Strata Improvements 07: Strata Owners' Works
or, why strata owners' works don’t always work …
Many strata owners want to make changes to their properties, which is fair enough. But, getting strata building approval is confusing, complicated, slow, and uncertain; often leading to refusals or disputes. Conversely, when works happen they’re often inadequately documented or covered. So, why don’t strata owners’ works, work so well?
[10.75 minutes estimated reading time, 21614 words]
Introduction
Today’s [and next week’s] articles in the Strata Improvements series look at common property and building structure issues from the strata owners’ perspective when they want to do work in their strata lot and other parts of the building.
Strata owners often [quite rightly] want to improve their apartments, shops, and offices with minor and major works adapting it to suit their changing needs, tastes, and desires. Sometimes strata owners’ works may also incorporate common property building structure changes or occupy parts of the common property.
There are many reasons why this is a good thing for all strata stakeholders. Especially, since strata lot and building improvements can bring many benefits to all stakeholders.
But there are also risks. Strata owners’ works can cause problems in the building and for other strata owners and residents that can be minor or very serious, and the problems can be temporary or long-term. Plus, there’s often a non-strata set of third-party compliance issues affecting their works [like local councils, etc] that need to be considered.
And, interestingly, strata owners’ works are a great example of the competing challenges that comprise the tragedies of the commons and anti-commons in strata buildings as I wrote about in The Tragedies of the [Strata] Commons: Or, when common property becomes a strata tragedy and an anti-tragedy …
Today, I cover how strata owners’ works are handled now and why that’s problematic.
Next week, I’ll cover my suggestions for better ways to handle strata owners’ works.
So, how are strata owners’ works handled now?
Over time the strata laws and other controls on strata owners’ works have evolved into many layers of controls, authorities, and permission structures.
But that haphazard evolution means that those mechanisms have different criteria, create gaps between different kinds of works, sometimes overlap, and can be confusing to apply for strata owners as well as for strata buildings, committees, and managers.
In most of Australia strata owners’ works are covered by two kinds of complementary controls.
Firstly, there are always prohibitions in the strata laws and/or building by-laws against anyone damaging or changing common property.
This prohibition creates a primary control or stop on strata owners’ works that, by default, prevents most kinds of work in strata buildings. Plus, any strata owners’ works performed in breach of these prohibitions risk enforcement orders by Courts or Tribunals to have the works removed and the strata building restored or made good.
Secondly, there are mechanisms, usually contained in strata laws and/or building by-laws, that allow strata buildings to approve strata owners’ works via more or less formal decision processes.
The details of the strata approval types and processes vary from state to state, but an overview of the typical strata owners’ works approval systems is as follows.
A. Standard strata by-laws sometimes permit minor and temporary works to be done by strata owners inside their strata lots without notice to or approval of the strata building and impose automatic conditions about maintenance, repair, and consequential damage.
B. Standard strata by-laws that prohibit work that ‘damages’ common property usually also include provisions that permit some minor or temporary works to be done by strata owners with a majority vote approval from either the strata committee or a strata owners’ meeting.
C. Some states’ strata laws allow minor works [sometimes called ‘cosmetic work’] to be performed by strata owners inside their strata lots and to common property without strata building approval and impose very basic default conditions about maintenance, repair, and consequential damage.
D. When strata owners’ works are more significant, but not major or structural, [sometimes called ‘minor renovations’], some states’ strata laws include a more formal, but still simple, strata building approval process that involves prior written application with details of the works, consideration by the strata committee or a strata owners’ meeting, three quarter majority vote approval, and customisable conditions that a strata building can impose on the strata owner and their works.
E. More extensive and substantial strata owners’ works, works by strata owners to and in common property, works that create new/changed building structures, and/or where the benefits/obligations need to pass onto future strata lot owners must usually be approved by creating a new by-law. Those by-laws must set out work details, affected common property, the rights and obligations on strata owners, three-quarter majority vote approval, registration on titles, and must specify whether the strata corporation or the strata owner has the ongoing obligations over common property maintenance, repair and replacement.
F. Strata buildings can also give strata owners licences [a legalistic property permission] to use parts of the common property [with or without works] by three-quarter majority vote approval including conditions a strata building can impose on the strata owner [including in relation to ongoing obligations and payments].
G. Strata buildings can also lease parts of the common property to strata owners by three-quarter majority vote approval, a written lease document, and registration.
H. More recently, in a few states [NSW and ACT], strata owners’ works that have environmental benefits like solar panels, heat pumps, EV charging, etc [sometimes called ‘sustainability infrastructure’] have reduced approval thresholds from three-quarter majority vote approval to just a majority vote.
I. At the highest level, strata buildings can transfer ownership of parts of the common property to strata owners by strata subdivisions and property transfer. That involves surveys, plans and valuations, unit or lot entitlement changes, planning approval, registration on titles, stamp duty, and multiple party consents. Approval requirements vary between states between three-quarter majority votes, no dissent votes, and unanimous votes. Plus, common property transfers usually involve a payment to strata buildings by strata owners.
J. And, finally, Tribunals or Courts can make orders about strata owners’ works giving them permission to perform the works on conditions when strata buildings have unreasonably refused to approve them.
That’s a dizzying range of options and ways for strata buildings to stop, approve, and control strata owners’ works.
Isn’t this way too difficult and confusing?
