Do’s and Don’ts of strata by-law drafting: A comprehensive guide for Lot Owners & Owners Corporations

Introduction

Strata by-laws are integral to maintaining a harmonious and well-functioning environment in strata communities, providing the foundational rules for residents living in close proximity. These regulations are meticulously crafted based on specific legislation, but their intricacies can often lead to varied interpretations and disputes if not handled correctly.

This guide provides Owners Corporations with a clear understanding of the key aspects of drafting strata by-laws. It aims to clarify the process, identify common mistakes, and offer practical insights to ensure the by-laws you create are fair, compliant, and legally enforceable.

Interactive Tool: Is Your By-Law Valid or Void?

What Are Strata By-Laws & Who Can Draft Them

The Purpose of Strata By-Laws in Community Living

Strata by-laws are the rules that govern the behaviour of owners and residents within a strata scheme, acting as a constitution for the community. They are designed to ensure everyone is treated fairly and can live together harmoniously while protecting the property’s value and condition.

These rules address a wide range of matters to manage shared living environments effectively. Common areas covered by strata by-laws include:

• Dispute Resolution: Creating processes to handle disagreements between residents or with the Owners Corporation.
• Pet Ownership: Setting conditions for keeping animals within the strata scheme.
• Noise Levels: Regulating acceptable noise to prevent disturbances between residents.
• Use of Common Property: Outlining guidelines for shared spaces like gardens, hallways, and recreational facilities.
• Parking: Establishing rules for the use of parking spaces by residents and visitors.
• Maintenance Obligations: Defining the responsibilities of individual owners and the Owners Corporation for repairs and upkeep.

The Owners Corporation’s Role in Drafting By-Laws

The responsibility to create, alter or introduce new by-laws rests exclusively with the Owners Corporation. This occurs when a special resolution is passed during a general meeting convened for that purpose.

Section 136 of the Strata Schemes Management Act 2015 (NSW) provides the legal framework for this authority, allowing an Owners Corporation to make by-laws for the “management, control, use, or enjoyment of the lots and the common property.” While the Owners Corporation holds this power, it may also engage strata managers or legal professionals to assist in the drafting and preparation process, ensuring the by-laws are both compliant and enforceable.

The ‘Do’s’ of Effective Strata By-Law Drafting

Start with the NSW Government’s Model By-Laws

Begin by using the model by-laws provided by the NSW Government, as they offer a legally sound foundation and ensure your initial draft aligns with fundamental legal requirements. However, it is essential to customise these templates so they:

• reflect the specific circumstances of your strata scheme
• address unique needs, such as pet policies or parking arrangements

Use Clear Precise Language & Define Terms

Ambiguity in legal documents can lead to confusion and disputes among strata residents. To prevent this, by-laws should employ clear, precise language that makes each rule’s intent obvious. This clarity:

• helps residents understand their rights and responsibilities
• streamlines the registration process

Furthermore, when amending existing by-laws, follow these steps:

• Read the entire document carefully.
• Identify and review any defined terms.
• Ensure all changes remain consistent with those definitions to maintain clarity and enforceability.

Register All By-Laws with NSW Land Registry Services

After drafting and securing approval from the owners corporation, register your by-laws with NSW Land Registry Services (NSW LRS) so they become legally enforceable. For official recognition, you must:

• record the by-laws on the Folio of the Register for the common property
• complete registration within six months of the approval date, since any amendments lodged later are considered invalid

Conduct Regular Reviews & Updates

Legislation and regulations governing strata schemes can evolve over time. To keep your by-laws compliant and relevant, schedule periodic reviews. According to the Strata Schemes Management Act 2015 (NSW), an initial review is required within 12 months of its enactment, but it’s best practice to continue reviewing regularly. Consider:

• engaging legal professionals for expert insights and to maintain compliance
• planning ongoing review intervals (for example, annually or biennially)

The ‘Don’ts’ of Drafting Strata By-Laws

Do Not Contradict Existing Legal Frameworks

Strata by-laws do not exist in isolation; rather, they are part of a broader legal framework governed by legislation such as the Strata Schemes Management Act 2015 (NSW). It is crucial that any by-law created by an owners corporation operates within the parameters set by this Act.

If a by-law contradicts these governing laws, it risks being declared invalid. Any rule made outside the scope of the Strata Schemes Management Act 2015 (NSW) is considered beyond the power of an owners corporation and will not be enforceable if challenged.

Avoid Overstepping the Owners Corporation’s Powers

While an owners corporation has the authority to create by-laws for governance, this power is not unlimited. By-laws should function as tools for effective management, not as mechanisms for undue control over residents.

There is a clear line between ensuring good governance and overreaching. Under Section 150 of the Strata Schemes Management Act 2015 (NSW), the NSW Civil and Administrative Tribunal has the authority to invalidate any by-law it considers an overextension of the owners corporation’s power.

Avoid Harsh, Unconscionable or Oppressive Rules

The fundamental purpose of strata by-laws is to support a harmonious living environment, which means they cannot be harsh, unconscionable, or oppressive. Consequently, rules that are excessively stringent, inequitable, or overbearing are prohibited.

