Introduction

Living in the NSW strata scheme involves owning your lot while sharing common property areas with fellow owners. However, situations frequently arise where a lot owner desires exclusive access to a part of the common property, such as an adjacent courtyard, attic space, or a specific car space, which requires formal authorisation beyond informal agreements.

The primary legal pathway in NSW to achieve this is through a Common Property Rights By-law, formerly known as an exclusive use by-law, governed by the Strata Schemes Management Act 2015 (NSW). This guide explains the purpose of this specific by-law. It outlines the essential steps and considerations for lot owners legally seeking to secure exclusive use rights over common property areas like attics, courtyards, and parking spaces within their strata scheme.

Understanding Exclusive Use By-Laws in NSW Strata

What is Common Property in a Strata Scheme?

Common property within a strata scheme encompasses all areas of the land and buildings not included within the boundaries of any individual lot owner’s property. Under the Strata Schemes Development Act 2015 (NSW), common property is any part of the parcel (the land included in the scheme) not comprised of a lot. This includes common infrastructure, which is not part of a lot.

Examples of common property frequently include:

• Gardens, fences, driveways, and visitor parking spaces
• Shared building structures like roofs, gutters, external walls, foyers, lobbies, stairwells, and lifts
• Utility infrastructure serving multiple lots, such as pipes and wiring located in common areas
• Shared facilities like laundries, gyms, or swimming pools

Identifying the precise boundaries between a lot and common property requires careful examination of the registered strata plan for the specific scheme. This plan is the definitive source, outlining lot boundaries often defined by the inner surfaces of walls, upper surfaces of floors, and under surfaces of ceilings.

Relying on visual inspection alone can be misleading, as areas like balconies or garages might appear private but are legally defined as common property on the plan.

What is an Exclusive Use By-Law / Common Property Rights By-Law?

An Exclusive Use By-law, now formally termed a Common Property Rights By-law under the Strata Schemes Management Act 2015 (NSW), is a specific type of rule registered for a strata scheme. Its purpose is to grant an owner (or owners) of a particular lot the legal right to use a defined area of common property to exclude all other owners and occupiers.

This mechanism allows a lot owner to have sole use of areas such as:

• Attics
• Courtyards
• Garden areas
• Car spaces
• Storage spaces

Formal legal mechanisms, such as a Common Property Rights By-law, are necessary to grant exclusive rights over shared areas. Relying on informal agreements or understandings for the exclusive use of common property is unreliable and legally precarious. Such arrangements are likely unenforceable against current or future owners or the Owners Corporation, potentially leading to disputes.

The Process for Securing an Exclusive Use By-Law in NSW

Proposing the By-Law and Initial Steps

Initiating the process for securing exclusive use rights often begins with informal discussions. Engaging with members of the Strata Committee or the Strata Manager can provide early feedback and insight into the Owners Corporation’s procedures for such requests.

After these initial conversations, a formal written proposal should be submitted to the Owners Corporation. This proposal needs to outline clearly:

• The specific part of the common property involved
• The nature of the exclusive use rights sought
• The proposed terms, including maintenance responsibilities
• Any offered compensation or levy

Drafting the By-Law: Essential Components and Seeking Legal Advice

Drafting the Common Property Rights By-law is a critical stage requiring careful attention to detail. Engaging a solicitor specialising in NSW strata law is highly recommended to ensure the by-law is legally sound and effectively protects the lot owner’s interests while complying with the Strata Schemes Management Act 2015 (NSW).

A well-drafted exclusive use by-law must include several essential components:

• Clear Description and Plan: The by-law must precisely identify the specific part of the common property. This requires a detailed description and often a plan defining the exact boundaries of the exclusive use area, including the stratum height and depth. The plans attached must meet NSW Land Registry Services (LRS) requirements for clarity and reproducibility.
• Rights Conferred: It must clearly state the nature of the rights granted, whether it’s exclusive use and enjoyment or specific special privileges.
• Maintenance Responsibility: As mandated by 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. Typically, this responsibility falls upon the benefiting lot owner.
• Conditions: The by-law may include conditions, such as requirements for the benefiting lot owner to make payments (a one-off sum or ongoing exclusive use levies) to the Owners Corporation. It might also need to authorise specific works the owner intends to carry out within the area.

Obtaining Owners Corporation Approval: Consent and Voting

Securing approval involves meeting two distinct requirements under the Strata Schemes Management Act 2015 (NSW):

1. The Owners Corporation must obtain the prior written consent of the lot owner (or owners) who will benefit from the exclusive use by-law, as per section 143. This consent confirms their agreement to the terms and responsibilities outlined in the proposed by-law.
2. The Owners Corporation must approve the proposed by-law through a special resolution passed at a properly convened general meeting. A special resolution in NSW requires that not more than 25% of the value of votes cast (based on unit entitlements) are against the motion, meaning at least 75% must vote in favour.

