Can strata pass air conditioning maintenance to owners?

The answer will depend firstly on whether the OC has adopted the common property memorandum as part of its by-laws.

The fact that only 10 of the 154 lots have AC, and that each system serves only one lot, is relevant. However, the equipment's location also matters. In this case, if the internal head units are within the lots but the condensers are on common property, responsibility for the condensers may differ depending on whether the common property memorandum has been adopted.

If the common property memorandum has been adopted

Section 107 of the Strata Schemes Management Act 2015 (the Act) permits the by-laws of a strata scheme to adopt the prescribed common property memorandum. The memorandum specifically allocates responsibility between lot owners and the OC for maintaining, repairing, and replacing certain items of common property.

The prescribed memorandum provides that the lot owner is responsible for "air conditioning systems, whether inside or outside of a lot, which serve only that lot".

Accordingly, where an AC system serves only one lot, the memorandum places responsibility for maintaining, repairing and replacing that system on the owner of that lot, even where part of the system, such as the condenser, is located outside the lot on common property.

Section 106(7) of the Act is important in this regard. Although an OC ordinarily has a statutory obligation to maintain and repair common property, that obligation is expressly made subject to a common property memorandum adopted under section 107.

Therefore, if the memorandum has already been validly adopted and there is no inconsistent special by-law dealing with the AC systems, the OC would generally not need another by-law to stop paying for maintenance, repair and replacement of the individual systems. The relevant lot owners already bear responsibility. The OC should nevertheless notify the affected owners of the change in administrative practice and identify the relevant by-law adopting the memorandum.

If the common property memorandum has not been adopted

The position is different if the memorandum has never been adopted. The common property memorandum is not automatically applicable to every NSW strata scheme. Section 107 provides that the by-laws may adopt the memorandum, and the Regulation prescribes the memorandum that may be adopted.

If it has not been adopted, the fact that the memorandum would ordinarily allocate responsibility for an individual AC system to the lot owner does not, by itself, relieve the OC of its statutory obligations.

Section 106(1) of the Strata Schemes Management Act 2015 requires an OC to properly maintain and keep common property in a state of good and serviceable repair. Section 106(2) further requires it to renew or replace fixtures and fittings comprised in the common property.

If the condensers were installed as part of the original development, are situated on common property, have been there since the strata plan was registered in 1997 and have continuously been maintained, repaired and replaced by the OC, there would be a strong basis for treating the condensers as fixtures comprised in the common property.

The OC's historical maintenance of the condensers does not, by itself, legally determine ownership. However, almost 30 years of consistent treatment by the OC would be relevant evidence, particularly where no by-law or other document places the obligation on the benefiting lot owners.

In those circumstances, I would not recommend that the OC cease maintaining the condensers because the current common property memorandum says that AC systems serving one lot are normally an owner's responsibility. If the memorandum has never been adopted, it does not presently govern the scheme. Instead, the OC should first formalise the intended allocation of responsibility.

One option would be to adopt the prescribed common property memorandum by special resolution. Once adopted, responsibility for an AC system serving only one lot would ordinarily pass to that lot owner in accordance with the memorandum.

Alternatively, the OC could consider a specific AC by-law dealing with the ten systems and clearly setting out responsibility for their maintenance, repair and replacement, together with responsibility for any associated pipework, cabling, brackets, penetrations and damage to common property.

What about the internal head unit?

The internal head unit located wholly within a lot will ordinarily be treated differently from a condenser situated on common property. Assuming it forms part of the lot and is not common property, the lot owner would generally be responsible for its maintenance and replacement.

The more difficult issue is therefore the external condenser and associated components situated on or passing through common property.

Conclusion

If the common property memorandum has already been adopted, the OC should generally be able to rely upon it and require each of the ten lot owners to maintain, repair and replace their own AC system, including a condenser situated outside the lot, because the system serves only that lot.

If the common property memorandum has not been adopted, the OC should be much more cautious. Where the condensers are located on common property and have historically been treated and maintained as common property since the scheme commenced, the OC may presently have the maintenance obligation under section 106.

In that situation, rather than simply discontinuing payment, the preferable course would be to formalise the change by adopting the common property memorandum or putting an appropriate AC by-law in place.