Strata Improvements 05: Common Property, Lots & Using It

Or, is it mine, yours or ours …

Given that what is lot property and what is common property really matters in strata buildings, there would be a higher understanding of that, better controls on changes to the buildings affecting those things, and, fairer mechanisms for the shared use of those areas.  But, that’s not typically the case and we can do a lot better …

[8.50 minutes estimated reading time, 1713 words]

Introduction

I’ve previously introduced the importance of the building in a strata title corporation in my article Strata Improvements 04: There’s nothing common about this strata property.

In this article, I’m going to cover a few fundamentals about strata buildings.  Namely, what’s common property, what’s strata lot property, and, how its use is allocated.

There must be a building to create a strata corporation, strata owners’ property [their cubic space] is defined by walls, floors, and ceilings, asset values depend on its preservation, and, most strata insurance applies on a whole-building basis.

Plus, the strata operational fundamentals apply based on the way [use, responsibilities, rights, payments, control, etc] the strata building is constructed and divided.

So, it’s pretty obvious that these issues affect the basic features of property ownership and use in strata buildings since:

• strata owners’ property ownership depends primarily on the strata lot boundaries,

• but, strata owners’ property ownership also extends to their interest in the shared areas [the common property],

• what’s included in common property affects strata owners’ liabilities for its management, maintenance and liability, and

• controls on how strata owners can [and can’t] use their strata lot makes a big difference to them, and

• controls on how strata owners can [and can’t] share the use of common property also makes a big difference and often leads to disputes between them.

Consequently, I believe that it’s important for strata buildings to deal with the following challenges relating to the building structures.

A.    What’s actually in the lots and the common property.

B.     What to do when lots and the common property gets changed.

C.     How the common property is shared between strata owners or residents.

Lots vs. Common Property [and the stuff in between]

A perennial issue in strata building is delineating what is lot property and as a consequence what is common property. 

Once known this determines responsibilities between the strata owners and the strata building.

This delineation usually occurs by a combination of the strata plan and the deeming/defining provisions in strata laws about boundary locations.  Applied carefully, these tools resolve virtually all such questions although they sometimes require a physical inspection of the relevant part of the building and some technical expertise.

Sadly, not enough strata stakeholders have the skills to do this properly, actually look at the strata plan, and/or, do not understand the strata law deeming/defining provisions; rather, relying on generalities about what is and is not lot and common property.

But there are some more difficult features or mechanisms affecting what is lot or common property.

The first is common infrastructure [shared utilities and similar things] that are not shown on strata plans and are located in lot cubic spaces but are common property. 

Common infrastructure is everywhere in strata buildings and critical to the building operation but is typically hidden behind walls, floors and ceilings.  Even worse, common infrastructure is usually defined by words relating to type and use in strata laws.

So, because of its semi-secret nature, strata stakeholders are ignorant of its existence and, when dealing with common infrastructure, don’t do so properly [or at all].

Secondly, when new permanent structures are added to a strata building or a permanent structure in a strata building is altered or relocated there can be issues about whether or not the structures become or remain common property or instead belong to one or more strata owners.  Property law concepts of fixtures probably apply to make most of them parts of the common property, but not always and the law is unsettled in this area.  And, strata buildings deal with changes in a variety of ways.

There is [in some Australian states] a rarely used mechanism for a building alteration plan that can be registered to reflect the new or changed structures on the strata plan.  It’s an ideal way to do that.

More typically, structure changes are done via a by-laws, but even then the structures may be loosely defined, ownership may not be expressly covered, and only ongoing responsibility is addressed and not the many other relevant considerations. 

Plus, when other lower-level structure change consents are used they are even less precise than by-laws.

And, sometimes the ownership of the new or changed structure/s is never formally addressed.

So, strata buildings are often left with no record of changes that are made to the building, or when records exist they are incomplete, inadequate, and/or don’t address necessary and useful matters.

Thirdly, another reason for having records of building structure changes or improvements [including inside apartments] is to ensure those structures are properly covered under strata building damage insurance.

