By-law/s Concerning Renovation of Property – Beware of the Indemnity

15/08/2017

There are many thousands of home units in Sydney which are within the Strata Scheme.  Many of the units are relatively new and there are many older style blocks of units.  Strata title units have been in existence for more than 50 years.

We now have the Strata Schemes Management Act 2015 which replaces the Strata Schemes Management Act 1996 which sets rules and regulations dealing with strata title.

We also have the Strata Schemes Development Act 2015 which deals with a new concept of renewal of Strata Schemes.  We do not deal with the Development Act in this article.

One of the problems that have been with us for 50 years since strata lots were introduced is that many of the owners wish to change or renovate their units.

Separately the Owners Corporation are obliged to maintain the common property which is dealt with elsewhere.

One of the major issues is how to deal with situations where the lot owner of a particular unit wishes to renovate.  This is normally dealt with by way of by-laws.  It has now become common place to renovate units.  The renovations can be major renovations including removal of walls, changing of the position of for example, the kitchen or bathroom or opening walls to make windows into large doors leading onto balconies or the like.

One difficulty is that the buildings were never designed and built with these renovations in mind. This is a primary concern for all owners of units within strata blocks:

(a)       Firstly there are concerns as to what should be the rules relating to approvals;

(b)       Secondly what should be the rules relating to the actual renovations; and

(c)       Thirdly what should be the rules once the renovations have been completed.

We at Watson & Watson consider all alternatives.  Often there are no pre-determined rules which apply and by-laws are entered into on an ad hoc basis.  However almost universally in by-laws allowing an owner to renovate his or her unit there is an indemnity whereby the owner indemnifies the Owners Corporation, lot owners and other people against “all liability or expense arising out of the works” in respect to the alterations and additions.

An indemnity is extremely wide and can result in devastating financial disaster not only for the person giving the indemnity, but also the subsequent purchaser and furthermore the other lot owners of the units.

We advise on a regular basis in particular when someone makes contact in relation to “a simple by-law” requested by the Owners Corporation.  If renovations are undertaken there is no such protection which is risk free.  We have given guidance to those who wish to renovate as to possible methods to reduce the risks associated with renovations.

If you find yourself in a position where you wish to purchase a unit which has been renovated or you wish to renovate your unit, you are in a block of units where somebody else wishes to renovate their unit or the property has suffered as a result of previous renovations in a unit, please do not ignore the issues that arise. Richard Watson our experienced strata Solicitor can assist with your strata issues in particular relating to building and construction matters and provide the appropriate advice.

Please telephone Richard Watson or his Personal Assistant Shereen DaGloria to make arrangements to discuss the matter.

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.