Flat Chat Strata Forum Common Property Current Page

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  • #11111

    hi all,

    in a strata block of 5 units in NSW, if one owner acquired 4 units, can he decide himself all the necessary by-laws by special resolutions?

    examples of by laws would be: exclusive use/common property rights by laws; exclusive use of parking.

    would it be deemed unfair by a tribunal because more than 75% is under one owner? any option left for the single owner left in the block to oppose to him?

    any advice is very much appreciated.

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  • #27132
    Jimmy-T
    Keymaster

      Now, I am not a lawyer but there is a concept in law called something like Fraud on the Minority which applies where someone with the requisite number of votes uses them to disadvantage someone else, without properly compensating them for their loss.

      This is the principle that was notably used to require owners who voted to award themselves use of common property – extending into the roof of  the building – without adequate compensation to the other owners.

      Now, my first advice would be to talk to a lawyer.

      Then (unless the lawyer recommends otherwise) tell the majority owner you believe they have inadvertently committed a Fraud on the Minority and ask them to use their voting power to change the by-laws to include appropriate compensation for you and to take responsibility for the ongoing maintenance of the common property they have acquired.

      Do all this is writing and if they fail to respond appropriately, you could certainly apply to Fair Trading for mediation, then to NCAT to have the special resolutions overturned and/or have an element of compensation attached to them. I believe you would do this under section 149 (below).

      I’m not sure if there’s anything you can do to prevent the special resolution by-laws but at least you can be compensated.

      I would be looking for compensation based on an independent valuation (paid for by the majority owner) and with a condition in the by-law that the owner had sole responsibility for the maintenance of the common property thus acquired. 

      I also wouldn’t delay as there is a two-year window after which these by-laws are assumed to have met the requirements to be registered.

      149 Order with respect to common property rights by-laws
      (1) The Tribunal may make an order prescribing a change to a by-law if the Tribunal finds:
      (a) on application made by an owner of a lot in a strata scheme, that the owners corporation has unreasonably refused to make a common property rights by-law, or
      (b) on application made by an owner or owners corporation, that an owner of a lot, or the lessor of a leasehold strata scheme, has unreasonably refused to consent to the terms of a proposed common property rights by-law, or to the proposed amendment or repeal of a common property rights by-law, or
      (c) on application made by any interested person, that the conditions of a common property rights by-law relating to the maintenance or upkeep of any common property are unjust.
      (2) In considering whether to make an order, the Tribunal must have regard to:
      (a) the interests of all owners in the use and enjoyment of their lots and common property, and
      (b) the rights and reasonable expectations of any owner deriving or anticipating a benefit under a common property rights by-law.
      (3) The Tribunal must not determine an application by an owner on the ground that the owners corporation has unreasonably refused to make a common property rights by-law by an order prescribing the making of a by-law in terms to which the applicant or, in the case of a leasehold strata scheme, the lessor of the scheme is not prepared to consent.
      (4) The Tribunal may determine that an owner has unreasonably refused consent even though the owner already has the exclusive use or privileges that are the subject of the proposed by-law.
      (5) An order under this section, when recorded under section 246, has effect as if its terms were a by-law (but subject to any relevant order made by a superior court).
      (6) An order under this section operates on and from the date on which it is so recorded or from an earlier date specified in the order.

      The opinions offered in these Forum posts and replies are not intended to be taken as legal advice. Readers with serious issues should consult experienced strata lawyers.
      #27137

      Dear JimmyT,

      thank you for the reply. very very much appreciated the insight given. I will read more in regards to ” Fraud on the Minority”.

      Not that it changes any of the advices given, and apologize for the misunderstanding, but I’m actually that owner aiming for +75% majority with the purchase of the 4th out of 5 units in the block. Currently I’m at 60% with 3 out of 5.

      Prices and costs of the next purchase are high and it will be only viable for my specific situation if with the unit i could acquire the 75% votes and rights to exercise by laws.

      An exclusive use of a courtyard would help me to increase the rent of that unit and help in the cashflow of the new purchase.

      Thank you for your time Jimmy.

        

      #27138
      Jimmy-T
      Keymaster

        In that case, the fair thing to do would be to get an estimate of the value of the property with and without the courtyard and divide the difference according to the unit entitlements and give the remaining owner that (and a bit extra to be on the safe side).  

        That way, if the fifth owner comes here for advice, I can tell them, hand on heart, that you have done the right thing and there’s probably no point in taking this to NCAT.

        The opinions offered in these Forum posts and replies are not intended to be taken as legal advice. Readers with serious issues should consult experienced strata lawyers.
        #27167
        KERA
        Flatchatter

          Hi Jimmy

          re the 2 year window above – am I reading this out of context? Does it mean that once 2 years from the date of an AGM approving a special use ByLaw has lapsed that the ByLaw is assumed to have met the requirements to be registered at the LPI?

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