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

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Strata by-laws are integral to maintaining a harmonious environment in strata communities. They can, however, be complex to navigate as they are meticulously crafted based on specific legislation. The intricacies of these laws can lead to varied interpretations. This article aims to provide a clear understanding of the key aspects involved in drafting strata by-laws, identify common mistakes, and highlight scenarios where they may not suffice. Whether you’re a property owner, tenant, or someone interested in the dynamics of strata living, this guide endeavors to provide a comprehensive insight into the process of writing strata by-laws in NSW

Table of Contents

What are by-laws and who can draft them?

By-laws are like the basic rules for people living in a strata scheme, whether it’s a tall apartment building or a big complex. Think of them as the constitution for a small community. They make sure everyone is treated fairly and that people can live together in peace. Every strata scheme has its own set of by-laws, and they are made by the Owners Corporation.

So, what aspects do these by-laws address? They cover a wide range of topics, from regulations about pet ownership or listing properties on platforms like Airbnb, to guidelines on parking spaces or acceptable noise levels. Additionally, they provide directions on the utilisation of shared spaces within the strata and establish standards for residents’ behavior.

The responsibility to alter or introduce new by-laws lies exclusively with the Owners Corporation. To create or change most by-laws, the Owners Corporation must pass a special resolution during a general meeting convened specifically for that purpose.

The legal framework for the establishment of by-laws is set out in Section 136 of the Strata Schemes Management Act 2015 (SSMA 2015). This legislation acknowledges the Owners Corporation’s authority to formulate by-laws for the “management, control, use, or enjoyment of the lots and the common property.” However, this authority is not unfettered. The SSMA 2015 also specifies certain limitations that the Owners Corporation must adhere to when drafting these by-laws.

The Do’s of Drafting Strata By-laws

‘Do’ of Drafting by-laws #1: Begin with the NSW Government’s Model By-laws

A strong foundation is essential for any project. For strata by-laws, this foundation is often the model by-laws provided by the NSW Government. These templates serve as a reference, aligning by-laws with legal requirements. However, it’s essential to customise them to fit the specific needs of each strata scheme.

‘Do’ of Drafting by-laws #2: Prioritise Clear and Precise Language

Ambiguity in legal documents can lead to disputes. Therefore, by-laws should be written with clear language and specific intent. This clarity not only helps residents understand their rights and responsibilities but also streamlines the registration process.

‘Do’ of Drafting by-laws #3: Register By-laws with the NSW Land Registry Services

Once by-laws are drafted and approved, they must be registered with the NSW Land Registry Services (NSW LRS). It’s important to note that any amendments not registered within six months of approval are not valid. For by-law changes to be legally recognised, they must be officially recorded on the Folio of the Register for the common property.

‘Do’ of Drafting by-laws #4: Conduct Regular Reviews and Updates

Laws and regulations change over time. To ensure by-laws remain up-to-date, they should be reviewed periodically. While the SSMA 2015 required an initial review within the first 12 months of its enactment, it’s beneficial to continue these reviews regularly. This ensures by-laws stay relevant and enforceable. Engaging legal professionals during these reviews can offer insights into maintaining compliance and relevance.

In summary, creating strata by-laws demands careful consideration, foresight, and flexibility. By following these steps, owners corporations can ensure their by-laws are legally compliant and effectively address the specific needs of their strata community.

The Don’ts of Drafting Strata By-laws

By-laws are a part of the larger legal framework, which is based on important laws like the SSMA 2015. If the by-laws go against these main laws, they might not be valid anymore. It’s important to know that by-laws have to follow certain legal rules. If they don’t, they might not be taken seriously, and people might even go to court over them.

‘Don’t’ of Drafting by-laws #2: Avoid Overstepping Boundaries

There’s a delicate balance between ensuring governance and overreaching. By-laws should serve as governance tools, not mechanisms of undue control. Exceeding the powers granted to the owners corporation can be counterproductive and legally risky. Under Section 150 of the SSMA 2015, the Tribunal has the authority to invalidate any by-law deemed as an overextension by the owners corporation.