Whilst these multi-layered and overlapping strata works approval systems are great for strata boffins and geeks [like me and … maybe you], they’re just way too complex for ordinary strata stakeholders and inject a lot of friction into what is a very common and typical need of strata stakeholders.
In general terms, there are too many control layers, approval regimes, and consent types that cause:
confusion over which approvals are possible, appropriate, or best for strata owners’ works,
uncertainty about which strata owners’ works need approval and/or what kind of approval or approvals they need,
extra and unnecessary formality for routine and generally uncontroversial strata owners’ works,
conversely, inadequate and inappropriate consideration of major or very complex kinds of strata owners’ works,
inadequate, impractical, and poorly framed terms and conditions applied to strata owners’ works, and
inconsistent treatment of strata owners’ works requests [too strictly and not strictly enough] within strata buildings and across the strata sector.
It’s like each strata owner’s application for works approval [like a bathroom renovation] gets treated like it’s the first it’s ever happened and strata buildings start from scratch. When in fact, the same thing has happened tens of thousands of times before and will happen many more thousands of times again.
So, instead of creating a bank of knowledge and expertise about strata owners’ works based on actual experiences to better consider strata owners’ works applications, that valuable knowledge is lost and unavailable to strata stakeholders. And approvals and decision making about approvals are weaker for it.
Additionally, some strata buildings have superimposed their own internal approval regimes for some kinds of works [like standardised air conditioner installations] and added extensive compulsory conditions under by-laws which [since recent superior Court decisions like in Cooper’s Case might turn out to be ineffective since they might be inconsistent with the existing approval regimes for strata owners’ works in applicable strata laws.
What about when strata owner’s works are done without approval?
On the flip side, what about when strata owners’ works shouldn’t happen or shouldn’t be approved?
Sometimes, strata owners go too far.
They want to make changes to their strata lot that are just too substantial for the strata building or have too many serious permanent impacts on other strata lots, common property, and strata owners and residents.
They want to perform strata works that create significant disruption to everyone in the strata building because of access problems, space constraints, structural risks, how long they’ll take, and a myriad of other difficulties.
The strata owners want to use common property areas that are needed by other strata owners and residents [either temporarily or permanently].
Strata owners want to use and occupy common property areas without paying for them [which is a whole other topic I’ve written about in [article] [link].
Or, in worse cases, strata owners perform works without approval or without even asking for approval out of ignorance, naivety, time pressures, or cunning.
In those situations, strata buildings have rights to take action to stop and/or reverse things. But it’s not always black and white, or as easy as you’d imagine.
Firstly, the strata building may not know about the works until long after they’ve been finished because no one was watching, the works were internal, and/or, they were done surreptitiously. That means nothing happens about the unknown and unapproved strata owners’ works even though they may be non-compliant, poorly performed, defective, and/or create knock-on problems elsewhere in the strata building.
In many instances that I’ve been involved in, strata owners’ works weren’t discovered until after the strata lot was sold; further complicating things for everyone.
Secondly, it can be hard, if not impossible, to properly understand what strata owners’ works were performed, and/or, the precise details of the works after they’ve been done. So, the strata building misses the opportunity to decide about the work details, quality, and standards.
Thirdly, even if the strata building knows that strata owners are performing unapproved works, getting injunctions and/or interim orders stopping the works can be legally and practically difficult [as well as costly] because specialist Tribunals are soft, legal action [and expenses] are unpopular, legal action sometimes needs formal meeting approval, and strata buildings, committees, and managers are slow to act.
Fourthly, there are unresolved legal issues about getting or giving retrospective approval of strata owners’ works from strata buildings that cause many commentators, Courts, and Tribunals to say it can’t be done. Thereby, leaving unapproved strata owners’ works in limbo. Not appropriately approved with conditions, but still in place.
Fifthly, the absence of formal approval means future responsibility for unapproved strata owners’ works typically means the strata building gets stuck with maintaining, repairing, replacing, and/or making good the affected common property. Plus, there can be issues about whether or not the unapproved strata owners’ works are covered by the strata building’s insurance.
Finally, Court and Tribunal orders to remove unapproved works are discretionary. That means that even if the works needed approval, did not have approval, and, have adverse impacts on the strata building and other strata owners and residents, Courts and Tribunals can decide not to order removal. It’s tempting for judicial decision makers to take the easy way out because of the cost and disruption associated with removal and make good orders and a propensity for consumer focused legal forums to favour strata owners over strata corporations. So, in practice, strata law and rule breaking strata owners often get away with it.
All of these factors combine to make it harder for strata buildings to stop unapproved strata owners’ works.
Conclusions
Strata owners rightly want to do work in their buildings to improve things. However works need to be properly considered and approved, balancing the proponent strata owners’ expectations and the interests of the strata building and other strata owners and residents.
Unfortunately, existing approval processes are complex, overlapping, confusing, and out of sync with the practical realities of strata building operations. Plus, many strata stakeholders don’t know or understand them.
That’s resulting in the worst of both worlds: strata buildings aren’t controlling strata owners’ works properly or at all, strata owners aren’t getting approvals for perfectly reasonable works, and, when strata owners’ works are approved it takes too long, costs too much, and may not cover the works properly anyway.
What’s needed is a single, simpler, better graduated, and more flexible system of controls on strata owners’ works and approvals. A system where the approval requirements increase according to the magnitude and impact of the strata owners’ works but where strata buildings can set the thresholds for different kinds of works to suit their preferences and unique circumstances.
More about how to do that next week.
October 24, 2022
Francesco ...