By Anton Kelly
The concept of exclusive use is unique to sectional title schemes. It means that although all owners own all the common property in undivided shares, they can agree that one owner (or perhaps a few owners) can use a specified portion of their co-owned property, and no other owner will use it.
So there is benefit to the owner who holds the rights. But, as the old saying goes, there are no free lunches, and the exclusive use of common property comes at a cost, which is a burden. Let’s weigh up the benefits and burdens of holding exclusive use rights.
Benefits of exclusive use in sectional title schemes
The first and most obvious benefit is that the owner who holds exclusive use rights over a portion of common property can use the area and other owners can’t stop that use or use the area themselves.
Secondly, exclusive use rights increase the market value of the property, particularly if the exclusive use rights are over parking areas.
An owner who has rights of exclusive use may be able to improve the area, by adding a structure or making a building improvement to the area. All that is required to authorise the alteration to the exclusive use area (EUA) is the consent of the body corporate by ordinary resolution. However, the body corporate cannot consent to the alteration if it constitutes the extension of the section or the creation of a new section. There are other processes and resolutions required for those! Click this link to find out how it’s done.
An owner can rent out the exclusive use area to another owner, if it is not needed. For example, if an owner only has one car but has a garage and an EUA parking bay.
Finally, although this is a technicality, registered exclusive use rights can be traded among owners, so they have independent value, other than the value they contribute to the property.
Burdens of exclusive use in sectional title schemes
It’s worth repeating at this stage that exclusive use areas are common property, owned by all the owners together in undivided shares, and so EUAs are the responsibility of the body corporate to maintain. Owners are only obliged to keep their EUAs neat and clean.
However, the Sectional Titles Schemes Management Act (SMSTA) requires the body corporate to charge owners with exclusive use rights an additional contribution, on top of their ordinary annual levies, to cover the costs the body corporate has with respect to the area. Examples, in addition to maintenance, are insurance and supply of water and electricity.
A common issue with the additional contribution for EUAs is that calculating the amounts individual owners must pay can be very complicated, and few bodies corporate do it properly. The result is that when a big expense comes along such as water proofing a patio, replacing shade cloth parking canopies, or removing a large tree from a garden, owners can be charged substantial amounts in addition to their EUA “levies”.
Exclusive use rights are definitely a benefit to sectional title owners. One can have one’s “own” garden, parking bay, store room or even swimming pool, but use is not free and one might not have any say or control over what or when maintenance is done.
If you have any difficulties regarding exclusive use please contact consulting@for a no obligation quotation for advice.