This article about purchasing common property has been provided by Gemma Lumley, Kerin Benson Lawyers.
A common question we get asked is: can I buy common property? The short answer is yes. But the longer answer is more complicated.
Let’s say you own a lot in a strata scheme but you don’t have a car space. There is an area of unused driveway that you want to purchase to be added to your lot property title. As a lot owner, you can ask your owners corporation if they are willing to sell you that area. If they are, then parties will commence a subdivision of the strata plan. This can be a lengthy process that involves re-drawing the strata plan to add the car space to the lot and remove it from common property (or, let the car space be it’s own new lot), valuing each of lots as drawn on the new strata plan, allocating unit entitlement, and obtaining consent from each lot owner and their mortgagee to the change of unit entitlements and council consent to the proposed subdivision. And of course, there is also the conveyancing side whereby the owners corporation agree to sell (i.e. transfer) that land to you for a price. The benefit of subdividing the strata plan to add the lot to your property is that it is then your land which you can deal with as you wish (under all relevant legislation of course!) and it cannot, without undergoing a similar process, be returned to the owners corporation.
There is another option, however. This involves obtaining the exclusive use right to common property. In this scenario, the owners corporation agrees – by special resolution – to grant the owner of your lot the exclusive use to the common property on terms and conditions recorded in a common property rights by-law. The by-law is registered on the title of the property for the owners corporation and cannot be removed unless the owners corporation vote by special resolution to repeal it and the owner of lot provides their written consent. Common conditions of a common property rights by-law include that the owner of your lot repair and maintain the common area they have exclusive use of, and that the owner of the lot is liable to damage to the common property or other lots caused by the use of the area. The by-law can also require the owner of the lot to pay a sum to the owners corporation. This is, in a sense, the payment or fee for the common property. Such a sum can be a lump sum amount, or it can be annual, or on any other basis parties agree. The benefit of using a common property rights by-law to “buy” part of the common property is that the process of making and registering a by-law is much more simple and cost effective. The downside is that the area of common property is not added to your lot as lot property, it is only a use right and it can be repealed by a special resolution.
Gemma Lumley Kerin Benson Lawyers E: allison@kerinbensonlawyers.com.au P: 02 4032 7990
This post appears in Strata News #688.
Disclaimer: This is general information and should not be considered to be legal advice. If you are affected you should obtain legal advice specific to your individual situation.
Have a question about purchasing common property in NSW or something to add to the article? Leave a comment below.
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This article has been republished with permission from the author and first appeared on the Kerin Benson Lawyers website.
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