By laws – Rules for Management of Strata Scheme

10/08/2018

The Strata Schemes Management Act 2015 (SSM Act 2015) has come into force which includes Part 7 which relates to by-laws.  In essence the by-laws set out the rules applicable to the owners of various lots and the Owners Corporation and others in a Strata Scheme.

Generally by-laws for a Strata Scheme binds the Owners Corporation, lot owners and others including occupiers and Mortgagees.

By-laws may be made in relation to management, administration control, use or enjoyment of lots or the common property of a Strata Scheme.

There are many standard by-laws and other by-laws which have stood the test of time as to their meaning and effect.  Also there are by-laws which relate to alterations and repairs to common property and exclusive use of common property.

The 2015 Act has been simplified in that there are model by-laws which may be adopted as the by-laws for a Strata Scheme.

The SSM Act (2015) provides that a common property rights by-law is a by-law that confers on the owner(s) of a specified lot(s) a right of exclusive use and enjoyment of whole or specific part of the common property or special provisions in respect of the whole or part of the common property.  We note:

(a)       The Lots Owners(s) obtaining the benefit of a common property rights by law must provide written consent to the by-law.

(b)       The common property rights by-law must provide for the maintenance of the property by either the Owners Corporation or the owner(s) of the lots.

(c)       The common property rights by-law while it remains in force continues to operate for the benefit of and is binding on the owner(s) for the time being of the lot specified in the by-law.

(d)       Often there is compensation payable by the lot owner(s) obtaining the benefit which is paid to the Owners Corporation.

In the Strata Schemes Management Act 2015 there are restrictions on by-laws for example:

              1.        A by-law cannot be unjust, harsh, unconscionable or oppressive.

2.        A by-law cannot operate to prohibit or restrict the devolution of a lot or a transfer, lease, mortgage or other dealings relating to a lot.

3.        A by-law cannot prohibit or restrict persons under 18 years of age occupying a lot.  This does not relate to Strata Schemes for retirement.

4.        A by-law cannot prevent keeping of assistance animals.

5.        Further a by-law has no force or effect to the extent that it is inconsistent with the Strata Scheme Management Act or other law.

The restrictions provide some difficulties for lot owners but more particularly for Owners Corporations who have the role of enforcing the by-laws.

There are procedures to change by-laws for example:

A.       An Owners Corporation may in accordance with a special resolution of the Owners Corporation change the by-laws of a Strata Scheme.

B.       However a change of by-laws has no affect until the Owners Corporation has lodged a Notification with the Register General (which cannot be lodged more than 6 months after passing of the resolution).

C.       A by-law resulting from an Order of the Tribunal cannot be revoked without an unanimous resolution of the Owners Corporation and in the case of leasehold strata, the consent of the lessor.

There are provisions relating to enforcement of by-laws.

The Civil and Administrative Tribunal (the Tribunal or NCAT) may make orders relating to by-laws; for example an order that an amendment to a by-law be revoked, an order that the repealed by-law be revived or an order that the additional by-law be replaced.

The Tribunal may make an order declaring a by-law to be invalid if the Tribunal considers that an Owners Corporation did not have the power to make the by-law or that the by-law is harsh, unconscionable or oppressive.

If you are a lot owner and are concerned regarding the imposition of by-laws by the Owners Corporation which you believe to be unfair or restrictive or you are on the Owners Corporation wishing to introduce a new by-law or have any queries regarding the by-laws governing your strata scheme please contact Richard Watson Senior Strata Solicitor or his personal assistant Shereen Da Gloria to discuss your concerns.

This is only a preliminary view and is not to be taken as legal advice without first contacting Watson & Watson Solicitors on 02 9221 6011.

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