Do I Need To Pay An Owners Corporation Money for an Exclusive Use By-Law?

Do I Need To Pay An Owners Corporation Money for an Exclusive Use By-Law?

We have recently received an influx of enquiries from lot owners in strata schemes seeking advice on whether or not they are required to pay their owners corporation money (compensation), either in the form of a lump sum payment or a periodic fee, for the grant of exclusive use rights over a specifed part of common property for their benefit pursuant to an exclusive use by-law.

This article provides some guidance about when an owners corporation can seek the payment of money from a lot owner in consideration for the grant of exclusive use rights over common property.

In our experience it is reasonable for an owners corporation to seek the payment of money from a lot owner if the lot owner is to be granted exclusive use and enjoyment over the following areas:

(a)    common property attic/void/roof space for storage or habitation;

(b)    common property garden area;

(c)    common property car space;

(d)    common property basement below the owner’s lot: Hogan v Owners Corporation (Strata & Community Schemes) [2003] NSWCTTT 726; and

(e)    common property courtyards and balconies.

The source of the owners corporation’s right to seek the payment of money from a lot owner stems from the provisions of section 53 of the Strata Schemes Management Act 1996 which states:

“53 Can a by-law contain conditions?

A by-law to which this Division applies may confer rights or special privileges subject to such conditions as may be specified in the by-law (for example, a condition requiring the payment of money by the owner or owners of the lot or lots concerned, at specified times or as determined by the owners corporation).”

In our experience, when acting for an owners corporation, we suggest that the owners corporation first obtain advice from a registered valuer to determine the amount of compensation (money) that should be paid by the lot owner in return for the grant of the exclusive use rights over the common property area preferably before the by-law is prepared.

If more than one owner is to enjoy the benefit of the exclusive use area under the exclusive use by-law, those lot owners should pay money to the owners corporation according to the relative proportions of their respective unit entitlements unless the exclusive use by-law states otherwise.

If you require further details or assistance dealing with any of the above issues, please contact strata lawyer Michael Pobi on (02) 8710 3430.

Please note that the information contained in this article is not legal advice and should not be relied upon. You should obtain legal advice before you take any action or otherwise rely on the content of this article.