Section 139 of the Strata Schemes Management Act 2015 (NSW) explicitly states that a by-law cannot be harsh, unconscionable, or oppressive. The Tribunal can rely on both Section 139 and Section 150 of the Strata Schemes Management Act 2015 (NSW) to ensure that all by-laws remain fair, reasonable, and within the proper scope of the owners corporation’s authority.

Common Examples of Invalid Strata By-Laws

Prohibiting Children or Assistance Animals

A by-law that prohibits children or individuals under 18 from living in a general residential strata scheme is not permissible. Section 139(4) of the Strata Schemes Management Act 2015 (NSW) explicitly forbids such rules, although exceptions may apply for specialised housing like retirement villages.

Similarly, a by-law cannot exclude assistance animals from the strata scheme. This is outlined in Section 139(5) and (6) of the Act, which aligns with the Commonwealth’s Disability Discrimination Act 1992 (Cth). While a complete ban is illegal, an owners corporation is permitted to:

• Request documentation that confirms the animal’s status as an assistance animal.
• Ensure that any requirements are in line with the relevant legislation.

Deactivating Access Devices or Restricting Access Rights

A lot owner’s right to access their property is fundamental and cannot be easily overridden by a strata by-law. Any rule that allows an owners corporation to deactivate an access device, such as a key card or fob, in response to a by-law breach is likely to be declared invalid if challenged.

Legal judgments, including the case of Cooper v The Owners – Strata Plan 58068 [2020] NSWCA 250, have firmly established that access is an inherent property right. A by-law that attempts to remove this right, particularly without clear preconditions or processes, is considered an overreach of the owners corporation’s power and infringes on the fundamental rights of owners and occupiers.

Improperly Recovering Costs as a Levy Debt

An owners corporation does not have the power to create a by-law that makes the costs associated with a by-law breach recoverable from an owner as a levy debt. The NSW Civil and Administrative Tribunal has clarified that without a specific statutory power, such a mechanism is impermissible.

This is because Section 83 of the Strata Schemes Management Act 2015 (NSW) expressly states that levies must be raised for the administration or capital works funds. Costs arising from a by-law breach do not fall into either of these categories, and simply relabelling the cost as a “levy debt” does not change its underlying character, which the owners corporation lacks the power to impose.

The Process for Amending Strata By-Laws

Drafting Clear Motions & Obtaining Necessary Consent

When amending an existing strata by-law, it is essential to draft the motion with clear and specific terms. The motion should:

• Explicitly state which words, clauses, or paragraphs are to be deleted.
• Clearly indicate which words, clauses, or paragraphs are to be inserted in their place.

This level of precision prevents ambiguity and ensures all parties understand the proposed changes.

If a by-law grants specific rights over common property to a particular lot owner, you must obtain that owner’s written consent before making any changes. This step is crucial for ensuring the amendment is valid and respects the rights of the affected individual within the strata scheme.

Passing a Special Resolution & Updating All Documents

For an amendment to be officially adopted, the owners corporation must pass a special resolution at a general meeting. This formal voting process ensures that a sufficient majority of owners agree to the proposed change before it can proceed.

After a special resolution is passed, it is vital to update all related documents consistently. If the amendment involves an annexure, plan, or drawing, these must also be updated to reflect the changes. Any plans included should be in black and white to ensure clarity and proper registration.

Streamlining Your Strata Renovation By-Laws with Instant By-Laws

What is Instant By-Laws

Instant By-Laws is an online tool created to assist NSW strata lot owners with their renovation projects. It allows users to instantly generate customised, lawyer-drafted by-laws, motions, and other necessary documents online. This service simplifies the legal requirements for strata renovations, ensuring a streamlined and compliant process from start to finish.

Key Benefits for Your Strata Renovation Journey

Using a service like Instant By-Laws offers several advantages for those navigating the complexities of strata renovations. It provides a cost-effective and efficient alternative to traditional legal services, ensuring compliance without unnecessary delays.

Key benefits include:

• Fixed Price: The service is offered at a reasonable, fixed price, eliminating the uncertainty of hourly lawyer fees and helping you manage your renovation budget effectively.
• Speed and Convenience: You can receive a complete suite of bespoke documents instantly, allowing you to proceed with your strata renovation project without waiting for lengthy drafting processes.
• Expert Legal Backing: All documents are crafted and approved by the strata lawyers at PBL Law Group, ensuring they align with current legal standards and best practices in NSW.
• Guided Compliance: The platform guides you through every stage of the legal compliance and risk-management process, from understanding NSW legal requirements to preparing for your general meeting.

Conclusion

Properly drafted strata by-laws are central to maintaining a harmonious community, requiring a careful balance between individual rights and the collective needs of residents. To be effective and legally sound, by-laws must be created with careful consideration, clear language, and adherence to the Strata Schemes Management Act 2015 (NSW).

Because the legal landscape governing strata schemes is complex and continually evolving, seeking professional guidance can prevent significant issues. For trusted expertise in drafting, amending, or interpreting strata by-laws, contact the expert strata lawyers at PBL Law Group for a consultation.

Frequently Asked Questions