Question: If extra rooms are being created within units without approval, what impact does this situation have on owners corporation insurance?
There are more and more situations where extra rooms are being created within units without owners corporation approval (eg a 2 bedroom made into a 3 bedroom). Some are obvious, some you wouldn’t know if they were approved or not.
What impact does this situation have on owners corporation insurance and the owners insurance? Especially when the units have been on sold and the new owners don’t realise.
Does a strata manager have an obligation to know how many bedrooms the units were originally built as?
Answer: From a claims perspective, policies will have an exclusion for illegal installations.
When it comes to arranging insurance, the sum insured must be reflective of full replacement value. Notwithstanding, most insurers have a provision in their policy for lot owners fixtures and fittings which allows for extra re-build costs in addition to the building sum insured if a lot owner has upgraded their property without the owners corporation knowing or factoring this into the building sum insured.
From a claims perspective, policies will have an exclusion for illegal installations. If converting the property from a 2 bedroom to a 3 bedroom is non-compliant, the insurer may decline cover for repairs to the installations that do not comply.
This post appears in Strata News #487.
Tyrone Shandiman
Strata Insurance Solutions
E: tshandiman@iaa.net.au
P: 07 3899 5129
This information is of a general nature only and neither represents nor is intended to be personal advice on any particular matter. Shandit Pty Ltd T/as Strata Insurance Solutions strongly suggests that no person should act specifically on the basis of the information in this document, but should obtain appropriate professional advice based on their own personal circumstances. Shandit Pty Ltd T/As Strata Insurance Solutions is a Corporate Authorised Representative (No. 404246) of Insurance Advisernet Australia AFSL No 240549, ABN 15 003 886 687.
We live next to ( adjoining building ) a three bedroom unit.
Currently there are 2 king sized beds and in the third bedroom there are 2 double bunks. This is fine for 2 families with children but not however when 8 adults arrive to stay ( which happens frequently). How can this situation be rectified?
Hi Catherine
Contact local council to check occupancy limits.
Thanks
Question
The 3 bedroom house next to me has been divided into 3 units two bedsits and a 2 bedroom. No off street parking it is on a school bus stop has no drive way and even if it had there’s room for one car only. It’s on a very small block front with five houses and this is causing home owners problems accessing there home for parking as the number of vehicles from the units are parking them out.
Last count the 3 units/ house has five cars so far Are there any nsw regulations to cover what the landlord needs to provide to ease the situation.
Hi Ian
This would be a matter for your Local Council to address.
Hi.i have a question. I live in parramatta. I live in 2 bedroom unit. I have my room. A guy he lives in lounch room and he told me in next 3 days 2 other guys coming live in the other room. I am thinking by the law that’s not right. Plz let me know if I can complaine about this matter or not. Thank you
Hi Halo
If you are renting the premises, you would be best to contact someone like the Tenants Union of New South Wales.
We wish you all the best in resolving the matter.
The bylaw ‘cannot limit a bedroom to occupy less than 2 adult per bedroom’. What does this mean? I thought the issue was overcrowding.
Hi Diane
We have received this reply from Leanne Habib:
Section 137 states:
137 Occupancy limits
(1) A by-law may limit the number of adults who may reside in a lot by reference to the number of bedrooms of the residence.
(2) The limit may not be fewer than 2 adults per bedroom.
(3) The by-law has no effect:
(a) to the extent to which it is inconsistent with any planning approval or other law applicable to the lot, or
(b) in any other circumstances prescribed by the regulations for the purposes of this section.
(4) To avoid doubt, the Tribunal may make an order under Division 5 about a by-law made under this section.
(5) The regulations may provide for the circumstances when a person is a resident of a lot for the purposes of a by-law made under this section.
(6) For the purposes of this section, a “bedroom” is a room approved for use as a bedroom under, or indicated as a bedroom in any plans the subject of, a planning approval and includes any other room prescribed by the regulations as a bedroom for the purposes of this section.
The exception to this rule is set out in the regulations which provides:
Occupancy limits–exception
36 OCCUPANCY LIMITS–EXCEPTION
For the purposes of section 137 (3) (b) of the Act, a by-law that limits the number of adults who may reside in a lot has no effect if all of the adults who reside in the lot are related to each other.
The intention of these sections is to limit overcrowding in apartments by limiting the number of adults which may occupy a bedroom (unless they are related).
Thank you for your prompt reply however this does not answer my question.
If a Lot owner leases out the upstairs to one tenant then a bedroom downstairs to another tenant then another bedroom to another tenant ie 3 separate leases in the one Lot..
The owner is not living at the Lot. So this almost becomes lodgings.
1. Is this legal?
2. And does their leases have to be formalised