Managing Common Property Disputes in Duplex Strata Schemes

Introduction

Managing disputes in two-lot strata schemes, such as duplexes, has become increasingly complex due to recent legal reforms and the unique challenges these arrangements present. The introduction of new duties, stricter rules for repairs, and formal processes for finances and dispute resolution means that informal, neighbourly agreements are no longer sufficient.

For duplex owners, understanding the legal responsibilities and the structure of strata management is essential to prevent and resolve conflicts effectively. This guide outlines the key issues, legal changes, and practical strategies to help owners navigate common property disputes in duplex strata schemes.

Interactive Tool: Check Your Duplex Strata Dispute Risk & Next Steps

Understanding the Unique Nature of Duplex Strata Schemes

The Automatic Strata Committee & Meeting Rules

In a two-lot strata scheme, the formation of a strata committee is automatic, removing the need for formal elections under Section 30(3) of the Strata Schemes Management Act 2015 (NSW). Consequently, the committee comprises the two lot owners.

The representative for each lot is determined as follows:

• Sole Owner: A single owner automatically becomes the committee member.
• Multiple Owners: They must nominate one person to represent them; if no nomination is made, the owner listed first on the strata roll becomes the member.
• Company Ownership: A company must nominate a representative to act on its behalf.

Specific rules also govern meetings to ensure fairness. According to Clause 17(2)(c) of Schedule 1, a quorum of two is required, meaning both owners must be present before any decisions can be made. This provision prevents one owner from taking advantage of the other’s absence to pass motions.

Special Exemptions for Finances & Strata Insurance

Two-lot strata schemes can agree to certain exemptions from standard financial and insurance obligations—provided both owners pass a unanimous resolution:

• Forgoing the Capital Works Fund: Under Section 74(5) of the Strata Schemes Management Act 2015 (NSW), owners may decide not to establish a sinking fund if:
  • The buildings for each lot are physically detached.
  • There are no additional buildings or parts of buildings on common property.
  • (Note, however, that the Administrative Fund must still be maintained for day-to-day expenses.)
• Forgoing Building Insurance: Under Section 160(4) of the Strata Schemes Management Act 2015 (NSW), the owners corporation can opt out of holding building insurance if the buildings are physically detached. In this case, each owner should arrange separate insurance for their own lot, although requirements such as public liability insurance may still apply.

Common Sources of Disputes in Duplex Strata Properties

Disagreements Over Common Property Repairs & Maintenance

Disputes over the repair and maintenance of common property are among the most frequent issues in a duplex strata scheme. The Owners Corporation, which consists of both lot owners, has a strict legal obligation under section 106 of the Strata Schemes Management Act 2015 (NSW) to properly maintain and repair all common property.

This duty requires keeping shared areas in a state of good and serviceable repair. However, disagreements often arise regarding:

• What constitutes necessary maintenance
• The urgency of repairs
• How costs should be shared

Even with limited common property, such as a shared roof or driveway, ambiguity about responsibility can lead to significant conflict between owners.

Navigating Insurance Complexities & Known Defects

Insurance is another common area of dispute, as owners must decide on adequate coverage for shared structures. This requires clear agreement on:

• Whether to hold a joint policy or separate ones
• How to divide the costs

These decisions can become a point of contention.

A critical issue that can invalidate coverage is the failure to repair known building defects. Most strata insurance policies include exclusions for damage resulting from a known issue that was not rectified. Under the Insurance Contracts Act 1984 (Cth), owners have a duty to disclose any known defects to their insurer. Failing to do so could lead to a claim being denied or the policy not being renewed.

Conflicts Arising from Renovations & By-Law Enforcement

Renovations that affect common property frequently lead to disputes between owners. Conflicts can arise from:

• Differing opinions on aesthetics
• The impact on property value
• The use of shared spaces like gardens and driveways

Additionally, strata by-laws—or the lack thereof—can complicate living arrangements. The interpretation and enforcement of rules often become sources of friction, particularly concerning issues magnified by close proximity, including:

• Noise levels
• Parking arrangements
• The keeping of pets
• Nuisance smoke

The Challenge of Decision-Making & Voting Deadlocks in Strata

How Voting Works with Unit Entitlements & Polls

In a strata title duplex, the owners corporation is made up of just two members, with each owner holding one vote. This setup can easily result in a deadlock if the two owners disagree on a motion, causing the motion to be defeated.

However, this stalemate can be resolved if one owner demands a “poll.” When a poll is called:

• The decision is no longer based on one vote per owner.
• The outcome is instead determined by the unit entitlements assigned to each lot.

Unit entitlements are generally calculated based on the value of each lot. As a result:

• The owner with the higher-valued property usually holds more unit entitlements.
• This owner, therefore, has greater voting power.

For decisions requiring a simple majority, the owner with more unit entitlements can effectively control the outcome by demanding a poll.

Understanding Fraud on the Minority & Your Legal Options

The owner with majority voting power is not permitted to use it for an improper purpose, a situation legally referred to as “fraud on the minority.” This could occur, for example, if the majority owner refuses to approve necessary actions, such as raising a levy to fund essential repairs to the common property. Such a refusal would be considered an abuse of their voting power.

