NSW: Q&A Exclusive Use of Common Property

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Lot owners from NSW have questions about Exclusive use of common property.

Table of Contents:

• QUESTION: Can exclusive use by-laws be challenged if they result in subsequent usage that is detrimental to the building?
• QUESTION: We are selling our apartment. The purchasers have advised that our car space is shown as Common Property. What can we do?
• QUESTION: A by-law was created for exclusive use of part of a common area. The lot is now for sale and the owner is advertising the room as part of the sale. Is this legal to advertise this as part of the sale?
• QUESTION: An ordinary resolution passed in 1991 at a general meeting voted to allow owners to park on common property and gave them allocated spaces. Do these owners have exclusive use rights of the common property?
• QUESTION: I’m looking into having a parcel of land divided between me and my next door neighbour as exclusive use common property. What is usually included in such an agreement?
• QUESTION: Before I owned my apartment, another lot owner was given exclusive use of common property. The area is quite large and I’m perturbed I no longer have access. Is there anything I can do?

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Question: Can exclusive use by-laws be challenged if they result in subsequent usage that is detrimental to the building?

Several of my scheme’s by-laws grant exclusive use of common property areas (including the rooftop) to individual lot owners in our high rise building.

These owners have progressively modified ‘common area rooftop utility structures as ‘penthouse apartments’, now compromising roof maintenances and access.

The bylaws are so well written that these owners have power of veto to any attempt at voting to issue a breach against them.

These exclusive use by-laws appear to have been a common trick of developers in the 70’s, who had every intention to use these utility rooms as residential penthouses, and circumvent height controls.

Can such exclusive use by-laws be challenged if they result in subsequent usage that is detrimental to the building?

Answer: A review of the exclusive by-laws should be undertaken including whether it complies with the Strata Schemes Management Act and Regulations including whether the granting of the exclusive use was approved by special resolution.

A review of the exclusive by-laws should be undertaken including whether it complies with the Strata Schemes Management Act and Regulations including whether the granting of the exclusive use was approved by special resolution.

Section 142 of the Strata Schemes Management Act 2015 provides:

For the purposes of this Act, a “common property rights by-law” is a by-law that confers on the owner or owners of a specified lot or lots in the strata scheme–

1. a right of exclusive use and enjoyment of the whole or any specified part of the common property, or
2. special privileges in respect of the whole or any specified part of the common property (including, for example, a licence to use the whole or any specified part of the common property in a particular manner or for particular purposes), or that changes such a by-law.

Section 143 provides the requirements and effect of common property rights by laws

1. An owners corporation may make a common property rights by-law only with the written consent of each owner on whom the by-law confers rights or special privileges.
   Note : Any addition to the by-laws will require a special resolution (see section 141).
2. A common property rights by-law may confer rights or special privileges subject to conditions specified in the by-law (such as a condition requiring the payment of money by the owner or owners concerned, at specified times or as determined by the owners corporation).
3. A common property rights by-law may be made even though the person on whom the right of exclusive use and enjoyment or the special privileges are to be conferred had that exclusive use or enjoyment or enjoyed those special privileges before the making of the by-law.
4. After 2 years from the making, or purported making, of a common property rights by-law, it is conclusively presumed that all conditions and preliminary steps precedent to the making of the by-law were complied with and performed.

It is important to ensure that the common property rights by law was made with the written consent of each owner on whom the by-law confers rights or special privileges.

Subsection 4 is of importance as it indicates that following 2 years after the making of the common property rights by-law it is conclusively presumed that all conditions and preliminary steps precedent to the making of the by-law were complied with and performed.

There is another section in the Act, section 150 which provides an order invalidating by-law:

1. The Tribunal may, on the application of a person entitled to vote on the motion to make a by-law or the lessor of a leasehold strata scheme, make an order declaring a by-law to be invalid if the Tribunal considers that an owners corporation did not have the power to make the by-law or that the by-law is harsh, unconscionable or oppressive.
2. The order, when recorded under section 246, has effect as if its terms were a by-law repealing the by-law declared invalid by the order (but subject to any relevant order made by a superior court).
3. An order under this section operates on and from the date on which it is so recorded or from an earlier date specified in the order.

This section can be relied on if the common property rights by-law was not authorised and the owners corporation did not have the right to make it or is harsh, unconscionable or oppressive. An application would need to be brought to the Tribunal and you would need to show the exclusive use by-law is not consistent with the By-laws in the building, legislation and regulations.

