Legal battles may be complex, time-consuming, and costly. In order to avoid unnecessary disputes, it is important to be aware of your rights and obligations arising from living in strata. Particularly, it is important to be aware of your rights and obligations in respect of potential defects or repairs that may affect your lot. An overview of some key considerations is provided below.
Lot Property and Common Property – What is the Distinction?
Boundary structures such as walls will typically fall within the common property of a strata scheme. Generally, everything within those boundaries, from the inner surface inwards, will fall within lot property unless specifically noted otherwise on the strata plan.
For strata schemes registered after 30 November 2016, the boundaries of a “lot” are defined in section 6 of the Strata Schemes Development Act 2015 (NSW) (“SSDA”), which provides as follows:
“(1) For the purposes of this Act, the boundaries of a lot shown on a floor plan are:
(a) except as provided by paragraph (b):
(i) for a vertical boundary in which the base of a wall corresponds substantially with a base line–the inner surface of the wall, and
(ii) for a horizontal boundary in which a floor or ceiling joins a vertical boundary of the lot–the upper surface of the floor and the under surface of the ceiling, or
(b) the boundaries described on the floor plan relating to the lot, in the way prescribed by the regulations, by reference to a wall, floor or ceiling in a building to which the plan relates or to common infrastructure within the building.”
“Common property” is defined in section 4 of the SSDA as “any part of a parcel that is not comprised in a lot (including any common infrastructure that is not part of a lot)”. Common infrastructure includes the cubic space occupied by a vertical structure of a member of a building or a structure that encloses pipes, wires, cables or ducts (other than a wall) that are not for the exclusive use of one lot.
For strata schemes registered prior to 1 July 1974, “common property” is defined in section 2 of the Conveyancing (Strata Titles) Act 1961 (“CTSA”) as “so much of the land for the time being comprised in a strata plan as is not comprised in any lot shown in such plan.” The CTSA notes the definition of a lot as a “lot shown as such in the strata plan”.
Similarly, for strata schemes registered after 1 July 1974 (but before 30 November 2016), the Strata Schemes (Freehold Development) Act 1973 (NSW) (“SSFA”) defines common property as “so much of a parcel as from time to time is not comprised in any lot”. A lot is defined as:
“one or more cubic spaces forming part of the parcel to which a strata scheme relates, the base of each such cubic space being designated as one lot or part of one lot on the floor forming part of the strata plan… being in each case cubic space the base of whose vertical boundaries is as delineated on a sheet of that floor plan and which has horizontal boundaries as ascertained under subsection (2), but does not include any structural cubic space unless that structural cubic space has boundaries as prescribed and is described in that floor plan as part of a lot”.
Section 5(2) of the SSFA defines the boundaries of any cubic space as:
- in the case of a vertical boundary, where the base of any wall corresponds substantially with any lines shown in the floor plan (comprised of the base of each vertical boundary of every cubic space forming the whole of a proposed lot, or the whole of any part of a proposed lot to which the plan relates)—the inner surface of that wall; and
- in the case of a horizontal boundary, where any floor or ceiling joins a vertical boundary of that cubic space—the upper surface of that floor and the under surface of that ceiling; or
- any such boundaries as described on a sheet of the floor plan relating to that cubic space (those boundaries being described in the prescribed manner by reference to a wall, floor or ceiling in a building to which that plan relates or to structural cubic space within that building).
In light of the above, consideration should be given to the floor plan, date of registration, and composition of the strata plan in the process of distinguishing lot property and common property.
The distinction between “lot” and “common” property is important, as the power and control of the use of common property including the responsibility of its maintenance and repair is vested in the owners corporation. As such, a lot owner is not authorised to perform maintenance or repair works upon common property and will not be indemnified for doing so, unless with prior consent of the owners corporation (The Owners—Strata Plan No 32735 v Lesley-Swan [2012] NSWSC 383).
Owners should be aware that under section 106(1) of the Strata Schemes Management Act 2015 (NSW) (“SSMA”), an owners corporation must “properly maintain and keep in a state of good and serviceable repair the common property and any personal property vested in the owners corporation”. Section 106(2) requires the owners corporation to renew or replace any fixtures or fittings comprised in the common property.
Options Available to Lot Owners in the Event of Defects to the Common Property
If an owners corporation fails to uphold its obligations under the SSMA, including its obligations to maintain and repair the common property, a lot owner is entitled to make an application to the NSW Civil & Administrative Tribunal seeking orders compelling the owners corporation to do certain works in order to meet those obligations.
However, there are certain circumstances in which an owners corporation may not be required to comply with its obligations to repair and maintain the common property, including circumstances where:
- the subject repair work is deemed, by way of special resolution:
- to be inappropriate to maintain, renew, replace or repair the property;
- such decision would not affect the safety of any building, structure or common property in the subject strata scheme nor detract from the appearance of any property in the strata scheme (section 106(3)); and
- there is a common property rights by-law which provides that the repair of the subject common property falls on a specified lot owner (section 106(7)).
In the event that a lot owner suffers loss as a result of a failure of the owners corporation to meet its obligations under section 106 of the SSMA, a lot owner may be entitled to recover damages under section 106(5) compensating any foreseeable loss within two years of becoming aware of the loss. It is a requirement that the loss sustained must be linked to the breach of the statutory duty (The Owners—Strata Plan No 32735 v Lesley-Swan [2012] NSWSC 383).
Conversely, lot owners may be liable for consequential damage to common property caused as a result of a failure to maintain lot property. To that effect, lot owners are under obligation not to use their lots in a manner that causes a nuisance or hazard to the occupier of any other lot (section 153(1)). In Stolfa v Owners Strata Plan 4366 [2010] NSWSC 1507 (unreported), the Court held that the owners corporation’s obligation to maintain the common property extended to rectifying damage to common property caused by a lot owner. However, as the damage in that case was caused by lot owners, they were held liable to indemnify the owners corporation to that extent. An owners corporation may take action against a lot owner or other persons for causing damage to the common property. Under section 106(4) of the SSMA, if such action is taken, the owners corporation may defer compliance with its strict obligations under sections 106(1) and 106(2) until the action is completed, so long as the safety of the building, structure, or common property of the strata scheme will not be affected in the interim. Arguably the owners corporation can also defer compliance with its duty under subsection 106(4) in circumstances where it is pursuing a claim with respect to defects in the construction of the common property against third parties such as the builder or developer.
As to standing, it is important to note that:
- in respect of defects in the common property, the owners corporation will be the entity that has standing to sue for such by reason of the original construction; and
- in respect of defects in lot property, lot owners will have standing to sue for such, but should consider obtaining legal advice (noting that it is rarely the case that substantial defects will be present in lot property).
Should you be uncertain about your rights and/or obligations arising as a result of potential defects or repair works, Chambers Russell Lawyers is well-placed to advise you in that regard.