NSW: Can a costly balcony upgrade proceed without owner approval

Question: Does a $500,000 balcony upgrade with no structural concerns need approval from all owners, not just the committee?

An owner-investor in our 21-lot block arranged an inspection report for all balconies. The report noted non-compliance with Australian Standards and balustrade breaking away from the walls, but no structural concerns. It concluded with two options. Either to monitor yearly or engage a consultant to manage the upgrade. That owner then obtained financing plans for an upgrade to all balconies, ranging from $500,000 to $1,000,000, to be paid over 5, 10 or 15 years.

Our next meeting has “consider balcony balustrade report” on the agenda. If it’s resolved to proceed with the upgrade, do future quotes and costing have to be approved by owners in a general meeting, or just the committee? I’m concerned the committee will approve these significant costs without owner oversight. Under the Strata Schemes Management Act 2015 (the Act), expenditure exceeding the prescribed threshold requires at least two independent quotes.

If the upgrade proceeds, can I push back given there are no structural concerns and this appears to be an unnecessary embellishment? We already have special levies each year to manage other costs. Balcony upgrades will potentially cost me around $85,000 over many years, depending on the financing chosen.

Answer: Yes, major balcony works of this scale should go to a general meeting for owner approval, and having no structural concerns doesn’t end the question.

This is a matter where the owners corporation should proceed carefully, transparently and in stages.

The first point is that balcony balustrades are often common property, but this should always be checked against the registered strata plan, by-laws and any applicable common property memorandum.

If the balustrades are common property, the owners corporation has an obligation under section 106 of the Act to properly maintain and keep common property in good and serviceable repair. That obligation is not limited only to “structural” defects.

Therefore, the fact that a report says there are “no structural concerns” does not necessarily mean the owners corporation can ignore the issue. If the report identifies non-compliance, safety concerns, deterioration, or balustrades breaking away from walls, the owners corporation should treat that seriously. A balustrade may not be “structural” in the engineering sense, but it can still be a safety-critical item.

There is a very important difference between:

1. necessary repair, replacement or safety/compliance work;
2. preventative works recommended by an expert;
3. staged maintenance or monitoring; and
4. an optional upgrade, improvement or embellishment.

That distinction should be clarified before owners are asked to approve a very large project. If the proposed works go beyond repair or replacement and amount to an improvement or enhancement of common property, section 108 may also need to be considered, which generally requires a special resolution.

In this case, the report appears to provide two possible pathways: yearly monitoring or engaging a consultant to manage an upgrade. That does not automatically justify a $500,000 to $1,000,000 project. The owners corporation should first understand exactly what problem is being addressed, whether immediate works are required, whether monitoring is acceptable, whether staged works are possible, and whether the proposed works are repair/replacement or an enhancement of the existing common property.

For a project of this magnitude, good governance strongly supports the matter being returned to a general meeting for owner approval. While strata committee decisions can operate as decisions of the owners corporation, the strata committee cannot decide matters that the legislation requires to be decided by the owners corporation in general meeting, by special resolution, or by unanimous resolution. The owners corporation’s decision in general meeting also prevails over a strata committee decision.

There are also practical financial reasons why this should be placed before all owners. If the project requires a special levy, amended levies, further contributions, a strata loan or long-term financing, those matters should be clearly approved by owners in general meeting. Strata loans must be approved by resolution at a general meeting, and the owners corporation must also determine special levies or further contributions at a general meeting.

Owners should be given the proposed scope, the consultant’s recommendation, competing quotations, funding options, loan terms if any, levy impact per lot, timing, risks and alternatives. Expenditure above $30,000 also generally requires at least two independent quotations, unless an exception applies.

Where the proposed cost is in the range of $500,000 to $1,000,000 for a 21-lot scheme, the quotes, contractor selection, consultant engagement, project management arrangements and funding structure should be addressed transparently at general meeting level. That does not mean every small administrative step must go back to owners, but the major decisions should not be left as a blank cheque to the committee.

The meeting agenda is also important. If the agenda item only says “consider balcony balustrade report”, owners should check whether the motion merely notes the report, approves further investigation, or authorises works and expenditure. A motion should be clear enough that owners understand what they are being asked to approve. If the intention is to commit the owners corporation to major works, financing or levies, that should be expressly stated in the motion and supported by appropriate documents.

The owner is entitled to push back, but the strongest argument is not simply “there are no structural concerns”. A better approach is to ask for proper process and proper evidence. For example:

• Has an independent consultant engaged by the owners corporation confirmed that full replacement is required?
• Does the report identify an immediate safety risk or only a future maintenance issue?
• Is annual monitoring a reasonable option?
• Are there staged repair options?
• Are the works like-for-like replacement, or do they improve or enhance the common property?
• If the works are an improvement or enhancement, is a special resolution required?
• Have at least two independent quotations been obtained for the proposed expenditure?
• What is the total cost per lot, including finance costs?
• How does this project sit with existing special levies and other known capital works priorities?
• Can the capital works fund plan be updated to rank this item against other building needs properly?

The fact that owners are already paying special levies for other issues is relevant. It does not remove the owners corporation’s duty to attend to genuine common property repair or safety matters, but it is highly relevant to timing, staging, funding and proportionality. A responsible owners corporation should consider the whole financial position of the scheme, not one project in isolation.

There is also a governance issue where the process appears to have been driven initially by one owner’s private balcony renovation. That does not mean the concern is invalid. Sometimes one owner identifies a genuine building-wide issue. However, once the matter becomes a scheme-wide project, the owners corporation should take control of the process. It should rely on independent advice obtained for the owners corporation, not simply adopt a pathway driven by one owner’s private quote or preferred financing model.

A sensible next step may be for the owners corporation to resolve only to obtain independent expert advice and comparable quotations, rather than immediately approve the upgrade. The expert brief should ask whether the balustrades require immediate repair/replacement, whether monitoring is acceptable, what minimum works are required, whether staged works are possible, and whether any proposed design goes beyond repair into improvement.

If the owners corporation proceeds without proper authority, adequate information, or a reasonable decision-making process, an owner may have options to seek mediation through NSW Fair Trading and, if necessary, orders from NCAT. However, before taking that path, owners should first ask clear questions, request documents, and seek to have any major expenditure returned to a properly convened general meeting.

In short, the owners corporation should not ignore a balustrade report simply because there are no structural concerns. Equally, a report identifying concerns should not be used to justify a major capital project without proper scope, expert justification, competitive quotations, owner approval and transparent funding decisions.

This post appears in Strata News #802.

Abe Ayoubi
W: Senior Strata Manager (NSW)
E: abe.strata@gmail.com