Pierrette Khoury
Khoury Lawyers
P: 0415 459 486
E: [email protected]

This post appears in Strata News #428.

Question: We are selling our apartment. The purchasers have advised that our car space is shown as Common Property. What can we do?

We’ve lived in the same Villa for 17 years. We decided to sell a while ago and received an offer last week, which we accepted.

We received an email from our agent about the car space on our property. The purchasers had advised that the car space on our property behind a gate is shown as Common Property.

When we purchased the property 17 years ago, we were told the car space was part of our property. What can we do?

Answer: Are you aware of an exclusive use by-law which might apply to the relevant car space?

Firstly, a copy of the strata plan showing the car space in contention would assist. The second question to ask is whether or not you are aware of an exclusive use by-law which might apply to the relevant car space. If so, while the space is not “part” of your lot, your prospective purchaser will have exclusive use of it.

Leanne Habib
Premium Strata
P: 02 9281 6440
E: [email protected]
You can connect with Leanne & Premium Strata on Facebook, Twitter & LinkedIn.

This post appears in Strata News #409.

Question: A by-law was created for exclusive use of part of a common area. The lot is now for sale and the owner is advertising the room as part of the sale. Is this legal to advertise this as part of the sale?

A by-law was created for exclusive use of part of a common area (room~20sqm). The lot is now for sale and the owner is advertising the room as part of the sale.

1. Is this legal to advertise this as part of the sale?
2. What are the steps in changing this by law or allowing this room to be for use of common property

Answer: It would be legal to advertise a common property rights by-law but be sure to check the legal requirements for the conveyancing process.

It would be legal to advertise a common property rights by-law (eg. the exclusive use and enjoyment of a common area), but be sure to check the legal requirements for the conveyancing process.

Firstly, is the common property rights by-law registered with the Registrar General of your state? For example, in NSW, the by-laws of a strata scheme are legally required to be attached in a contract for sale of a strata property. If there is a common property rights by-law that has been approved and registered at the land titles office properly, there will be evidence of the by-law in the contract for sale.

Secondly, the contract and marketing materials must reflect the common property rights by-law accurately. For example, there may be conditions such as fees payable to the owners corporation for the exclusive use, maintenance responsibilities or any time restrictions. The conditions should be disclosed to all interested purchasers. Your conveyancer or lawyer should be able to advise you on the disclosure obligations for selling a property in your state.

What steps do I take to change an exclusive use by-law?

If you own a strata property in NSW, familiarise yourself with the procedure for changing by-laws under the current Strata Schemes Management Act 2015 (the Act).

Section 141 of the Act requires a change to by-laws to be by special resolution of the owners corporation. Section 143 of the Act states that an owners corporation may make a common property rights by-law only with the written consent of each owner on whom the by-law confers rights or special privileges. A common property rights by-law includes a by-law that changes an existing common property rights by-law.

Therefore to change an exclusive use by-law, in addition to obtaining a special resolution, consent of the lot owner affected should also be obtained to ensure the validity of the change is not open to challenge.

This section notes that ‘any addition to the by-laws will require a special resolution (see section 141)’.

In order to change a common property rights by-laws, owners should follow the procedure as prescribed in section 141 of the Act:

141 Procedure for changes to by-laws

1. An owners corporation may, in accordance with a special resolution of the owners corporation, change the by-laws of the strata scheme.
2. A change to the by-laws of a strata scheme has no effect until—
1. the owners corporation has lodged a notification with the Registrar-General in the manner approved by the Registrar-General, and
2. the Registrar-General has made an appropriate recording of the notification in the folio of the Register for the common property.

3. The secretary of the owners corporation must keep a consolidated up to date copy of the by-laws for the strata scheme.
4. A notification cannot be lodged in the Registrar-General’s office more than 6 months after the passing of the resolution to make the by-law.

Whether you are selling your property or buying one, engage a legal representative who will look out for any red flags and provide a smooth conveyancing process.

Yuhao Gu
Omega Legal
E: [email protected]
P: 0402 990 108

This post appears in Strata News #397.

Question: An ordinary resolution passed in 1991 at a general meeting voted to allow owners to park on common property and gave them allocated spaces. Do these owners have exclusive use rights of the common property?

An ordinary resolution passed in 1991 at a general meeting voted to allow owners to park on common property and gave them allocated spaces.

There is no bylaw & it was not a special resolution.

Do these owners have exclusive use rights of the common property?

Is the resolution valid?

Answer: As no by-law was created, no exclusive use was validly created.

