Lot Renovation Works Under 2015 Act

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Forums Strata law reform Lot Renovation Works Under 2015 Act

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  • #24880
    Sandy
    Member

    Hi Amanda

    Under the Act sn 109 covers Cosmetic work by owners and sn 110 covers Minor renovations by owners.

    There is a third category, which the Minister referred to as Major work in the second reading speech, such as work affecting the structure of the lot, external appearance or waterproofing, which requires a special by-law.

    Which section of the Act does this Major work fall under? Sn 108? Sn 111? Somewhere else?

    Also, the term ‘Major work’ isn’t used in the Act. Is it acceptable to use that term as a generic descriptor heading in a by-law to indicate work which requires a special by-law, followed by explanation of what is covered by that description?

    In other words, in a global renovations by-law refer to three types of renovation work: cosmetic, minor and major.

    Many thanks

    Sandy

     

     

     

     

     

     

    #24971
    Amanda Farmer
    Expert

    Hi Sandy,

    You have astutely picked up that the term “major works” does not appear in our legislation.

    It is by applying this checklist that we end up with what I (and other strata lawyers) call “major works”:

    – it’s not cosmetic or minor

    – it changes the external appearance of the building OR

    – it involves waterproofing OR

    – it involves structural changes

    There is no one section of the Act that sets this out. You have to read sections 109, 110 and 111 together.

    Section 108 stands a little outside of this. It relates to the specific situation where an owner is adding to the common property, altering the common property or erecting a new structure on common property for the purpose of improving or enhancing the common property. If that’s what’s happening, then a special resolution is required. A by-law is only required in that case if the lot owner is going to take on future responsibility or the repair and maintenance of the affected common property (that’s usually the case).

    As for what type of lot owner work constitutes an “improvement or enhancement of the common property”, I think that’s a little grey. In practice, I always include a clause in my ‘major works’ by-laws drafted for lot owners along the following lines: “To the extent the Work constitutes an improvement or enhancement of the common property, the Work is approved for the purposes of section 108 of the Act.” 

    Amanda.

     

    #24977
    Sandy
    Member

    Thank you Amanda.

    I find the three headings of cosmetic, minor and major a brief, easy-to-understand and useful way to describe the three categories so what you have said is helpful.

    Sandy

    #27453
    Sandy
    Member

    Hi Amanda

    I have some further questions re ‘major’ works.

    We are currently drafting a global renovations by-law. In the current draft the wording re the approval process for major* works says that major* works:

    “I. require the approval of a General Meeting of the Owners Corporation”

    “II. may require a special resolution and the making of a by-law in accordance with section 108 of the Act, if the Owners Corporation reasonably determines that such a by-law is necessary to protect its interests by ensuring the ongoing maintenance of affected common property by the owner.”

    My questions are:

    1. Could there be some types of major* works that might be approved by a general resolution at a General Meeting (implied by I. above)?

    2. Are there some types of major* works that might be approved by a special resolution at a General Meeting but not require a by-law (implied by II. above)?

    It has been suggested to me that one example that might fit into either my 1. or 2. category are works for which consent or another approval is required under another Act but which might not have a major effect on common property.

    Before this discussion arose I had thought that major* renovation works always required a by-law (so that changes to common property were registered on the common property title and to ensure ongoing responsibility was transferred to the owner).

    3. If not, at what point in the approval process and by whom would the decision be made if a by-law is required?

    I have put an asterisk against major* in the description above, because that description for renovation works that are neither cosmetic or minor has also been questioned.

    4.     An alternative has been proposed to call these ‘special works’. I think that would become ambiguous given the descriptor ‘special’ is already applied to special resolutions and special by-laws. Am I being too pedantic?

    Many thanks

    Sandy

     

     

     

     

    #27499
    ts1904
    Expert

    Hi Sandy,

    1. No – because works in strata schemes are either cosmetic (no approval required), minor (general resolution, or resolution by the strata committee if there is a by-law permitting them to do so) or major (I call them ‘changes to common property’). Per s108, changes to common property must be approved by special resolution.

    2. Only if the owners corporation does not want a lot owner to be responsible for the works.

    3. It’s normally best to try and come to an agreement on this before a meeting is convened otherwise you’re going to need two meetings (one to approve the works and another to register a by-law). The vast majority of the time it is accepted that a by-law will be necessary. It’s not very common that an owners corporation would agree to be responsible for a lot owners renovations.

    4. You can call it what you want, but the approval process under s108 of the Act still applies! I’d call them ‘changes to common property’ because that is what it is called in section 108.

