Question: When a mixed-use building with residential and commercial lots plans major external painting, how does the committee determine who pays for what?
I’m on the committee of a mixed-use residential and commercial building. We’re considering a major external painting project, but the strata manager says it’s not automatically a shared cost.
When it comes to painting costs, is the commercial lot a completely separate entity, even though it’s the same building? How do we determine if the commercial lot needs to contribute to the painting costs, and what document controls this contribution? Furthermore, how do we determine who is responsible for their part, and what can we do if they are unwilling to contribute?
Answer: Specialist knowledge and experience are required to determine how these agreements impact the management and funding responsibilities of a strata scheme.
Although the residential and commercial lots are located in the same building, major works such as external painting are not automatically jointly managed.
The residential and commercial components of the building are completely seperate legal entities. The relationship between them is normally controlled by a building management statement (BMS) or strata management statement (SMS). You need to check this to determine if, and how much, the commercial lots are required to pay.
Unless a BMS or SMS says otherwise, the commercial and residential lots will each be privately responsible for arranging and funding the maintenance of the areas that are their property (as shown on the survey plan). This is true, even if another party potentially gains a benefit from that property.
For developments like the one you describe, it is common for the BMS or SMS to be silent about responsibility for external painting. If this is the case at your building, the residential and commercial lot owners are each independently responsible for painting their sections of the facade. In such circumstances, to have the full exterior painted, you will need to either negotiate with the commercial lot and convince them to paint their section of the building (at their direct expense) or potentially take legal action to force them to paint if the building has become dilapidated.
Even if the BMS or SMS makes the external painting (or other works you are planning) a “shared facility” expense which is jointly controlled and funded, it will almost certainly require the commercial lot owner to vote to approve the works.
Developments controlled by a BMS or SMS comprise a substantial proportion of those for which we provide sinking fund/capital works plans and other services. In our experience, most lot owners and service providers do not understand the complexity of working with BMS or SMS systems.
It really does require specialist knowledge and experience to determine how these agreements impact the management and funding responsibilities of a strata scheme.
Kaylene Arkcoll Leary & Partners E: enquiries@leary.com.au P: 1800 808 991
This post appears in the July 2025 edition of The NSW Strata Magazine.