Building on a lot
I want to build an addition onto my house, which is part of a community scheme. Can I just go ahead and organise the building work, without involving the corporation? My friend is in a community strata scheme, and I know she cannot alter the outside of her unit without agreement from the corporation, but community schemes are different, aren’t they?
In many community schemes approval may not be required to extend or alter the appearance of a building on a lot (approval must be obtained in community strata schemes). However, the scheme description (if any) and the by-laws in a particular community scheme may prevent or impose restrictions or conditions on work being undertaken on a lot. Council approval may also be required depending on the nature of the work being undertaken.
Buying a community title
What do I need to be aware of if I wish to purchase a lot in a community plan?
There are various things that must be considered. They include:
- The type of scheme - is it a community scheme or a community strata scheme? This will indicate what a lot owner actually owns.
- The by-laws and, if applicable, scheme description and development contract(s) for the scheme. It is advisable to obtain independent advice about the content of these documents.
- The level of the scheme. Is it a primary, secondary or tertiary scheme? If a secondary or tertiary scheme, have I seen the plans, development contract(s) (if any), by-laws and scheme description of the scheme or schemes above?
- Have I seen a copy of the plan that defines my lot? Do the boundaries of the lot agree with boundaries shown on the plan?
- What constitutes the common property?
- Do the scheme description or by-laws limit the type of structures I can build on my lot?
- The statement of accounts and financial records of the corporation and those of any scheme above.
- What must I contribute to the upkeep, maintenance and management of the common area in the scheme? In the case of a secondary or tertiary scheme this will also include contributions that the scheme is required to make to the scheme(s) above.
- How do the contributions and other charges compare with other corporations?
- Are there any unpaid contributions owing on my unit or lot? If any outstanding contributions are not paid by the vendor before settlement then they will become the new owner's responsibility.
- Is the corporation planning any major expenditure that I may be asked to contribute to?
- Are there any structural problems in the building?
- What is the amount of money in the sinking fund? Is it adequate for future needs?
- What maintenance services are provided? What are the charges for these?
- In relation to insurance, does the corporation have all required insurance coverage, including public liability for at least ten million dollars, for the full cost of replacing the buildings and improvements on the common property (and in the case of a strata plan the buildings divided by the strata plan) and related costs and, if required, appropriate fidelity guarantee insurance.
- In the case of a shared wall where an easement for support or shelter exists do the owners of the adjoining community lots have appropriate insurance cover? Note that this requirement does not relate to community strata schemes.
- Is there a body corporate manager?
- Is there a management committee?
- What system does the corporation have for resolving disputes?
- If the scheme has only two lots, have the by-laws exempted the corporation from certain requirements of the Act including to hold annual meetings and to have administrative and sinking funds.
Style of living
- What are the rules about having other people visiting and parking?
- Will the building or site be accessible if I am disabled and require a wheelchair or walking aid? If not, can suitable modifications be made easily?
- What are the restrictions on the use of my lot and the common property?
- Can I store my caravan/boat/bicycle?
- Are pets permitted?
Company and moiety titles
Are moiety titles and company titles the same as community titles?
They are not the same. Company and moiety titles are schemes where either a company or a group of owners own the property and the shares or ownership give rise to a right to occupy a unit. Strictly speaking, a shareholder does not own the property, but owns shares in the company that owns the property. The shares give an entitlement to occupy a unit. Such schemes can be more expensive and complex to administer, and prospective buyers may find it difficult to obtain finance to buy shares in a company title. Depending on the structure of the building, it may be possible to convert to a community strata scheme.
I don’t use the common property driveway, as I have a driveway on my lot that accesses the street. Do I have to pay contributions for the maintenance of the common property?
The amount of each owner’s contribution to the corporation is normally calculated according to the lot entitlement set out in the community plan. The corporation may, by unanimous resolution, determine that contributions are paid on some other basis.
