Question: An owner renovated two bathrooms and then submitted a claim for waterproofing and tiling. Does the owners corporation have to pay when the work was an upgrade, not a repair?
An owner in our building asked for approval to renovate two bathrooms. The request was approved at an EGM under section 108 of the Strata Schemes Management Act 2015.
Once the renovations were finished, the owner sent the owners corporation a claim for waterproofing and like-for-like tiling. The renovation wasn’t for repairs, it was an enhancement. Is the owners corporation responsible for paying this claim?
Answer: An owners corporation’s duty to maintain common property generally does not extend to making enhancements or improvements.
I cannot comment on a specific scenario without being instructed. I can comment generally.
Within a strata scheme, property is common property unless it has been subdivided into a lot, pursuant to section 4(1) of the Strata Schemes Development Act 2015 (NSW) (“SSDA”):
common property, in relation to a strata scheme or a proposed strata scheme, means any part of a parcel that is not comprised in a lot (including any common infrastructure that is not part of the lot).
The SSDA, at section 6(1), further defines the boundary of lots as:
For the purposes of this Act, the boundaries of a lot shown on a floor plan are —
(a) except as provided by paragraph (b) —
(i) for a vertical boundary in which the base of a wall corresponds substantially with a base line — the inner surface of the wall, and
(ii) for a horizontal boundary in which a floor or ceiling joins a vertical boundary of the lot — the upper surface of the floor and the under surface of the ceiling, or
(b) the boundaries described on the floor plan relating to the lot, in the way prescribed by the regulations, by reference to a wall, floor or ceiling in a building to which the plan relates or to common infrastructure within the building.
Taken together, this means that the lot is the airspace within the structures that encompass the lot, and the boundaries which are formed by those structures, including the surface, are common property. This would include the original tiles.
Section 108 of the Strata Schemes Management Act 2015 (NSW) (“SSMA”) is the provision of the SSMA that sets out the regime for making changes to common property. Whilst the SSMA has provisions for cosmetic works (section 109) and minor works (section 110), the changing of tiles is likely to engage section 108 as such works could involve waterproofing.
In default terms, all section 108 does is to allow a change of common property and does not automatically shift maintenance obligations to an adjoining lot owner: c.f section 108(4). However, the SSMA also allows for such conditions to be written into the approval of the works, pursuant to section 108(3) and (5). Still, those would need to be expressly stated, and “[i]f a special resolution under this section does not specify who has the ongoing maintenance of the common property concerned, the owners corporation has the responsibility for the ongoing maintenance.”
In respect of repairs, an owners corporation has an obligation pursuant to section 106 of the SSMA to, inter alia:
- properly maintain and keep in a state of good and serviceable repair the common property and any personal property vested in the owners corporation; and
- renew or replace any fixtures or fittings comprised in the common property and any personal property vested in the owners corporation.
In respect of sections 106 and 108 of the SSMA, and their predecessors in section 62 and section 65A respectively of the Strata Schemes Management Act 1998 (NSW), past decisions have held that the obligation to maintain does not include making enhancement or improvements: c.f. The Owners Strata Plan 50276 v Thoo [2013] NSWCA 270; Glenquarry Park Investments Pty Ltd v Hegyesi [2019] NSWSC 425; Stolfa v Owners Strata Plan 4366 and Ors [2009] NSWSC 589. However, that default position can be deviated from, and some things to consider include:
- was the works an improvement or enhancement of the common property where otherwise that objective could not be achieved; or
- are those enhancements or improvements consequential upon necessary repair or maintenance of the common property.
I would encourage the inquirer to seek legal advice.
This post appears in Strata News #811.
Matthew Lo
Kerin Strata Lawyers
E: matthew@kerinstratalawyers.com.au