NSW: Authorising works to the common property and the resolution is required

This article is about how works to common property must be properly authorised under strata law and the different approvals required for owners corporations and lot owners.

This is part one of our sustainability series. As you would know if you have owned or occupied a lot in a strata scheme for any length of time, work to the common property must be authorised under the Strata Schemes Management Act 2015. For ease of reference, in this series I will refer to this Act as the Management Act.

Why does work to the common property have to be authorised? It is because when the strata plan is registered, the effect of section 24 of the Strata Schemes Development Act 2015 is that the registration creates the Owners Corporation and makes the Owners Corporation the owner of the common property in the plan. The Owners Corporation holds the common property as an agent for each lot owner as tenants in common in shares proportional to their lot’s unit entitlements: section 28 SSDA.

So how is work to the common property authorised? For this we go to Part 6 of the Management Act. Under this part I’ll group where the Owners Corporation’s authority comes from and then where a lot owners authority to do work to the common property comes from:

First, the owners corporation:

• The owners corporation has a ‘strict’ obligation to maintain and repair the common property under s106 of the Management Act and which takes effect as soon as the item of common property is ‘no longer operating effectively or at all or has fallen into disrepair’: Seiwa Pty Ltd v Owners Strata Plan 35042 [2006] NSWSC 1157. This duty is often quoted and has been much disputed, especially the relatively new ability of a lot owner to claim for reasonably foreseeable losses arising from a breach of the owners corporation’s obligation. In conjunction with section 9 of the Management Act which makes the owners corporation responsible for the management of the scheme (including maintaining and repairing the common property, section 106 not just authorises the Owners Corporation to repair and maintain the common property but requires it.
• Section 108 can also be used to authorises the owners corporation to add to or alter the common property or to erect a new structure on the common property. However, the limitations are that it has to be :
• for the purpose of enhancing or improving the common property
• approved by a special resolution; and
• the authorisation has to set out the responsibility for the ongoing maintenance if the work is to be done by a lot owner.

Secondly, lot owners:

• Section 111 of prohibits lot owners from undertaking work to the common property unless it is authorised by Part 6 of the Management Act, by a common property rights by-law, by a special resolution of the owners corporation or by the owners corporation as authorised by a by-law.
• Section 108 as discussed above can authorise an owners corporation to add to or alter the common property or to erect a new structure on the common property. It can also be used to authorise a lot owner to do the same. The same restrictions apply in that the work must be for the purpose of improving or enhancing the common property, must be passed by a special resolution and a by-law must be passed. The by-law must set out the authorisation, the ongoing maintenance responsibility and can only be passed with the written consent of the relevant lot owner.
• S109 authorises cosmetic work , or pre-authorises it if you like. Cosmetic work is work that is very minor such as laying carpet, painting, installing or replacing handrails, installing or replacing internal blinds and curtains, filling minor holes and cracks in internal walls and installation or replacing hooks nails, screws for hanging paintings and other things on walls. S109 permits this work with no further resolution of the owners corporation or strata committee being required. Thinking about it, some of this work such as installing curtains and blinds can increase sustainability by reducing energy consumption by occupants.
• S110 sets out the process for the authorisation of minor renovations and the conditions of any approval. These works are approved either by an ordinary resolution of the owners corporation at a general meeting or, if a by-law delegating the power to do so has been passed and registered, by a resolution of the strata committee. These works are work that are not cosmetic work or work that involves making structural changes, would change the external appearance of the lot, involve waterproofing and works that are either authorised by a by-law made under Part 6 or are common property rights by-law or work that requires consent under other legislation such as the Environmental Planning & Assessment Act 1979.

The perennial question in strata title law, is whether works to the common property are repair and maintenance works under s106 of the Management Act or whether they are works to add to or alter the common property, being an upgrade under s108. The difference is that repairs are an obligation and require ordinary resolution. The owners corporation, generally speaking, is not required to alter or add to the common property to upgrade it and this work requires a special resolution.

How do you tell the difference? It’s complicated. More on this in part 2.

Please seek legal advice that is tailored to your situation because as always, the devil is in the details and this is general information only.

Allison Benson
Kerin Benson Lawyers
E: allison@kerinbensonlawyers.com.au
P: 02 4032 7990

This post appears in Strata News #773.

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Read next:

• [ARTICLE 1]
• [ARTICLE 2]
• [ARTICLE 3]

This article has been republished with permission from the author and first appeared on the Kerin Benson Lawyers website.

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