Contributions are not just used to cover maintenance of the common property. Other costs, for example in relation to insurance, service infrastructure, and management costs are also covered by contributions. Just because you do not use the common property driveway does not mean you do not have to contribute to its maintenance, as a member of the corporation.
Converting to community title
Our strata manager has suggested that we adopt the Community Titles Act 1996 (SA). Would we be better off?
If conversion occurs then much remains the same unless additional expense is incurred to change the nature of the now community strata plan. For instance, you are still required to obtain approval to change the exterior of your building; the corporation must insure the property rather than individual owners; you must still have the annual meetings and you will need to have administrative and sinking funds that you may not have had in your strata corporation.
The by-laws of schemes with only two lots may exempt the corporation from having annual general meetings or administrative and sinking funds.
A conversion to a community strata corporation will also allow the members to vote on a resolution to amend the by-laws to prohibit short term rentals of the holiday let type [Community Titles Act 1996 (SA) s 37(2)(a)].
The question of whether a corporation would be better off is a complex one and dependent on factors such as:
- the number of units involved
- the expectations of the lot owners
- the purpose the land is to be used for
- whether the common property is to be used for commercial gain
It is suggested that legal advice should be sought before that step is taken, as the Strata Titles Act 1988 (SA) will no longer apply and the conversion cannot be reversed.
If a strata corporation wishes to create a new community scheme rather than convert to a community strata scheme then this could only be done if there is no unit existing above another unit. It would require a unanimous resolution of the unit owners (and not an ordinary resolution as required for mere conversion), a survey to create a new plan, a valuation to establish new lot entitlements, possible approval by local government authority and conveyancing and LTO fees. It can be an expensive exercise.
Exclusive use of the common property
One of the lot owners in our community scheme was granted exclusive use of part of the common property by the corporation some years ago. We feel that this is an unfair situation. How can we regain this common property for use by all owners?
A by-law may confer on the occupiers of a group lots the exclusive right to use a specified part of the common property. The by-laws may impose conditions in relation to the use and may require an owner of a lot to pay a fee for the exclusive use of the common property.
The benefits of the by-law regarding exclusive occupancy are not limited in time and will benefit subsequent occupiers. Normally a special resolution would be required to vary the by-laws to put conditions on the use or to impose a fee, but the owner or owners to which it relates must also give written consent.
The fence between my lot and an adjacent lot is in need of repair. The body corporate manager says we have to sort it out ourselves and that it is not the corporation’s responsibility. Is this correct?
If you are part of a community scheme (not a community strata scheme), then you and your neighbour are joint owners of the dividing fence. The fence is not common property, so the corporation is not responsible to fix it. The issue of repairing the fence is between you and your neighbour. The Fences Act 1975 (SA) covers this area of law. See also the Fences and the Law booklet, published by the Legal Services Commission.
Similarly, if a fence between your lot and neighbouring land that is not part of your community scheme needs repair, you will need to discuss the matter with your neighbour. The corporation has no responsibility to be involved.
If the fence is between common property and your lot, or between common property and a neighbour who is not part of the scheme then the corporation will own half of the fence and be responsible for negotiating with you or the neighbour.
If you are part of a community strata scheme, the dividing fence will usually be common property (unless the plan states otherwise), therefore it would generally be the corporation’s responsibility to repair it. Similarly, a fence between a lot in a community strata scheme and neighbouring land that is not part of the scheme would be the responsibility of the corporation and the owner of the neighbouring land.
A visitor to my apartment received a letter from the corporation stating she could be fined $500 for unauthorised parking. Is this legal?
The by-laws may give the corporation the power to impose a penalty of up to $500 (or $2000 if the scheme only includes lots that are used, or intended to be used, solely or predominantly for business or commercial purposes) for breaches of the by-laws. An occupier such as a tenant or anyone who comes onto the property is bound by the by-laws. Anyone who receives a penalty notice may apply to the Magistrates Court to have the penalty revoked. The corporation can enforce the penalty notice by suing the occupier or visitor in the Magistrates Court.
Our body corporate manager has advised us that she can arrange our individual building insurance policies for us. Could there be any problems with this?