This is a complex legal question, however, in our view, because no by-law was created, no exclusive use was validly created. We envision that any attempt to challenge this historic “exclusive use” situation will be hotly contested.

To regularise the matter, the owners corporation could retrospectively pass a by-law, repeal the resolution and reverse the parking arrangements or you could (depending on other facts and legalities) seek Orders from NCAT that the resolution be invalidated.

Leanne Habib
Premium Strata
P: 02 9281 6440
E: [email protected]
You can connect with Leanne & Premium Strata on Facebook, Twitter & LinkedIn.

This post appears in Strata News #268.

Question: I’m looking into having a parcel of land divided between me and my next door neighbour as exclusive use common property. What is usually included in such an agreement?

I live in a strata complex and have a common area at the back of our property that was left as common property simply because it had a large tree that was unable to be removed when the complex was built and so our boundary fence was built around the tree.

The tree has since been removed and now I am looking into having this parcel of land divided between me and my next door neighbour as exclusive use common property.

I’m basically just looking for advice on what is usually included in such an agreement. What limitations are set on the agreement and renovations to the area?

We would like to fence in the area to make it part of our backyard.

Would new plans need to be drawn up or are basic agreements permissible?

Thanks for any advice.

Answer: You would need a by-law which sets out the boundaries of the relevant areas.

You would need an exclusive use by-law or common property rights by-law which sets out the boundaries of the relevant areas but also includes a scope of permissible works (eg fencing, its construction materials, location etc), duly licensed tradesmen, the requisite insurances, indemnities to the owners corporation and your ongoing repair and maintenance obligations.

You would need precise plans to be drawn up for the certainty of the by-law.

Leanne Habib
Premium Strata
P: 02 9281 6440
E: [email protected]
You can connect with Leanne & Premium Strata on Facebook, Twitter & LinkedIn.

This post appears in Strata News #249.

Question: Before I owned my apartment, another lot owner was given exclusive use of common property. The area is quite large and I’m perturbed I no longer have access. Is there anything I can do?

We are a small strata in NSW.

I became the owner of one of the lots in June 2015.

I became aware that, a few years prior to my purchase, one of the other lots was given exclusive use of common property. The area is quite large. It was apparently overgrown and had been left unattended for many years.

The lot owner has certainly done a great job and turned the area into a very nice garden with paving, decking, and even a studio. All these things were approved by the strata.

My beef is that I can not access this area and I do not think it is right.

I have a unit entitlement of 22, the exclusive use lot owner 23 and the majority owner 55.

All three lot owners in 2013 voted for the exclusive use.

I have tried to persuade the majority owner (55%) that we should try and get it back. The majority owner says he supported the exclusive use then and he supports it now because the lot owner has fulfilled all the conditions of the bylaw and reckons he has done a great job.

Is there anything I can do?

I take it that if the bylaw has been passed (in fact all three owners passed it at the time) then it is unlikely that NCAT would, or even could, remove the exclusive use provisions.

I have read on many legal sites that unless the bylaw was passed under suspect conditions eg a developer holding 75%+ of the entitlement then essentially it is a case of “well if that is what the owners wanted at the time then that is what they have got”.

Is that how you see it…in its most simplistic terms?

Answer: While it is difficult, it is not unheard of that an exclusive use by-law be repealed.

While it is difficult, it is not unheard of that an exclusive use by-law is repealed. It is unlikely the exclusive use owner would consent to the by-law being repealed, however, the Tribunal has powers to prescribe repeal of a by-law, if, for example, an owner has unreasonably refused to consent to the terms of a proposed common property rights by-law, or to the proposed amendment or repeal of a common property rights by-law.

You mention nothing of the exclusive use owner having paid for this large and presumably valuable area. This may be a ground for challenge of the by-law. The Owners Corporation should theoretically have been (and indirectly, the owners) compensated for the loss of this property which all the lot owners own in proportion to their unit entitlements.

You may have grounds to challenge, and, if successful, invalidate the by-law.

Mediation would need to occur first and we recommend engaging a strata lawyer to weigh your prospects of success.

Leanne Habib
Premium Strata
P: 02 9281 6440
E: [email protected]
You can connect with Leanne & Premium Strata on Facebook, Twitter & LinkedIn.

This post appears in Strata News #187.

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Read Next:

• NSW: When a lot owner wants to expand into part of the common property
• NSW: Do You Need the Owners Corporation Consent to Your DA?

This article is not intended to be personal advice and you should not rely on it as a substitute for any form of advice.

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