Introduction
Exclusive use by-laws play a crucial role in New South Wales strata schemes, allowing lot owners to secure private rights over common property areas such as attics, courtyards, or car spaces. These by-laws, formerly known as common property rights by-laws under the Strata Schemes Management Act 2015 (NSW), do not transfer ownership but grant specific usage rights that can significantly enhance a lot owner’s enjoyment and value within a strata community.
Understanding how these by-laws operate, the legal process for their creation, and the responsibilities they impose is essential for both lot owners and Owners Corporations. This guide provides clear, practical information to help you navigate the complexities of exclusive use in strata, ensuring your interests are protected and your rights are properly secured.
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Understanding Exclusive Use By-Laws in NSW Strata
What is Common Property in Your Strata Scheme
In a strata scheme, common property includes all parts of the land and buildings that do not form part of an individual owner’s lot. The Strata Schemes Development Act 2015 (NSW) defines it as any area within the parcel of land that is not contained within a lot.
Common examples of these shared spaces often include:
- Gardens, driveways, fences, and visitor parking areas
- Shared building structures like roofs, external walls, foyers, stairwells, and lifts
- Utility infrastructure that serves multiple lots, such as pipes and wiring
- Communal facilities like swimming pools, gyms, or laundries
Before seeking exclusive use, it is crucial to consult the registered strata plan for your scheme. This document provides the definitive boundaries between your lot and the common property. Relying on visual inspection can be misleading, as areas that appear private, such as some balconies or garages, may legally be defined as common property on the plan.
What is a Common Property Rights By-Law
A Common Property Rights By-law, as it is formally known under the Strata Schemes Management Act 2015 (NSW), is a registered rule that grants a specific lot owner the sole right to use a defined area of common property. This legal instrument allows an owner to use a space to the exclusion of all other residents, but it does not transfer ownership of that area, which remains with the Owners Corporation—a body that often requires specialised legal advice for Owners Corporations to manage such matters.
This mechanism is commonly used to provide a lot owner with sole access to areas such as:
- A courtyard
- Attic space
- Car park
- Storage cage
It formalises an arrangement that would otherwise be legally precarious. Relying on informal agreements, such as an old ordinary resolution or a verbal understanding, is unenforceable against current or future owners and can lead to disputes.
Exclusive Use vs Special Privilege By-Laws
A Common Property Rights By-law can grant two distinct types of rights, and understanding the difference is key. The two types are exclusive use and special privilege:
- An Exclusive Use By-Law grants a lot owner the right to the exclusive use and enjoyment of a whole, specified part of the common property. For instance, a by-law might allow a ground-floor apartment to have sole use of an adjacent courtyard.
- A Special Privilege By-Law, on the other hand, confers a specific right concerning a part of the common property without granting full exclusive use. To illustrate, a lot owner might be given the special privilege to install a sign on a common property wall, even though other signs may also be present on that same wall.ed but not registered; an unregistered by-law has ‘no legal effect’ and is ‘void and unenforceable’.
Comparing Exclusive Use By-Laws with Other Options
Exclusive Use By-Law vs Ownership on Title (i.e. Strata Subdivision)
When a lot owner in a strata scheme seeks control over a common-property area, two primary formal methods are available: securing a common property rights by-law or undertaking a strata plan of subdivision (i.e. Ownership on Title). While both options provide access to the space, they differ markedly in ownership, cost, complexity and the security of the rights granted.
An exclusive use by-law is generally more straightforward, quicker and less expensive. It grants a contractual right to use the area, but ownership remains with the Owners Corporation. By contrast, a strata plan of subdivision is costlier and more complex; the lot owner purchases the common property space and gains full legal ownership, which is then recorded on title.
The key differences between these two approaches include:
- Ownership and Title: A by-law confers exclusive use, yet the area stays common property; a subdivision transfers ownership so the space can be sold or mortgaged with the lot.
- Cost and Complexity: Obtaining a by-law usually involves legal, survey and registration fees, whereas a subdivision demands valuations, surveys, possible development consent, multiple special resolutions and higher upfront costs such as stamp duty.
- Security of Rights: Ownership via subdivision offers the highest security because it is registered on title; a by-law binds future owners but can be amended or repealed by special resolution with the written consent of the benefiting lot owner.
- Unit Entitlements: An exclusive use by-law leaves unit entitlements unchanged, while a subdivision can alter unit entitlements for the enlarged lot and affect strata levies.