    #27534
    Sandy
    Member

    Thank you ts1904. Your answer is very helpful but it has also raised more questions (or perhaps more confusion on my part).

    1. I understand the desirability of trying to avoid two general meetings to approve an application for a major* renovation.

    Q. I assume therefore that the strata committee is empowered to negotiate/agree before the application goes to the general meeting whether a by-law is required. Is that your view also?

    2. Section 110(7)(e) says that section 110 ‘<i>Minor renovations by owners</i>’ does not apply to work for which consent or approval is required under another Act.

    Q. So what section does apply to work which also requires approval from another authority? Is such work deemed to be major* work? Would you call such work ‘<i>changes to common property</i>’? What if the work was in effect a minor renovation for the purpose of a change in use of the lot (requiring approval under another Act)?

    3. You say that you call major* work ‘<i>changes to common property</i>’ because that is what it is called in section 108.

    Q. Does this mean you think all major* work falls into section 108?

    4. In response to my earlier questions in this thread asking what section/s of the Act major’ work falls into Amanda has said ‘<i>You have to read sections 109, 110 and 111 together.’</i> And ‘<i>Section 108 …… relates to the specific situation where an owner is adding to the common property, altering the common property or erecting a new structure on common property ….’</i>.

    Q. Is your answer different to Amanda’s?

    I think I am still left with the question I asked back in November – what section of the Act does major* work fall under?

    As a comment: I find the drafting of the Act extremely confusing in this area. And have found conflicting opinions on this in different strata forums which leads me to suspect the Act has not been well drafted in these sections.

     

     

    #27587
    ts1904
    Expert

    Hi Sandy,

    1. Yes absolutely.

    However the committee doesn’t necessarily have the final say. The lot owner could decide to proceed however they want, but it would be wise for them to listen to what the committee have to say instead of blindly running to a meeting with a motion that the owners corporation be responsible for the works, only to be rejected (and therefore waste everyone’s time and money).

    2. An example of work that would require approval under another Act might be that requires development consent from Council (i.e. a development application). So, the proposed work might be something that is considered as a minor renovation, however if the local council planning controls require that a development application be submitted, then the work is no longer a minor renovation and is now a change to common property (s108).

    To give an example (and this might not be accurate), you might be installing an air conditioner, which is considered to be a minor renovation, but be doing so in a local government area that requires a development application, and therefore it is exempt from being considered as a minor renovation because the works require approval under another Act.

    I don’t know if any Council’s require a development application for air conditioning s this is only an example!

    3. Basically yes. The term ‘major work’ is a made up term. It doesn’t appear anywhere in the Act.

    4. I don’t think our answers are different. You need to consider what the work actually is. Is it installation of hard flooring? If so, that’s a minor renovation which is listed under s110. Is it re-waterproofing a bathroom? If so, that’s excluded from being a minor renovation and therefore becomes a change to common property (s108).

    If you look at the particular item of works, you need to try and define it first as either a cosmetic renovation (s109) or minor works (s110 + the Regulations). if it doesn’t fit into those categories, it’s probably a change to common property (or ‘major works’ as you call it).

    Hope this has helped clarify things and hasn’t caused further confusion!

    #27658
    Sandy
    Member

    Hi ts1904 and Amanda

    I’m still struggling with this a bit.

    In principle I like ts1904’s three categories: 1. cosmetic; 2. minor; and 3. changes to common property.

    Would 3. then include some renovation work that is not structural (Amanda suggested in another response that ‘structural’ should be restricted to work on common property which in effect is holding up the building/lot)?

    For example, in my multi-storey building we have common property air conditioning ducts above the ceilings and common property outlet vents within the common property face of walls. When I did a major renovation (pre 2015 Act and under a special by-law) all the ducts and vents were replaced with new ones and in some instances re-positioned.

    We also have a fire safety sprinkler system in the ceilings some of which was altered in my renovation (as is done in other renovations in my building).

    Both the air conditioning and fire sprinkler system work involved significant damage and subsequent repair to the common property ceilings of my apartment.

    Looking at the 2015 Act these works would not be cosmetic work, structural work, change to the external appearance, waterproofing, or work requiring consent under another Act.

    However could it be said that these works are changes to common property under section 108 and therefore require a special resolution? And a by-law if maintenance responsibility is to pass to the lot owner (which in my view it should)?

    The current draft of our renovations by-law puts both these types of works under minor renovations which I am not comfortable about.

    I think I have found support for my view in Alex Ilkin Strata Legislation Handbook NSW 2016-17 pp 44 to 47.

    I would love to get more guidance on this. Many thanks again.