On the other hand, using majority power to fulfil legal obligations is not regarded as fraud on the minority. For example:

• If an owner with higher unit entitlements passes a motion to raise levies for urgent common property repairs, they are acting within the law.
• This is because the owners corporation has a statutory duty to maintain the common property under section 106 of the Strata Schemes Management Act 2015 (NSW).

If an owner feels oppressed by an improper use of voting power, they can seek recourse through the NSW Civil and Administrative Tribunal (NCAT).

Appointing a Compulsory Strata Manager Through NCAT

If a duplex strata scheme becomes dysfunctional due to ongoing disputes or the oppression of a minority owner, an application can be made to NCAT. The tribunal has the authority to order the compulsory appointment of a strata managing agent, who acts as a neutral third party.

This professional manager:

• Is empowered to take over and exercise all the functions of the owners corporation.
• Makes impartial decisions, thereby removing control from the owners.

The case of Bradshaw v Cooke and The Owners – Strata Plan No 91905 [2021] NSWCATAP 156 illustrates a situation where this occurred. While this provides a solution for the oppressed owner, it is important to note that it involves legal costs for the NCAT application as well as ongoing fees for the appointed strata manager.

Key 2025 Legal Changes Affecting Duplex Strata Owners

Extended Liability for Common Property Repairs

A significant legal change has affected the limitation periods to claim damages for common property defects, increasing the time an owner has to sue the owners corporation. This period has been extended from two years to six, creating a much longer window of financial risk for the strata scheme.

For duplex owners, this means it is crucial to:

• Address all repair issues promptly
• Maintain detailed records to avoid future liability

New Duties for Owners & Rules for Urgent Repairs

The 2025 reforms introduce new legal duties for owners, who automatically form the strata committee in a two-lot scheme. Both owners must now act honestly, with care, and in the best interests of the property as a whole. This formalises the relationship, requiring that decisions are fair and justifiable rather than based on personal preference.

Additionally, new rules have been put in place to prevent the delay of urgent repairs where such delay could affect safety or a person’s access to their home or common property. For example:

• One owner cannot block the repair of a collapsed shared driveway because of a dispute
• The necessary work must be completed, with the costs to be resolved afterwards

Streamlined Processes for Renovations & Financial Hardship

To prevent indefinite delays, a request for a minor renovation is now automatically approved if the owners corporation does not refuse it in writing within three months. This provides a clear mechanism to stop one owner from blocking another’s reasonable renovation plans through simple inaction.

The reforms also establish a more considerate approach to financial difficulties. Formal rules now require the owners corporation to consider a payment plan for unpaid strata levies before commencing debt recovery action. This means if one owner falls behind on payments, the other cannot immediately initiate legal proceedings and must first follow this formal process.

Proactive Strategies to Minimise Duplex Strata Disputes

Fostering a Partnership Through Communication & Due Diligence

Before purchasing a property in a duplex strata scheme, it is vital to cultivate a sense of partnership with the other owner. This approach builds a foundation of mutual respect and cooperation, which is essential for effective problem-solving and communication down the line.

Engaging in thorough due diligence and open dialogue from the beginning is crucial. To ensure both parties can work together harmoniously, it is beneficial to:

• Assess compatibility in lifestyles and expectations
• Discuss how each owner views their responsibilities towards shared property, such as common walls or a roof
• Clarify each owner’s willingness to contribute to upkeep

By addressing these topics early, both parties can better understand how they will collaborate on shared responsibilities.

The Importance of Formal Written Agreements & Record-Keeping

To prevent misunderstandings, all agreements between owners should be documented in writing. These documents can function as informal by-laws, clearly outlining each party’s responsibilities and the agreed-upon rules for the strata property.

Adopting formal mechanisms, such as holding annual general meetings, can also help manage the strata scheme effectively. These meetings provide a structured forum to:

• Discuss and plan for capital expenditures
• Establish budgets for maintenance
• Address any concerns before they escalate

Maintaining a written record of all decisions and discussions is invaluable for clarifying expectations and provides a clear basis for resolving any future disputes.

Planning for Regular Maintenance & Emergencies

Establishing a regular maintenance schedule for all shared areas and structures is a key proactive strategy. This approach helps prevent disputes arising from neglect or deterioration and ensures both owners contribute to preserving the property’s value.

Additionally, owners should develop an agreed-upon plan for handling emergencies, such as urgent repairs or natural disasters. Deciding in advance how these situations will be managed can significantly alleviate stress and confusion when they occur, allowing for a swift and cooperative response.

Conclusion

The nuanced dynamics of two-lot strata schemes require a proactive approach to management, as disputes over repairs, insurance, and decision-making can easily arise. Understanding your legal duties, the importance of formal agreements, and strategies for resolving conflict are essential for maintaining a functional and harmonious living arrangement.

For guidance through the complexities of strata laws or to resolve conflicts within your duplex scheme, contact the strata law lawyers at PBL Law Group. Our experts provide comprehensive legal services tailored to meet your needs, helping to make your duplex living hassle-free.

Frequently Asked Questions (FAQ)