Strata living in New South Wales offers a unique community environment with shared amenities like pools, gyms, and BBQ areas. However, the enjoyment of these facilities relies on owners contributing to their upkeep through regular levy payments. But what happens when an owner falls behind on their levies? Can they be denied access to these common facilities?

The Legal Position in NSW

In New South Wales, the Strata Schemes Management Act 2015 (SSMA) governs the rights and responsibilities of lot owners, including the implications of unpaid levies. An owner who has not paid their levies (including any interest and recovery costs) is considered an “unfinancial owner.”

The SSMA does impose some restrictions on unfinancial owners. Specifically, the Act restricts their participation in certain strata matters such as being restricted from voting at general meetings (except on motions requiring a unanimous resolution) and being elected to the strata committee.

However, it’s crucial to understand that the SSMA does not grant an automatic right to an owners corporation to deny an unfinancial owner access to common property facilities.

The Critical Role of By-Laws

The ability to restrict an owner’s access to common property facilities hinges on the existence and validity of specific by-laws within the strata scheme.

• By-laws and Restrictions: If a strata scheme’s registered by-laws explicitly include provisions restricting access to common facilities for lot owners with unpaid levies, then the owners corporation may have grounds to enforce those restrictions.
• Validity of By-laws: Even when such by-laws exist, their enforceability is not guaranteed. Section 150 of the SSMA empowers the NSW Civil and Administrative Tribunal (NCAT) to deem by-laws “harsh, unconscionable, or oppressive,” which can render them invalid.
• Legal advice is essential: Given the complexities of the legislation and the potential for legal challenges, owners corporations should always seek updated legal advice to determine the enforceability of any by-laws that restrict facility access. What might have been considered enforceable in the past may not be today.

Important Considerations for Owners Corporations

Owners corporations need to proceed cautiously and ensure they are acting within the boundaries of the law. Here are some key considerations:

• Check the by-laws: The first step is to verify that the strata scheme has a by-law that specifically addresses the issue of restricting access to common property facilities for unfinancial owners. If no such by-law exists, the owners corporation cannot legally enforce such a restriction.
• Assess the enforceability of the by-law: Even if a relevant by-law is in place, it is essential to assess its enforceability as a by-law that is deemed harsh, unconscionable, or oppressive is unlikely to be upheld.
• Seek updated legal advice: Strata law is subject to change, and legal interpretations can evolve over time. Owners corporations should obtain current legal advice to ensure that their by-laws and enforcement actions comply with the latest legal standards.
• Apply to NCAT if necessary: If an enforceable by-law exists and an owner refuses to comply with it, the owners corporation may need to apply to NCAT for an order to enforce the by-law.

Proactive Measures: Promoting By-Laws and Levy Collections

To minimize disputes and ensure the smooth functioning of the strata scheme, owners corporations should adopt a proactive approach:

• Clear and comprehensive by-laws: Develop and maintain by-laws that are clear, unambiguous, and consistent with the SSMA. Ensure that all owners have easy access to these by-laws.
• Effective levy collection: Implement a robust system for collecting levies, including:
  • Issuing levy notices promptly.
  • Offering a range of payment options.
  • Following up on overdue payments in a timely and consistent manner.
  • Establishing a clear policy for handling levy arrears.
• Dispute resolution: Establish clear and fair procedures for resolving disputes related to levy payments and access to facilities.
• Professional guidance: Seek legal advice as needed to ensure compliance and best practices.

In NSW, the ability of an owners corporation to restrict an unfinancial owner’s access to common property facilities is not automatic. It depends on the specific by-laws of the strata scheme.

ACCESS TO FACILITIES: DO YOU NEED TO UPDATE YOUR BY-LAWS FOR UNFINANCIAL OWNERS?

Adrian Mueller I BCOM LLB FACCAL I Partner

Since 2002 Adrian has specialised almost exclusively in the area of strata law. His knowledge of, and experience in strata law is second to none. He is the youngest person to have been admitted as a Fellow of the ACSL, the peak body for strata lawyers in Australia. Profile I Linked

Contact Us

For all strata law advice including by-laws, building defects and levy collections contact our specialist NSW and Sydney strata lawyers here or call 02 9562 1266, we’re happy to assist.