While each lot owner in a community scheme is responsible for insuring their own buildings, the by-laws of a community scheme may allow for the community corporation to act as an agent for the lot owners in arranging insurance. The corporation may delegate this task to a body corporate manager. If arranging building insurance for lot owners is an option, not a requirement, under the by-laws, then individual lot owners can choose whether they want the corporation to arrange their insurance or whether they want to do it themselves; there is no requirement for all owners to agree.
Problems can arise in relation to the way an insurer invoices the corporation for the insurance premium. If building insurance is arranged on behalf of two or more owners, an insurer may invoice the corporation for one amount, without showing the amount that would be payable for individual lots. If an insurer will not provide a breakdown, then the corporation has to work out each owner’s contribution. Contributions are normally determined according to lot entitlements, but this may not be appropriate in relation to building insurance, because lot entitlements are based on the unimproved value of the land, not the value of the buildings. Thus, whether an insurer will provide a breakdown of the premium in relation to each lot may be one of the factors to consider when choosing an insurer.
A corporation may decide that a lot owner’s building insurance premium, or share of the premium, will be paid as part of the annual contribution levied by the corporation. If so, the levy applicable to your lot may compare unfavourably with the levy applicable to another lot where the owner has arranged their own insurance, or to the contributions levied by another corporation that does not arrange lot owners’ building insurance. Such a disparity in levies may be a problem if you wish to sell your lot.
What are some issues to consider when choosing a manager?
At least five clear days before the date of the meeting at which the corporation is to consider whether or not to enter into a contract with a manager, the manager must make available for inspection by members:
- a pamphlet setting out the role of the manager and the rights of the corporation;
- a copy of the proposed contract;
- a copy of the schedule to the policy of professional indemnity insurance maintained by the manager; the insurance must be for at least $1.5 million per claim.
In addition to the information required to be set out in these documents (see Body Corporate Managers), you may wish to consider the following.
- What services are included in the fee?
- Is there any fee charged for keeping the corporation’s funds?
- Will all bank interest be passed on to the corporation?
- Will the manager ensure the corporation receives the best bank interest rate?
- What maintenance company or contractors does the manager normally use, and does the manager receive any commissions, or have any financial relationship with contractors?
- Will the manager provide your treasurer with regular financial statements to keep the corporation up to date and allow for scrutiny? If so, how often? Note that the manager must provide a financial statement upon request by the corporation, within five days of the request (see Body Corporate Managers).
- Will the manager supply references from current clients?
- Does the manager have the skills to help resolve disputes?
- What fees will be charged for any additional services by the manager?
The rules of my apartment complex are very restrictive. I can't put a blind on my balcony or have a barbeque. Am I bound by the rules and what can I do about it?
The by-laws that govern a scheme can be amended by a special resolution passed at a properly convened meeting of the corporation, if they meet the above requirements. A copy of the by-laws as amended must be lodged with the Registrar-General within 14 days of the passing of the resolution.
Any by-laws that is inconsistent with the scheme description (if any) will be invalid. The by-laws of a secondary (or tertiary) scheme must also be consistent with the scheme description and the by-laws of the primary (or secondary) scheme. Scheme descriptions can be amended by a unanimous resolution but there are various other requirements to be met before the amendment can be lodged with the LTO.
By-laws are the rules by which the scheme is to be run and bind all the owners, occupiers and persons entering the property. The by-laws and scheme description of a primary scheme bind any secondary and tertiary corporation and owners and those of a secondary scheme also bind the corporation and owners of the tertiary scheme. The by-laws and scheme description of a secondary (or tertiary corporation) cannot be inconsistent with the by-laws and scheme descriptions of the primary (or secondary) corporation. The tertiary by-laws must also not be inconsistent with its scheme description .
Short Term Rentals
A neighbouring lot owner advertises his property for term holiday stays. We do not want strangers coming onto the property - particularly if there is a risk that they may breach the by-laws or cause damage. Can we do anything about this?
