In a consulting matter I dealt with this month, the trustees of a scheme were undertaking the mammoth task of sorting out 20 years’ worth of unapproved alterations made to the scheme’s common property.
Many schemes battle with unauthorised common property alterations. These alterations are often undertaken quite innocently by owners of sections who mistakenly believe they ‘own’ exclusive use areas (EUAs) and can therefore build on them without body corporate approval. They don’t realise that EUAs are in fact common property and that in order to legally build on or alter their EUA they require body corporate approval via an ordinary resolution. Prior to 7 October 2016, they required the written consent of the trustees.
In this article I’m sharing three options trustees may like to consider when attempting to clean up these kinds of en masse unauthorised common property alterations.
1. Approach the local council for assistance
The common property alterations, whether properly approved by the body corporate or not, may well require written approval from the local authority under the National Building Regulations and Building Standards Act No. 103 of 1977. As such, if the owners in question have not obtained local authority approval, they are in breach of the National Building Regulations which means they are in breach of a law relating to the common property. Trustees have a duty to ensure compliance with all laws relating to the common property and, in order to remedy these breaches, it may be possible to have the local council order individual owners to remove illegal building structures.
2. Make application to CSOS
The body corporate could make application to the Community Schemes Ombud Service (CSOS) on a case by case basis, challenging each owner who has made unauthorised common property alterations. However, the trustees would need to bear in mind the range of defences that an owner may raise in response.
For example, estoppel. If, in the past, the body corporate has appeared to consent to the alterations in some way (expressly or impliedly), then it may be estopped (prevented) from forcing an owner to remove the alterations. If there has been a significant lapse in time since the alterations were undertaken and the body corporate has failed to take action on the matter until now, the body corporate’s inaction could be construed as implied consent. Or, if the unit has changed hands since the alterations were undertaken, implied consent could be construed from the previous issuing of a levy clearance certificate, indicating that there were no outstanding issues relating to the unit or its previous owner.
Other important considerations for trustees considering this route are the significant financial and time costs. And, of course, there is always the very real risk that the adjudication orders may not give the body corporate the desired relief or that the owner may refuse to comply with the order.
3. Pass a conduct rule to regularise the alterations
Another approach is to regularise and legalise all alterations that are acceptable to the body corporate, rather than attempting to have them forcibly removed.
In order to achieve this, a proposed conduct rule can be drafted (preferably by an attorney well versed in sectional title management law) and put to the body corporate for approval by special resolution, approving the existing common property alterations, subject to various reasonable conditions that protect the body corporate and manage these common property areas appropriately.
If the trustees choose to go this route, it is important to first speak to the local council as council approval of the existing alterations should be one of the conditions attached to body corporate approval in the new conduct rule.
Whichever way trustees choose to deal with unauthorised common property alterations, whether by trying to force removal via the local council or CSOS or by regularising and legalising them, I recommend getting the majority of owners on board to support the process. Either way, there are going to be costs to the body corporate, and in the case of regularising and legalising, a special resolution is required to pass the new conduct rule. So the trustees are well advised to call a general meeting with this topic on the agenda to get a directive from owners as to how they should proceed to remedy the illegal alterations.
Article reference: Paddocks Press: Volume 17, Issue 5.
Jennifer Paddock is a dual-qualified lawyer with experience working as a strata title managing agent and solicitor in New South Wales. Prior to this, she served as a specialist sectional title attorney and practice manager at Paddocks for five and a half years. She brings a wealth of knowledge and expertise to the Paddocks team. Contact her at email@example.com.
This article is published under the Creative Commons Attribution license.