The table below lists a more comprehensive comparison of exclusive use by-laws vs ownership on title:
| Feature | Exclusive Use By-law | Ownership on Title (Subdivision) |
| Legal Nature of Right | Contractual usage right or special privilege | Full legal ownership (fee simple) |
| Ownership | Area remains common property, owned by the Owners Corporation | Area becomes part of the individual lot, owned by the lot owner |
| Transferability/Sale | Rights are attached to the lot and transfer with it upon sale | Can be sold independently or as part of the lot |
| Security/Permanence | Dependent on the by-law’s validity; can be amended or repealed under specific circumstances (e.g., NCAT order, consent of benefiting owner) | Higher security; forms part of the registered title, more difficult to alter or remove |
| Ability to Mortgage | Generally not directly mortgageable as a separate asset | Can be mortgaged as part of the lot |
| Maintenance Responsibility | Explicitly defined in the by-law, usually assigned to benefiting lot owner | Lot owner is responsible for all aspects of the area |
| Initial Cost | Typically involves legal, surveyor, valuation, and LRS registration fees; may include one-off compensation | Higher initial costs due to surveyor fees, subdivision process, and potential stamp duty |
| Ongoing Costs | May involve ongoing exclusive use levies | Included in general strata levies based on unit entitlement |
| Process Complexity | Requires Owners Corporation approval (special resolution) and LRS registration of by-law | Requires surveyor, strata plan of subdivision, Owners Corporation approval, and LRS registration of plan and transfer |
| Ability to Amend/Repeal | Requires special resolution and consent of benefiting owner; NCAT can order amendment/repeal if unreasonable | Requires formal subdivision or consolidation, highly complex and costly |
When a Licence or Lease Might Be More Appropriate
Although an exclusive use by-law creates a lasting right attached to a lot, there are occasions where a less permanent arrangement is preferable.
Key characteristics of these alternatives are:
- Licence: Grants temporary permission to use common property for a specific purpose and period, such as a business running a pop-up display in a shared foyer. It is flexible but offers less security and certainty than a registered by-law.
- Lease: Establishes a formal landlord-tenant relationship for a defined term, requires Owners Corporation consent and provides more structure than a licence yet still falls short of the permanence of a by-law.
These options are particularly practical when the need for the area is short-term and does not justify the legal process or enduring nature of creating a common property rights by-law.
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The Legal Process for Securing an Exclusive Use By-Law in Your Strata Scheme
Drafting a Legally Sound By-Law
Drafting a Common Property Rights By-law is a critical step that requires precision to ensure it is legally enforceable, and understanding the Do’s and Don’ts of strata by-law drafting is essential. Engaging a solicitor who specialises in NSW strata law is highly recommended to protect the lot owner’s interests and to ensure compliance with the Strata Schemes Management Act 2015 (NSW). A specialist can also confirm the details are adequate to avoid future conflicts over the rights and privileges granted.
A well-drafted exclusive use by-law must contain several key elements to be effective:
- Clear Description and Plan: The by-law must precisely identify the specific part of the common property, using a detailed description and, often, a plan that defines exact boundaries. Any plans must meet NSW Land Registry Services (LRS) requirements for clarity.
- Rights Conferred: It must clearly state the nature of the rights being granted, whether for exclusive use and enjoyment or for specific special privileges.
- Maintenance Responsibility: As required by Section 144 of the Strata Schemes Management Act 2015 (NSW), the by-law must state whether the Owners Corporation or the benefiting lot owner is responsible for repair and maintenance.
- Conditions and Authorised Works: The by-law can set specific conditions, such as a one-off payment or ongoing levies, and it should authorise any specific works the owner intends to carry out within the exclusive use area.
Obtaining Strata Owners Corporation Approval
Securing approval for an exclusive use by-law involves two distinct legal requirements, both of which must be satisfied for the by-law to be validly made:
- Prior written consent of the benefiting lot owner (or owners) must be obtained, confirming their agreement to the proposed terms and responsibilities.
- The Owners Corporation must then pass the by-law via a special resolution at a properly convened general meeting, a process governed by specific voting rights; in NSW, this requires at least 75% of votes in favour, meaning no more than 25% against.
Common Hurdles in Obtaining Approval
Registration with NSW Land Registry Services
The final and most crucial step is registering the approved by-law with NSW Land Registry Services (LRS). An exclusive use by-law has no legal effect and is unenforceable until it is registered.
The Owners Corporation must lodge the by-law—typically using a Consolidation/Change of By-laws form—so that it is recorded on the Certificate of Title for the common property. This registration generally must be completed within six months of the special resolution being passed; once registered, the by-law becomes binding on the benefiting owner, all other owners in the strata scheme, and any future owners of the lot.
