming until after commencing of legal proceedings although the builder argued it was ready, willing and able to conduct the remedial work under a new contract for $1.00.

At the final hearing (some six years later) the builder argued that the Owners Corporation’s claim should either be dismissed or the amount claimed be limited to the amount for which the builder could have conducted the work.

The Court found for the Owners Corporation and ordered damages be paid. While there is a legal principle that a plaintiff must mitigate its loss, there is also a principle of acting reasonably. This means a plaintiff is able to recover its estimated costs of rectifying the damage except to extent it was unreasonable to insist on reinstatement. The Court stated that in building contracts “it is also generally accepted that the owner must give the builder a reasonable opportunity to rectify any defects … except where its refusal to give the builder that opportunity is reasonable or where the builder has repudiated the contract by refusing to conduct any repairs”.

In providing this opportunity, the Owners Corporation is not mitigating its loss but mitigating the builder’s damages. What is reasonable depends on the circumstances of the case but it includes whether or not the builder has attempted to repair the defect and if owner had reasonably lost confidence in the willingness and ability of builder to do the remedial work:  The Court found the onus was on the builder to prove that the Owners Corporation acted unreasonably. In this instance the builder’s scope of works was deficient, early attempts at rectification were unsatisfactory & it was appropriate for Owners Corporation to commence proceedings. Although the Owners Corporation had rejected the builders offer to conduct the works this was reasonable as it had lost confidence in Builder by this time.

 

Author: Allison Benson

Office: Sydney & Newcastle

Email: allison@kerinbensonlawyers.com.au

Date: 31 August 2014

Case: The Owners – Strata Plan No 76674 v Di Blasio Constructions Pty Ltd [2014] NSWSC 1067