Registration with NSW Land Registry Services

The final and essential step is the registration of the approved by-law with NSW LRS. The Owners Corporation must lodge the by-law, typically using an approved Consolidation/Change of By-laws form, for recording on the common property’s Certificate of Title.

Registration is mandatory for the by-law to become legally effective and binding on:

• The current benefiting owner
• All other owners in the strata scheme
• Any future owners

An unregistered by-law may not be enforceable. Some resources suggest this registration should occur within six months of the special resolution being passed.

Key Considerations for Specific Exclusive Use Areas

Attics / Roof Spaces

Attic or roof spaces are often located above top-floor apartments and are typically common property. Granting exclusive use rights for these areas require careful consideration through a common property rights by-law.

When seeking exclusive use of an attic, several essential factors must be addressed:

• Structural Capacity: Determining if the existing structure can safely support the intended use is essential, whether for storage or as a habitable room. An engineering assessment may be necessary to confirm load-bearing capacity.
• Waterproofing and Insulation: Alterations must not compromise the building’s waterproof membrane or insulation. Even if the internal space is granted for exclusive use, responsibility for the main roof structure and membrane typically remains with the Owners Corporation.
• Access: Creating access, such as installing stairs or a ladder, involves altering common property structures. This usually requires specific authorisation within the by-law or potentially a separate works by-law under section 108 of the Strata Schemes Management Act 2015 (NSW).
• Fire Safety: Modifications must comply with all relevant regulations, including requirements for fire separation and smoke detection systems.
• Services: Consideration must be given to common property services like pipes or wiring that may run through the space. The by-law should address access requirements for maintaining these services.
• Ventilation: Adequate ventilation must be ensured, particularly if the space is converted for habitation.
• Insurance: Implications for building insurance should be reviewed, especially if structural modifications are made.
• Value and Compensation: Converting attic space, particularly into habitable areas, can significantly increase the lot’s value. The Owners Corporation may seek financial compensation or impose a levy as a condition of the by-law.

Courtyards

Courtyards adjacent to ground-floor lots are frequently sought for exclusive use to provide private outdoor space. The first step is verifying that the courtyard is common property on the registered strata plan.

Key considerations for exclusive use courtyards include:

• Boundary Definition: The by-law must precisely define the boundaries of the exclusive use area, often referencing the strata plan or an annexed sketch plan.
• Access: The by-law should clarify access arrangements and ensure that granting exclusive use does not impede necessary access to other common property areas or services.
• Enclosures and Structures: Installing items like fences, pergolas, paving, or sheds requires specific authorisation in the by-law. Depending on the structure, separate development approval (DA) from the local council might also be necessary.
• Landscaping and Maintenance: The by-law must clearly state who is responsible for landscaping, gardens, lawns, and hard surfaces within the courtyard. Typically, this responsibility falls to the benefiting lot owner.
• Drainage and Waterproofing: This is critical, especially if the courtyard is above a basement or another part of the building. While the lot owner may maintain surface elements, the Owners Corporation often retains responsibility for underlying common property drainage systems and waterproof membranes. The allocation of these responsibilities must be explicit in the by-law.

Car Spaces

Car parking arrangements in strata schemes vary; spaces can be part of a lot owner’s title, common property with exclusive use rights granted by a by-law, or allocated through other means like licences. When relying on an exclusive use by-law for a car space, specific considerations must be addressed.

Factors to address for exclusive use of car spaces include:

• Identification: The specific car space must be unambiguously identified in the by-law, usually by number or reference to a location plan attached to the by-law or the registered strata plan.
• Associated Areas: The by-law should clarify if the exclusive use rights extend to adjacent areas, such as storage cages, sometimes related to parking spaces.
• Access: The designated space must not unreasonably obstruct access to other parking spaces or common property driveways.
• Maintenance: The by-law needs to define responsibility for maintenance, which could include cleaning, surface repairs, and line marking. The Owners Corporation might retain responsibility for the overall pavement structure or assign it to the lot owner.
• Levies: It is common for by-laws granting exclusive use of car spaces to include a condition requiring the benefiting lot owner to pay a regular levy to the Owners Corporation.
• Use Restrictions: The by-law may impose restrictions, such as prohibiting storage or limiting use to registered and operational vehicles only.
• Comparison to Title: An exclusive use by-law provides rights but does not confer ownership. Owning a car space ‘on title’ offers greater security and the ability to sell the space independently but usually involves higher initial costs and potentially higher strata levies. Exclusive use rights depend on the registered by-law’s validity and wording, which could be amended or repealed in the future under specific circumstances.

Obligations and Responsibilities Associated with Exclusive Use By-Laws

Maintenance Responsibility for the Exclusive Use Area

A crucial aspect 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. This provision within the by-law modifies the general duty of the Owners Corporation to maintain common property, but only for the specified area.