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Common Applications & Key Considerations for Exclusive Use Areas
Attics & Roof Spaces
When granting exclusive use of attic or roof spaces, which are usually common property, several critical factors must be addressed in the common property rights by-law. These areas sit above top-floor apartments and therefore present unique structural and safety challenges.
A thorough assessment is essential to confirm the proposed use is safe and compliant.
Key considerations include:
- Structural Capacity: An engineering assessment may be required to confirm the existing structure can support the intended use, whether for simple storage or conversion into a habitable room.
- Waterproofing and Insulation: Any alterations must not compromise the building’s waterproof membrane. The Owners Corporation generally remains responsible for the main roof structure, even if the internal space is for exclusive use.
- Access: Creating access—such as installing a ladder or stairs—involves altering common property and must be specifically authorised within the by-law, or potentially under Section 108 of the Strata Schemes Management Act 2015 (NSW).
- Fire Safety: All modifications must comply with fire safety regulations, including requirements for fire separation and smoke detection systems.
- Development Approval: Significant alterations, particularly converting an attic into a habitable area, may require a development approval (DA) from the local council in addition to strata approval.
- Common Services: The by-law should address access needs for common property services, such as pipes or wiring, that run through the space.
Courtyards & Garden Areas
Courtyards adjacent to ground-floor lots are often sought for exclusive use, creating private outdoor areas. The first step is confirming on the registered strata plan that the area is indeed common property.
When drafting a by-law for a courtyard, it is essential to address the following points to prevent future disputes:
- Boundary Definition: The by-law must precisely define the boundaries of the exclusive use area, often with a detailed sketch plan that meets NSW Land Registry Services requirements.
- Access Rights: It should be clear that granting exclusive use does not impede necessary access to other parts of common property or essential services.
- Authorised Structures: If the owner plans to install fences, pergolas, paving, or sheds, this must be expressly authorised in the by-law; such structures may also need separate council approval.
- Maintenance and Landscaping: The by-law must assign responsibility for the upkeep of gardens, lawns, and hard surfaces, a duty that typically falls to the benefiting lot owner.
- Drainage: Responsibility for surface drainage is usually given to the lot owner, while the Owners Corporation often retains responsibility for underlying common property drainage systems and waterproof membranes, which must be explicitly stated.
Car Spaces & Storage Cages
Parking arrangements in a strata scheme can vary, so the first task is verifying—by checking the strata plan—whether a car space is common property or already forms part of a lot’s title. If it is common property, an exclusive use by-law is required.
For a by-law concerning car spaces or storage cages to be effective, it must address several key details:
- Clear Identification: The specific space must be unambiguously identified, usually by number or by a location plan attached to the by-law.
- Access: The by-law should ensure that use of the designated space does not unreasonably obstruct access to other parking spaces or common property driveways.
- Maintenance: Responsibility for maintenance—including cleaning, line marking, and surface repairs—must be clearly assigned to the benefiting lot owner.
- Levies and Payments: By-laws granting exclusive use of car spaces commonly require the benefiting owner to pay a regular levy to the Owners Corporation.
- Use Restrictions: The by-law may impose restrictions, such as prohibiting storage of items other than vehicles or limiting use to registered and operational vehicles only.
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Your Obligations & Responsibilities Under an Exclusive Use By-Law
Maintenance Responsibility for the Exclusive Use Area
A crucial component of any Common Property Rights By-law is the clear allocation of maintenance responsibilities. Under Section 144 of the Strata Schemes Management Act 2015 (NSW), the by-law must explicitly state whether the Owners Corporation or the benefiting lot owner is responsible for the repair and maintenance of the exclusive use area.
In most strata schemes, this responsibility is assigned to the lot owner who benefits from the by-law. This typically includes duties such as:
- Keeping the area clean and tidy
- Undertaking routine repairs to surfaces or fixtures
- Ensuring the area remains in a good state of repair
However, this transfer of responsibility has limits. The NSW Civil and Administrative Tribunal (NCAT) decision in Mastellone v The Owners – Strata Plan No 51169 [2021] NSWCATAP 188 highlighted that the Owners Corporation retains a fundamental duty to maintain core common property infrastructure. This means it could still be liable for damage to an exclusive use area if that damage was caused by a failure to maintain other parts of the common property, such as a roof leak.