‘Don’t’ of Drafting by-laws #3: Ensure Equitability and Flexibility

The primary purpose of by-laws is to facilitate a harmonious living environment. They shouldn’t become tools of undue restriction. Formulating excessively stringent, inequitable, or overbearing by-laws goes against the ethos of strata living and the principles set out in the SSMA 2015. With Sections 139 and 150 of the SSMA 2015 as a guide, the Tribunal ensures by-laws remain fair, reasonable, and within the scope of the owners corporation’s authority.

Making strata by-laws means you have to be in charge, but also fair to everyone. If you go too far in one direction, like ignoring the main laws or being too strict, the by-laws might not count, and you could have legal problems. The important thing is to find the right balance, be clear, and follow the main laws.

Examples of Invalid By-laws

Example of an invalid by-law #1: Restrictions on Children

While it might seem like an easy way to ensure peace, a by-law that prohibits children or those under 18 from residing in general residential strata schemes is not permissible. Section 139(4) explicitly forbids such a rule. However, exceptions are made for specific environments like retirement villages or senior resident housing.

Example of an invalid by-law #2: Exclusion of Assistance Animals

Both compassion and legal considerations come into play here. A by-law that tries to keep out assistance animals is not allowed. This is explained in Section 139(5) and (6), which talks about the Commonwealth’s Disability Discrimination Act 1992. Owners corporations can, however, request documentation confirming the animal’s role.

Example of an invalid by-law #3: Restricting Lot Owners’ Access or Lease Rights

Property rights are fundamental, and any by-law that infringes upon them is likely to face legal challenges. Judgments such as The Owners – SP No 91684 v Liu and Cooper v The Owners – Strata Plan 58068 have emphasised the importance of access rights of lot owners and starta residents. By-laws that ambiguously or overtly restrict these rights are at risk of being invalidated.

Example of an invalid by-law #4: Engaging in Discriminatory Practices

Fairness and equity are paramount when drafting by-laws. The case of Araya v Owners Corporation SP65717 highlighted this. Although the specific by-law in question wasn’t found to be discriminatory, the case emphasised that actions or by-laws of owners corporations could be evaluated under the Anti Discrimination Act 1977, especially if they appear to infringe on residents’ rights.

Example of an invalid by-law #5: Prohibiting Cooking

A by-law that restricts residents from cooking in their own homes might sound extreme, but such a rule was the subject of Franklin v The Owners—Strata Plan No. 87497. The NCAT’s decision was clear: such a blanket ban was not only unwarranted but also infringed upon residents’ basic rights. Cooking, after all, is a fundamental household activity that should not be curtailed.

In the complex world of strata by-laws, these examples show how important it is to find the right balance between keeping things organised and respecting people’s rights. When making by-laws, it’s crucial to understand these details well so that they can hold up if someone questions them legally.

Conclusion

Proper by-laws are central to any strata community. They need to balance individual rights with what’s good for the group. The laws around this are always changing because of new rules and court decisions. So, it’s really important to be very careful and adaptable when making or changing by-laws.

Because these rules are so tricky and any mistake can be a big deal, it’s really helpful to have a legal expert on your side. If you’re thinking about making, changing, or just understanding strata by-laws, request a call-back from one of our friendly expert strata lawyers at PBL Law Group for a free legal consultation.

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Raea Khan Circle
Director Lawyer
Raea Khan

Raea is Managing Director and Principal Lawyer for PBl Law Group. Raea assists clients with major projects, property developments, construction and strata law.

He has worked in Western Australia and Queensland assisting with expansion projects in the energy and resource sector and now predominately advises clients in Strata and Community Association matters.

He is a member of the Australian College of Strata Lawyers where majority of his work is advising developers and owners corporations with dispute related minor and major defects, strata governance and common property litigation. He is proficient at leading negotiations and meetings.

Raea has a particular interest in the commercial aspect of any dispute and always tries to weigh up the risk, reward and benefit of legal proceedings at each different stage.

Raea enjoys all forms of competitive sport, including Crossfit and actively participates in Triathlons, representing Australia as an age group athlete. He was a member of Red Head Surf Lifesaving club.

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