In most cases, the responsibility for maintaining the exclusive use area is assigned to the lot owner, who benefits from its use. This typically includes duties such as:

• Keeping the area clean and tidy
• Undertaking routine repairs to surfaces or fixtures within the area
• Ensuring the area remains in a good state of repair
• Potentially arranging and paying for insurance related to the exclusive use of space

However, there are limits to this transfer of responsibility. Even if a by-law makes a lot owner responsible for maintaining an item within their exclusive use area, the Owners Corporation may still be liable for damage caused by its failure to maintain other parts of the common property under its care.

The NSW Civil and Administrative Tribunal (NCAT) Appeal Panel decision in Mastellone v The Owners – Strata Plan No 51169 [2021] NSWCATAP 188 highlighted that the Owners Corporation’s fundamental duty remains to maintain core common property infrastructure. This means it could be liable for consequential damage, such as a roof leak damaging an exclusive-use ceiling, resulting from a breach of that duty.

Costs and Potential Exclusive Use Levies

Obtaining exclusive use rights typically involves several costs, which are usually borne 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 exclusive use area is required
• NSW LRS registration fees
• Valuation fees if compensation is being considered

Furthermore, the Common Property Rights By-law can impose conditions requiring the benefiting lot owner to pay for the Owners Corporation. These payments serve as consideration for granting rights over a shared asset and can take different forms:

• A one-off lump sum payment: Paid upfront to the Owners Corporation
• Ongoing payments: Often referred to as ‘exclusive use levies’, these are regular contributions paid by the benefiting owner

These exclusive use levies might cover ongoing maintenance expenses related to the area still borne by the Owners Corporation or act as compensation for the privilege granted.

The details regarding any required payments, including the amount or calculation method and payment schedule, must be specified within the registered by-law. This creates a binding financial obligation for the benefiting lot owner.

Common Hurdles in Obtaining Approval

Seeking a Common Property Rights By-law for exclusive use can encounter several obstacles during approval. These potential hurdles include:

• Opposition from fellow lot owners — This significant challenge may arise due to:
  • Concerns about fairness
  • Potential impact on other residents’ use or enjoyment of common property
  • Fears of setting an undesirable precedent for future requests
• Financial costs — The proposing lot owner typically bears expenses for:
  • Legal advice
  • Drafting the by-law
  • Potential surveyor or valuer fees
  • Registration costs with NSW LRS

Additionally, the Owners Corporation might require a financial contribution or an ongoing exclusive use levy as a condition of approval, further adding to the financial burden.

• Conflicts with existing scheme by-laws — The proposed exclusive use might contradict current rules or restrictions within the strata scheme, necessitating careful review and potential amendment of other by-laws.
• Validity concerns Procedural errors, such as failing to obtain the necessary prior written consent from the benefiting owner, could invalidate the by-law.

Furthermore, the Owners Corporation retains the right to refuse the proposal, even if procedural requirements are met. While decisions must generally be reasonable, the Owners Corporation may decline the request based on the collective interests of the scheme, the nature of the proposal, or concerns raised by other owners during the general meeting where the special resolution is voted upon.

Addressing Disputes: Mediation and NSW Civil and Administrative Tribunal

Formal dispute resolution pathways are available in NSW when disagreements arise regarding a proposed Common Property Rights By-law and negotiations fail. These processes offer structured methods for resolving conflicts between lot owners and the Owners Corporation.

The first formal step is typically mediation, facilitated by NSW Fair Trading. This service provides a neutral mediator to help the involved parties:

• Discuss the issues
• Explore options
• Attempt to reach a mutually agreeable resolution in an informal setting

If mediation is unsuccessful or deemed inappropriate for the specific dispute, an application can be made to the NCAT. NCAT possesses the authority to:

• Hear and make binding determinations on a wide range of strata disputes
• Address issues concerning the making, interpretation, or enforcement of by-laws
• Resolve disputes about the use of common property
• Evaluate allegations of unreasonable refusal by an Owners Corporation

NCAT can issue orders to resolve the matter, potentially including orders compelling the Owners Corporation to make or register a by-law if its refusal was unreasonable.

Conclusion

Securing exclusive use of common property such as attics, courtyards, or a specific car space in NSW strata schemes necessitates a formal Common Property Rights By-law under the Strata Schemes Management Act 2015 (NSW). This involves a defined legal process including proposal, careful drafting of the by-law, obtaining the benefiting lot owner’s written consent, securing a special resolution at a general meeting of the owners corporation, and registration with NSW LRS, ensuring clarity on rights and maintenance obligations.

For trusted expertise in navigating the complexities of drafting and securing an exclusive use by-law, contact PBL Law Group. Our specialist 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 scheme property.

Frequently Asked Questions (FAQ)