This article discusses the $3,000 legislative limit on committee approval for home improvement requests and whether it can be increased by the committee.
Question: Can the committee increase the approval threshold for home improvement requests in exclusive use areas?
The committee received a home improvement request for the exclusive use area of a townhouse. Because the request exceeds $3,000, the committee was advised that the approval must be voted on at the AGM or through a paper meeting, which costs about $1,000. Is this a reasonable cost per meeting? Can the committee pass a resolution at the next AGM or paper EGM to increase the $3,000 threshold for home improvement requests to a higher value?
Answer: The $3000 limit was set when the legislation was introduced and has never been increased or indexed to inflation
The rules around lot-owner improvements are a mess.
This resource on the BCCM site: Improving common property and lots provides the following information:
The committee can approve an improvement by an owner if the:
- total cost is less than $3,000
- improvement does not detract from the appearance of a lot
- body corporate is satisfied that the use and enjoyment of the improvement is not likely to be a breach of the owner’s duties as an occupier (e.g. by causing a nuisance to others in the scheme).
If the committee cannot approve the work it must be authorised by ordinary resolution at a general meeting.
The explanation of the rules is plain enough, but the implementation is impractical for most owners and schemes.
The $3000 limit was set when the legislation was introduced and has never been increased or indexed to inflation. As a result, most improvements exceed the committee approval limit in value. Opportunities to increase the limit have been passed over every time there have been changes to legislation. It seems odd that, at the very least, the legislators don’t link these limits to inflation. Even applying a basic inflation rate as the increase, the limit should be around $6000.
As it is, the $3000 rate is insufficient to cover most modern improvements, so by the letter of the law, these should all be approved via a general meeting. The legislation appears to assume these are commonplace when, in fact, they are infrequent, difficult to arrange, and costly. This renders the current laws unworkable.
Consider an owner in a 100-lot scheme who wants to install an air conditioner with the cost being $5000. The external installation through common property walls needs approval. By the letter of the law, this should be done at a general meeting; however, if the AGM was held last month, and the scheme has no intention of calling a general meeting until the next AGM.
What’s the reasonable way to deal with an improvement application in this situation?
It doesn’t seem right that the owner should wait a year before the next general meeting to have an air-con approved. If you put this proposal to the owners, in reality, many would respond by proceeding with the installation regardless.
Maybe the owner could pay for the meeting, but if the cost was, say $1000 (a modest estimate), that adds quite a bit of expense to a routine application. The owner is doing the right thing by applying, and the body corporate should want owners to apply, so how is it beneficial to add a high bureaucratic cost to the process? Even if the owner accepted paying for a general meeting to get the work approved, they will struggle to juggle the time lines of body corporates – minimum three weeks to call a meeting – with the timelines of contractors who typically provide quotes valid for thirty days and are hard to book in at the best of times.
Maybe the body corporate should pay, but then other owners are paying for one individual’s air con upgrade, and that doesn’t seem right.
Ultimately, whichever legal pathway you follow, you end up in an unsatisfactory and impractical situation that runs against the principles of good management and in defiance of an obvious solution – raise the limit or change the laws so that the committee can approve the application.
So what can you do? I suspect that most body corporates are simply shrugging their shoulders at these rules and are having the committee approve these applications. Some may be doing retrospective approvals for all applications the committee has authorised at the next possible general meeting. If you are looking to resolve the issue and comply with the legislation, this appears to be a reasonable accommodation.
Other schemes may be twisting themselves in knots, trying to adhere to legislation. Are they better off? It would be helpful to hear about how schemes are addressing the issue in the comments.
It would also be interesting to know if anyone thinks the current legislation is working successfully, if correctly applied.
As it is, though, it is hard to argue that the current rules are user friendly and when that is the case, strata owners tend to respond by not using them.
William Marquand
Tower Body Corporate
E: [email protected]
P: 07 5609 4924
This post appears in Strata News #763.
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