    Sandy

     

     

    #28349
    Amanda Farmer
    Expert

    Hi Sandy,

    As well as work involving structural changes, category 3 would include work involving waterproofing and work changing the external appearance of a lot.

    In my view, the air con and fire safety work you refer to in your example would be minor work under our new law. (Also, in relation to fire safety, buildings often have other by-laws that need to be complied with when any work impacting fire services is being done).

    As for section 108,  whether or not work “improves or enhances the common property” (therefore triggering s 108) is always a difficult question to answer. I think in most cases, it’s reasonably arguable that a lot owner’s reno works are improving or enhancing the lot, not the common property. It’s also important to note that sections 109 and 110 say that s 108 “does not apply” to cosmetic or minor work falling within those sections. So, even if the air con or fire sprinkler work (for example) improves or enhances the common property, a s 108 special resolution is not required because that work is ‘minor’ work within the meaning of s 110.

    As for shifting responsibility for the maintenance of common property, in my view it is possible to do that via conditions attached to a section 110 motion for approval of minor work. Section 110 says an OC can impose ‘reasonable’ conditions on its approval. A reasonable condition would be that the lot owner takes on responsibility for the repair and maintenance of CP affected by their minor renovation. You should also have a clause to that effect in your global reno works by-law (I believe my template does).

    Bear in mind that even with a global reno works by-law in place, the strata committee is still delegated the task of approving minor works applications, so there remains a record – via SC meeting minutes – of who has done what and, by extension, who is responsible for affected common property.

    I don’t have my copy of Ilkin with me at home (it’s in the office) so can’t refer to those pages, but I’d be pleased to hear his views on the topic.

    Amanda.

    #28390
    Sandy
    Member

    Hi Amanda

    Thank you for your response. I understand what you are saying and it is consistent with your response to an earlier question of mine, and also to your global renovations template.

    1. If I have understood ts1904 (December 18 earlier in this thread) he/she takes the view that all lot building works that are not cosmetic or minor are changes to common property and fall under section 108. Am I correct in reading from your response that you take a different view?

    2. Once you have had a chance to look at Ilkin’s table (pp 44-47) I would be interested in your view of what he has set out. Some examples of things he has listed as major work requiring a special resolution and by-law are: air conditioner work of type not split system; exhaust system works; fire system interference; kitchen renovations involving exhaust system or plumbing work changes; plumbing works; and relocation or removal of walls.

    I understand from your comments that your view would be that all these are minor renovations (with possible exception of walls if they are demonstrably structural walls).

    I think some of the conflicting views might stem from section 109(5) which lists specific works that are not covered as cosmetic works. The first exemption is minor renovations covered by section 110.

    Then follows a list of other works including work that involves structural changes, changes to external appearance, waterproofing and where approval is required under another Act, all of which are then again explicitly excluded as minor renovations under section 110.

    However the list in section 109(5) also excludes works from being cosmetic that are not mentioned in section 110 or the Regulation, so leaving ambiguous whether they should be classified as minor or major.

    These works include work that detrimentally affects safety, including fire safety systems and work that involves the plumbing or exhaust system of a strata building. These are works that Ilkin has listed as major works requiring a special resolution (and by-law if ongoing responsibility is to be assumed by the lot owner).

    3. I would also be grateful for your view of how a lot renovation that requires approval under another Act should be treated (such as a renovation that is part of a change of use of the lot). This is explicitly excluded as a minor renovation in section 110(7)(e). So does the work require a special resolution? And a by-law?

    My general comment:

    It seems to me the Act has left significant ambiguity in the area of what work requires a special resolution and by-law.

    In my view the role of by-laws is to protect the ongoing interests of an owners corporation. It would be interesting to see the outcome should NCAT have to consider an appeal by an owner of a lot with (for example) a burst fire sprinkler system causing considerable water damage where the sprinkler system was altered as a minor renovation by a previous owner. The new lot owner would be able to argue that there was nothing registered on the strata plan to indicate the sprinkler system was the lot owner’s responsibility and not common property as more generally shown on the strata plan.

    My owners corporation has now set up a Building Works Register to capture all lot works and their terms of approval, to be included in perpetuity in our strata records. This has been done at my suggestion to try to protect the owners corporation in a legal situation such as my hypothetical example. However I would still prefer a lot-specific by-law for the types of works Ilkin has listed to remove any ambiguity and possible future legal challenge.

    With thanks and apology for the length of my post.

