Secret deal to grab common property

Boy, it sounds like someone does need to shake up the owners and explain about their interest in the common property. Well done so far!

mojo – a comprehensive and informative post as usual from Jimmy, and even though you’re a tenant you can, provided your strength of conviction is maintained, action most of what he’s suggested in order to guide those naïve Owners through the process.

They’re lucky to have you!

Ooops.  I just realised you are a tenant.  Much of what I wrote still holds but as a far as official meetings and minutes go, you might have to get one of your owner friends to make you their proxy and even nominate you for election to the committee.

@Mojo_1 said:

A question, Jimmy. The SM has been emailing me and calling me telling me I have NO powers to investigate issues or to speak at meetings. She’s emphasised that ALL I can do is vote. I thought that if I had permission of a majority of owners, I’d be able to speak at a meeting if it was relevant?

I would tell your strata manager she needs to go back to strata school. You can investigate as much as you want and talk to owners in a private capacity.

Under strata law you are an “interested party” and can raise complaints on a variety of issues at Fair Trading and NCAT. These include matters covered by sections 138 (resolution of disputes and failure of Owners Corp to fulfil its obligations) and 158 (To make, amend or repeal by-law conferring exclusive rights or privileges over common property) – both of which are relevant in your position.

All owners are entitled to attend executive committee meetings or send proxies, however, they or their proxies can only speak if a majority of the committee agrees. This applies to owners as well as proxies. You can speak at a general meeting as a proxy of an owner.

As to being elected to the EC? Are you sure? I’m just a proxy and a tenant…

Anyone – even a non-owner, non-resident of the building – can be elected to the EC at an annual general meeting, or elected by the EC to fill a mid-term vacancy, provided they are nominated by an owner who is not standing for election his or herself.  There are buildings where a long-term tenant has even been elected chairman.

One other specific question: does an owner of a car space own the airspace above it – ie to build a second story structure over it on metal stilts that preserve original car space?

I believe the standard airspace allowance is 2.4 metres above the floor (or thereabouts – but it’s what’s on the strata plan that counts).  There is also the issue of the new structures potentially being attached to common property, which includes drilling bolts into the floor and adjoining walls, and who takes responsibility for their maintenance.  

Mojo – not wishing to complicate an already complicated issue, but with reference to the following comment by Jimmy T……

There is also the issue of the new structures potentially being attached to common property, which includes drilling bolts into the floor and adjoining walls, and who takes responsibility for their maintenance.

 … here’s a little relevant knowledge.

Any additions or alterations to or the erecting of any structure on the Common Property such as the existing grease trap, the ducting, and the proposed extension above the carspace that will presumably be attached to the ground and possibly to the walls of the adjacent garage, and the granting of an exclusive use privilege each require a Special Resolution as opposed to an Ordinary Resolution at a General Meeting.

The Motions must be worded in that way (i.e. by stating that a special resolution is required), the significance being that for a Motion of that type to pass, ≥75% of those voting (including by proxy) need to vote in favour, with the percentage calculation being based on their collective lot units-of-entitlement (UOE) and the aggregate UOE of all those voting (i.e. a “poll vote”).

Additionally the Motion must be accompanied by the draft of a Special By-Law prepared at cost to the proponent to amongst other things make them (i.e. the current and all future Owners of the restaurant) and not the Owners Corporation (O/C) responsible for the on-going repair and maintenance of whatever it is that she’s adding to or erecting on its Common Property, and incorporate the basis upon which she’ll pay the O/C for the privilege of that exclusive-use.

That was why Jimmy commented that you’d need >25% voting against those Motions to defeat them, so you’d best do some more informing and/or lobbying to either obtain sufficient numbers of attendees or their proxies to achieve that threshold and to thereby defeat the Motions, at least until such time as Owners are better informed about what’s being put to them.

Section 65A of the Strata Schemes Management Act (SCMA) applies.

Finally (unless you need more info at a later time) any Owner, or you with the written authorisation of an Owner, can for a small fee inspect and if necessary make copies of the O/C’s records. That should both rattle the cage and be informative should you seek to inspect the Minutes of the General Meeting/s that approved of the Owner’s DA and Application to Sydney Water for the wastewater connection through the grease arrestor.

Section 108 of the SCMA applies.

Mojo – as I said before, the Owners in your Plan are lucky to have you!

In answer to your question about exclusive use attracting a fee, Division 4 of the NSW Strata Schemes Management Act (SCMA) prescribes how such a privilege may be obtained an Owner, and specifically Sect 53 talks to what a corresponding Special By-Law (SBL) may contain by way of conditions, and cites as an example one “requiring the payment of money by the owner or owners of the lot or lots concerned, at specified times or as determined by the owners corporation”.

Your Owner friends should really seek some relevant legal advice about the wording of a SBL that relates to any privilege of exclusive use that they, as an Owners Corporation (O/C) may consider, as such a SBL cannot be rescinded or amended without the prior written consent of the Lot Owner who’s at that time its beneficiary, and there needs to some basis to initially determine and regularly review the amount of any payment to the O/C for that privilege; such as a professional valuation and changes in property values respectively.

As for the change in use of the property involved, the Schedule 1 By-Law #19 of the SCMA states:

Change in use of lot to be notified

An occupier of a lot must notify the owners corporation if the occupier changes the existing use of the lot in a way that may affect the insurance premiums for the strata scheme (for example, if the change of use results in a hazardous activity being carried out on the lot, or results in the lot being used for commercial or industrial purposes rather than residential purposes).

So clearly, a prior notification to (and the implied prior consent of) the O/C WAS required, where it has the right to make a further condition requiring the Lot Owner (in this case) to meet the cost of any consequent increase in the O/C’s insurance premium.

There been some recent discussion HERE about strata-savy lawyers, and I again urge you to urge your Owner friends to contact one of those before matters progress too much further.

Mojo – with regard to the O/C selling part of its Common Property to the Owner, that requires a special resolution with ≥75% voting in favour in order for the matter to pass, and so far as the price (as opposed to the value) is concerned, it’s really up to the Owners Corporation (O/C) to determine, provided the price has some basis that’s defensible.

One further string to the O/C’s bow may be that, to the best of my knowledge, the installation of a grease arrestor requires the prior consent of Sydney Water, by way of an Application for “Commercial Trade Waste Permit” by the Owner of the property. So a representative of the O/C should perhaps contact Sydney Water with the relevant details of the property (address & lot number) and ascertain who the “applicant” was, who it should have been assuming a Rep. of the O/C (such as the Strata Manager) didn’t sign an Application, the status of any Permit that’s been issued, and to who its been issued.

Finally, even if the original resolution for the Owner to alter the Common Property in the manner that you describe was properly made (i.e. by special resolution), then the O/C may at a later General Meeting vote in that same way to rescind its earlier decision. The Owner concerned could seek to challenge that decision on the basis that she’s already acted upon the original resolution, but in the circumstances that you’ve outlined with respect to this entire saga, I doubt such a challenge would succeed, particularly with the O/C obtaining good legal advice beforehand.