Since strata building damage insurance policies cover most of the strata lots as well as the common property, it’s better that the everyone knows what’s been added to or changed in the building structure [even when it’s only in a lot] so it is adequately insured and replaced when damaged.

Otherwise, there may be inadequate insurance cover and disputes between strata buildings and owners when claims are made.

So, I suggest that strata stakeholders look at their building’s strata plan every time they need to make decisions about building structures.

I also suggest, that strata stakeholders become familiar with the strata law deeming/defining provisions so they can apply them to the strata building and strata plan.  That includes knowing about common infrastructure definitions and locations.

I suggest that strata laws require strata buildings to maintain a register of building alterations covering the changes made, dates when they occur, ownership of the structures, responsibilities for maintenance, repair and replacement, and other relevant matters [including noting disputed issues where appropriate] to better inform the strata building and other stakeholders in the future..

So, I suggest that the strata laws reinstate the old obligations that existed on strata owners to notify the strata building of improvements in their strata lot.

Shared use & allocation issues

Every strata owner is a co-owner of the common property with equal and unlimited rights to use all of it.

Those rights can only be restricted by property dealings [such as covenants, easements, etc] or strata by-laws. That’s why there’s a by-law prohibiting parking on common property; otherwise, everyone could park anywhere on the common property.

This isn’t usually an issue because most strata owners are reasonable and sensible.  Plus, there’s often not much utility to many common property areas.

However, problems commonly arise in two situations.

Firstly, problems occur where the strata building doesn’t want areas used at all or over certain periods [like the roof, plant rooms, etc, or, pools and gyms out of hours]. 

The best practice in these situations is to make a by-law imposing the restriction/s and that’s an appropriate solution.  But, it doesn’t always happen.

Secondly, problems occur where more than one strata owner wants to use the same common property or common property that is limited in dimensions or capacity.  When that happens, those competing demands need to be balanced. 

Some examples I’ve seen include:

• where there are less common property parking or storage areas than apartments so everyone can’t get access to them,

• where two café operators want to put tables and chairs in the same common area lobby areas,

• where there aren’t enough incoming telephone or data lines for the increased demands for connections from strata owners and residents, and

• where multiple food outlets all want to connect to common exhaust ventilation systems, but they don’t have the capacity to handle the required air volumes.

The last scenario was the underlying problem in Lin’s case decided by the NSW Supreme Court in 2004 where, unfortunately, the strata building was ordered to create more mechanical ventilation capacity for the increasing number of fast food outlets being created in the strata buildings.

Typically, in most strata buildings, it’s a ‘first in best dressed’ situation where the first strata owner or owners to get permission to use the common area get it and everyone else misses out later when they need to use the common area or realise that it’s no longer available.

Plus, the creation of permanent rights over common property areas under by-laws makes the situation irreversible and the problem/s permanent.

A better solution in strata buildings is a fair sharing or shared use policy for common property areas, facilities, or services.  This would recognise the limited availability of that shared resource, that strata owners’ needs may vary and change, and, that what was fair once may not be fair in the future.

So, any special rights to use common property conferred on strata owners should not be permanent [with reviews and no guarantee of renewal].  And, strata buildings should consider whether, how much, and what kind of compensation should be received by the other strata owners who have lost or forgone the common property usage rights.

So, I suggest that the strata laws impose a sunset on approvals for the sole use of common property by strata owners to ensure that it is not permanently lost to the other strata owners.

So, I suggest that where the use of limited capacity common property resources is allocated to one or more owners, the strata laws provide a mechanism to revisit that allocation when other owners later also want to use those resources.

So, I also suggest that if common property is allocated for permanent use by one or more lot owners [however done] the strata laws require compensation to be paid by the benefitted strata owners to the other strata owners [and not to the strata building] for their permanent loss of their property interests.

Conclusions

We’ve reached a place where strata stakeholders don’t have detailed knowledge about lot and common property, apply generalised principles to defining those things, changes are not well documented and, allocation of shared use areas is typically permanent and done on a ‘first in best dressed’ basis.

But, because the strata building structures are so important to all strata owners and residents, strata stakeholders should do more and better.

Some of my ideas are in this article. There are undoubtedly many more.

September 14, 2023

Francesco ...