Under section 37(2)(a) of the Community Titles Act 1996 (SA) you corporation can pass a special resolution to include a by-law that prohibits or restricts an owner of a lot from leasing for a period of less than two months.
The owner of an adjoining lot has a tree on their property and its roots are damaging the paving on my lot. Can I ask the body corporate manager to raise the matter with the other owner?
If you are in a community title scheme (rather than a community strata scheme) and the tree is on an owner's lot (not on common property) and is only affecting your property, then it is a matter between you and your neighbour; it is not the corporation's responsibility to involved.
Similarly, if a tree on a neighbouring property that is not part of the community scheme is affecting your lot, then it is up to you to discuss the matter with the neighbouring owner.
If an owner’s tree is affecting the common property, then the corporation can discuss the matter with the owner.
If a tree on common property is affecting your property, then you could raise the matter with the corporation.
If you are in a community strata scheme then the corporation is able to become involved in any cross-boundary dispute between neighbouring lot owners or between lot owners and outside neighbours.
Types of community title
What is the difference between a regular community title and a strata community title?
There are two types of community titles:
- community schemes
- community strata schemes.
Primary community schemes
The satellite image and plan below are of a primary community plan. Each building sits on its own lot. The owners have title to the land under the lot and the sky above, unlike strata titles. Subject to the scheme description and by-laws, they are responsible for the maintenance and insurance of their respective buildings. Where buildings share a common (party) wall the owners of each building are jointly responsible for its maintenance. The common property is the shared driveway down the middle of the group (shown by the red pointer). The body corporate is responsible for the maintenance and insurance of the driveway and any other common property e.g. letter boxes, lighting and any service infrastructure that provides a service to more than one lot.
Primary community strata schemes
The photograph and plan below are of a primary community strata plan. In a community strata scheme the lot boundaries are generally defined by reference to parts of the building, similar to a strata title. There must be at least one lot that exists above another, unless the scheme is a converted strata title, company or moiety scheme which has been brought under the Community Titles Act 1996 (SA).
Community strata schemes are very similar to strata titled unit groups. Common property includes land that is not within a lot, and infrastructure (such as driveways, water, sewer, electricity) that do not serve single lots. In the case of a community strata scheme, depending on the plan, the common property may include the external walls and floor, the foundations, the roof, the space in the roof, gutters and eaves. It does not include the owner's fixtures and fittings such as kitchens and bathrooms.
The internal walls and lot subsidiaries are not common property and therefore are the owner's responsibility to maintain.
It is the responsibility of the corporation to insure all buildings on the land and any improvements on the common property and to maintain the common property, including those parts of the buildings that form part of the common property.
Our lots do not have separate water meters and we all pay the same for water, no matter how much we use. Can this be changed?
Unless your lot entitlements are all the same your corporation would have had to pass a unanimous resolution to impose an equal share of the bill upon each lot owner. Without a unanimous resolution the bill should be apportioned according to lot entitlements.
SA Water has three options when it comes to billing. It may send the total bill to the corporation for it to pay. If it is satisfied that any appropriate resolution is in place it may divide the total bill equally amongst all of the lots and send out individual bills to each lot owner. It may also apportion the bill as the corporation directs - for instance based on lot entitlements - and send out individual bills to the lot owners based on that apportionment.
A more expensive alternative is that SA Water may be able to install separate meters for each lot in community or community strata schemes currently without individual meters. There is a cost for this service. The individual lot owners are then responsible for the cost of connecting their lot to the new meter. As the meters are generally grouped together in one location this may be an expensive exercise and it may be impractical or even impossible to do this (for example in multi storey apartment blocks).
Private water meters may be installed on each lot to determine individual usage. These may be read by the corporation itself or the corporation may engage a firm which provides the meters and then reads them.
The content of the Law Handbook is made available as a public service for information purposes only and should not be relied upon as a substitute for legal advice. See Disclaimer for details. For free and confidential legal advice in South Australia call 1300 366 424.