This article about the repurposing of common property assets, in this case a tennis court, has been supplied by Todd Garsden, Mahoneys.
Jump directly to the QUESTION you are after:
- QUESTION: In a Standard Format Plan, what procedure is required to re-purpose common property?
- QUESTION: What legal capacity is there for a common property asset (a tennis court) to be re-purposed by a limited number of unit owners?
Question: In a Standard Format Plan, what procedure is required to re-purpose common property?
In a Standard Format Plan, what procedure is required to re-purpose common property?
Our AGM is forthcoming and a motion (ordinary resolution) is being put forward by the committee to reduce the footprint of the tennis court and use the vacated area for an alternate purpose.
In the motion, 3 quotes are being provided to resurface the court and move the fence in order to reduce the total area that the tennis court currently occupies but there are no quotes being provided for the alternate purpose ie a deck nor design details included as to what this deck will look like.
Is a special resolution required for this as common property is being re-purposed and is it required to include all costs and details of both components so that all owners are able to make an informed choice.
Answer: Section 163 of the Standard Module sets out the level of approval required
This amounts to an improvement to the common property.
Section 163 of the Standard Module sets out the level of approval required – which is based on the cost of the works and number of lots in the scheme. Our prior article explained this in a little more detail: QLD: Body Corporate Spending Limits During COVID-19. In summary this is:
- If the spending is less than $300 for each lot in the scheme – the committee can authorise the spending (but only if the committee spending limit is not reached).
- If the spending is less than $2,000 for each lot in the scheme – an ordinary resolution can authorise the spending but only once each financial year.
- If the spending is more than $2,000 for each lot in the scheme or the body corporate has already passed an ordinary resolution to authorise improvements – a special resolution is required.
A concern however is the lack of detail around the proposed deck. If insufficient detail is included in the motion, the motion may only be sufficient to give an indication of the body corporate’s preference – particularly if the cost is not included as it is not possible to then ascertain the type of motion required. In that case the body corporate would then later need to fully approve the deck with consideration of full quotes.
This post appears in Strata News #411.
Question: What legal capacity is there for a common property asset (a tennis court) to be re-purposed by a limited number of unit owners?
We purchased into a 35 unit secure complex in which a swimming pool, clubhouse and tennis court are part of common property. Our sinking fund schedule includes these assets and we base our sinking funds budgets according to this schedule.
The tennis court is overdue for refurbishment and we have the funds in our sinking fund to pay for the new court but:
- we are getting pushback from some committee members and
- there are some owners who feel that because the court is not utilised by all owners that we should look at re-purposing the court space.
A general email has been sent out by our Chairman at the request of an individual owner (the committee were unaware) asking all owners to submit their wish list as to whether:
- they wanted the court to remain or
- they wanted to re-purpose the court into another use.
Based on the feedback, these 2 options would formulate a motion.
As a committee, we had discussed that the court refurbishment would be included in the upcoming budget at our AGM. We have all been paying levies based on the sinking fund schedule and the capital assets listed.
What legal capacity is there for a common property asset to be re-purposed by a limited number of unit owners? Given that re-purposing the court area will devalue all owners’ units and the complex itself, what means do I and the others who want to refurbish the tennis court, have to protect our investment.
Answer: A body corporate can choose to repurpose the facilities at the scheme as long as it is approved correctly as an “improvement”.
Yes – A body corporate can choose to repurpose the facilities at the scheme as long as it is approved correctly as an “improvement”. The way this would be approved is included in this article: Body Corporate Spending Limits During COVID-19. There is no obligation to comply with the previous sinking fund forecast or what has been budgeted for expenditure.
However, in the meantime, until such time that the body corporate properly authorises the repurposing of the tennis court, it would be obliged to maintain the tennis court in good condition. This is a statutory maintenance obligation that cannot be ignored.
If the body corporate is considering these two options at the general meeting as alternatives, it needs to be careful that the motions are drafted correctly, and by the correct threshold.
This post appears in Strata News #374.
Have a question about repurposing of common property assets or something to add to the article? Leave a comment below.
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