Potential Costs & Exclusive Use Levies
Obtaining exclusive use rights involves several costs that are typically paid by the lot owner proposing the by-law. These expenses can include:
- Legal fees for drafting the by-law and providing advice
- Surveyor fees if a plan defining the area is required
- NSW LRS registration fees to make the by-law legally effective
- Valuation fees if compensation is being considered
Furthermore, the Owners Corporation can impose conditions requiring the benefiting lot owner to make a payment. This serves as compensation for granting rights over a shared strata asset and can take the form of a one-off lump sum payment or ongoing payments, often referred to as ‘exclusive use levies’.
The details of any required payments, including the amount and schedule, must be specified within the registered by-law. This ensures the financial obligation is clear and legally binding on the benefiting lot owner.
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Navigating Common Hurdles & Strata Disputes
Successfully obtaining an exclusive use by-law can be complex, with several common pitfalls that may derail the process. Proactively addressing these issues can help ensure a smoother path to approval and prevent future strata disputes within the strata scheme.
Key challenges that lot owners may encounter include:
- Opposition from other lot owners: Disagreements can make it difficult to achieve the required special resolution. To mitigate this, it is best to engage with other owners early, clearly explain the proposal, and consider offering fair compensation to the Owners Corporation.
- Ambiguous by-law drafting: A poorly written by-law can lead to future conflicts over rights and responsibilities. Engaging a specialist strata lawyer to draft a clear, precise, and comprehensive by-law with detailed plans is crucial to avoid unenforceability.
- Procedural errors: Failing to follow the correct legal steps, such as obtaining the prior written consent of the benefiting owner, can invalidate the by-law. It is essential to adhere strictly to all requirements outlined in the Strata Schemes Management Act 2015 (NSW).
- Failure to register the by-law: A by-law has no legal effect until it is registered with NSW Land Registry Services. This must be done within six months of the special resolution being passed; otherwise, the approval lapses and the by-law is unenforceable.
Resolving Disagreements Through Mediation & N
The below table contains a more comprehensive list of potential pitfalls and roadblocks you may encounter when trying to get approval for an exclusive use by-law:
| Common Pitfall | Impact/Risk | Solution/Best Practice |
| Opposition from fellow lot owners | Difficulty in achieving special resolution; prolonged disputes | Early engagement and informal discussions; demonstrate benefit to entire scheme; offer fair compensation |
| Failure to register by-law | By-law is void and unenforceable; wasted costs; lack of legal standing | Strict adherence to the 6-month registration deadline; engage legal professionals for lodgement |
| Ambiguous by-law drafting | Future disputes over scope of rights or responsibilities; unenforceability | Engage specialist strata lawyer for clear, precise, and comprehensive drafting; include detailed plans |
| Inadequate compensation | Owners Corporation refusal (deemed reasonable); perceived unfairness by other owners | Obtain independent valuation of the common property area; propose fair and transparent compensation/levies |
| Procedural errors (e.g., missing written consent) | By-law may be invalid or challenged; delays in registration process | Strictly follow all SSMA requirements (e.g., S.143 written consent); maintain meticulous records of meeting procedures |
| Unreasonable refusal by Owners Corporation | Applicant may need to pursue dispute resolution via NCAT, incurring further costs and delays | Present a robust proposal with all necessary reports (engineering, valuation); clearly articulate benefits to the scheme; be prepared to demonstrate reasonableness to NCAT |
Resolving Disagreements Through Mediation & NCAT
When disagreements arise over a proposed Common Property Rights By-law and cannot be resolved through informal discussions, NSW provides formal dispute resolution pathways.
The first step is typically mediation, which is facilitated by NSW Fair Trading. This process allows the lot owner and the Owners Corporation to discuss the issues with a neutral mediator and attempt to reach a mutual agreement.
If mediation is unsuccessful, an application can be made to the NSW Civil and Administrative Tribunal (NCAT). NCAT has the authority to hear strata disputes and make legally binding orders. In cases involving exclusive use by-laws, NCAT can:
- Compel an Owners Corporation to make a by-law if it finds that its refusal was unreasonable;
- Invalidate an existing by-law if it is deemed to be harsh, unconscionable, or oppressive.
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Conclusion
Securing exclusive use of common property like attics, courtyards, or car spaces in NSW strata schemes requires a formal Common Property Rights By-law. This legal process involves careful drafting, obtaining a special resolution from the Owners Corporation, and registration with NSW Land Registry Services to ensure your rights and maintenance obligations are clearly defined and enforceable.
For trusted expertise in navigating the complexities of drafting and securing an exclusive use by-law, contact our specialist strata by-law lawyers at PBL Law Group. Our strata lawyers can provide tailored legal advice to ensure the by-law complies with NSW legislation, protects your interests, and helps you successfully obtain the exclusive use rights you seek for your strata property.
Frequently Asked Questions (FAQ)