A lot owner has an apartment in a strata scheme with shared facilities with a pool, sauna and gym however the owner does not live in that strata scheme because they have rented their apartment out – can they still use the pool, sauna and gym, deemed as shared facilities?

The answer may not be that straight forward and raises many questions:

• They have rented out their apartment, but the lot owner still pays the levies so wouldn’t they be entitled to use the shared facilities?
• Even though the lot owner still pays the levies have they signed their rights over to the tenants for use of the shared facilities once they lease the property?
• Can the lot owner prohibit their tenants from using the apartment facilities thereby by doing so, the owner can have complete access to the facilities as after all they pay the levies?
• Perhaps the lot owner can still use the facilities, unless there is a specific by-law which prohibits them from using the shared facilities?

The answer is typically this:

• When an owner leases their lot, they also lease their interests in the common property to their tenant.
• This means the owner forfeits his or her right to use the common property facilities such as the pool, sauna and gym.
• In some cases a shrewd owner might change the lease to reserve to the owner the right to continue to use the common property facilities.
• It is unlikely this would be legally effective because an owner’s interest in the common property cannot be dealt with separately from, or severed from, his or her interest in their lot.
• However, an astute owner could decide not to lease out part of the lot such as storage room or one of two car spaces. In doing so, the owner could retain his or her interest in the common property and the right to use the common property facilities.

Do you need to review your by-laws?

In some cases it can be very useful to put in place a by-law that makes these rules clear to ensure that common property facilities are not overused.

NEED TO UPDATE YOUR COMMON PROPERTY FACILITIES BY-LAW?

Adrian Mueller I BCOM LLB FACCAL I Partner

Since 2002 Adrian has specialised almost exclusively in the area of strata law. His knowledge of, and experience in strata law is second to none. He is the youngest person to have been admitted as a Fellow of the ACSL, the peak body for strata lawyers in Australia. Profile I Linked

Contact Us

For all strata law advice including by-laws, building defects and levy collections contact our specialist NSW and Sydney strata lawyers here or call 02 9562 1266, we’re happy to assist

By-laws for BBQs, Pools and Gyms

Hot summer weather and the festive season is upon us and what a better time for lot owners and tenants to get fit, have a dip and pull out the barbie on a balmy summers day.

As the weather warms up to higher temperatures, so does the festive cheer. We recommend that reviewing and updating the following by-laws to help ensure that your strata blocks have clear rules and a stress free summer festive season.

BBQs – Fire Safety and Smoke Drift

For safety and smoke drift purposes it is highly recommended that a comprehensive by-law regulating (sometimes prohibiting) the use of BBQs on balconies.

Regulations on the type of BBQs such as

• Smokers
• Open fires
• Storage of LPG bottles, inflammable liquids and other substances and materials

All of these items should be considered as part of your by-laws.

Pools – Don’t Ignore the Potential Risks

A communal pool in strata has its benefits, but the risks cannot be ignored that’s why it’s important to have a clear set of communal rules in the form of a by-law to ensure everyone stays safe.

A by-law with clear communal rules such as:

• ‘No running’, ‘no diving (in shallow water)’ and ‘no bringing of glass’ at the pool are all great ways to help ensure everyone’s safety.
• Electricity and water do not mix well, so it’s important to minimise the risk of accidents by limiting electrical use around pools.
• And…who can and cannot use the pool.

Gyms – Reduce your Risks

Like pools, gyms in strata complexes have many benefits however come with safety risks and that’s why it’s critical to have a set of by-law rules to ensure everyone’s safety.

• Keeping noise to a minimum
• Hours of gym operation
• Safety rules
• Use and cleaning of equipment and more

Our specialist team of strata lawyers have been developing and reviewing by-laws for over 40 years. So, if you’re looking for a by-law or a review, we’d be happy to assist.

Get your by-laws right – speak to the experts!

Adrian Mueller I BCOM LLB FACCAL I Partner

Since 2002 Adrian has specialised almost exclusively in the area of strata law. His knowledge of, and experience in strata law is second to none. He is the youngest person to have been admitted as a Fellow of the ACSL, the peak body for strata lawyers in Australia. Profile I Linked

Contact Us

For all strata law advice including by-laws, building defects and levy collections contact our specialist NSW and Sydney strata lawyers here or call 02 9562 1266, we’re happy to assist.