    Sandy

     

     

     

     

    #28692
    Amanda Farmer
    Expert

    Hi Sandy,

    Answering your numbered questions:

    1. Yes

    2. Ok, follow me up if you don’t hear from me by the end of this month.

    3. I have not gone back up to re-read, but my memory of one of ts1904’s earlier comments in this thread is that the intent of 110(7)(e) is to make clear that 110 alone cannot be relied on to approve work requiring approval under another Act. I agree. In my view, what the OC can do under s 110 is approve the work subject to that other approval being obtained. For example, work on a heritage-listed property may be minor under s 110, but require local council approval. One of the conditions of the s 110 approval should be that before work commences, the lot owner must have local council approval. I have to say, I think it would be a pretty rare situation where work is minor but requires another approval. Aside from the heritage circumstance, I have yet to come across it.

    I agree with you that our new legislation has unintentionally created these ambiguities. I also agree that lot-specific by-laws are preferable in most renovation situations, but I bear in mind from the lot owner perspective that the higher approval threshold (special resolution) can create a barrier to approval which arguably shouldn’t be there. I believe we will see these cases play out over time: eg where a lot owner challenges an OC’s insistence on a by-law in a particular circumstance.

    Amanda.

    #28727
    Sandy
    Member

    Hi Amanda

    Yet another question on this tricky topic of lot renovation works and Part 6 of the Act.

    In Section 111 it says:

    An owner of a lot in a strata scheme must not carry out work on the common property unless the owner is authorised to do so:

    (a) under this Part, or

    (b) under a by-law made under this Part or a common property rights by-law, or

    (c) by an approval of the owners corporation given by special resolution or in any other manner authorised by the by-laws.

    1. In your view what is the intent of the last part of Section 111(c) – “or in any other manner authorised by the by-laws”?

    In my strata it has been suggested these words could allow us to write into our renovations by-law the authority for the Strata Committee (with authority delegated from the owners corporation) to approve an application involving (say) waterproofing without going to a general meeting – so in the same way as a minor renovation application. (With approval conditions that transfer ongoing responsibility for repair and maintenance to the lot owner).

    2. I would be grateful for your view on whether this would be a legal use of Section 111(c).

    thank you as always

    Sandy

    ps: the following words in the Minister’s Second Reading speech may be relevant:

    Major work, such as moving structural walls or enclosing a verandah, will require approval by special resolution of the owners corporation”.

    #28973
    ts1904
    Expert

    Hi Sandy,

    Refer to section 136(2):

    Matters by-laws can provide for

    (2)  A by-law has no force or effect to the extent that it is inconsistent with this or any other Act or law.

    Authorising the strata committee to authorise works such as waterproofing would contravene section 108 which requires works like that to be approved by special resolution of the owners corporation.

    Therefore the by-law would have no force or effect to that extent.

    #28974
    Sandy
    Member

    Thank you ts1904.

    That is an interesting comment. However if I have correctly understood Amanda’s comments earlier in this thread her view is that waterproofing in a bathroom does not necessarily fall under section 108.

    For example on 3 January Amanda said:

    As for section 108,  whether or not work “improves or enhances the common property” (therefore triggering s 108) is always a difficult question to answer. I think in most cases, it’s reasonably arguable that a lot owner’s reno works are improving or enhancing  the lot, not the common property.”

    I have done a lot of online research on the topic of the correct application of the Act to major works and there are so many different views in the strata industry. Some suggest section 108 applies, some 111, some 142 (common property rights by-law).

    Virtually all say a special resolution and by-law are required without giving the legal basis from the Act for that view. Within my strata there is now a view that we could use section 111(c) to write into our Renovations  by-law that an application for approval of major work should go to the Strata Committee for recommendation to the Owners Corporation whether or not a by-law is necessary. That is, decide on a case-by-case basis. And that if no by-law is recommended, an ordinary resolution rather than a special resolution may only be necessary.

    I am arguing that our Renovations by-law should say approval for Major Works require a special resolution and a by-law to give maximum ongoing protection to the Owners Corporation. But I am struggling to provide a legal basis in the Act to back up my view.

    I really don’t want my building to become the test case at the Tribunal some time in the future.

    thank you, further comments would be most welcome.

    Sandy

    #29052
    ts1904
    Expert

    Hi Sandy,

    Waterproofing affixed to the floor, or any common property wall, forms part of the common property.

    In that case, I personally would argue that they are improving or enhancing the common property. Others might argue that they are not improving or enhancing it at all, and are just replacing it (fair point).

    I’d say that generally speaking most in the industry recommend a special by-law as it covers all basis and can be used for the avoidance of any doubt. It makes it crystal clear that the owner of the lot is responsible, as opposed to other methods which can end up leading you to the Tribunal.

    That’s why I recommend it for my clients. I know it might seem like another step in what is already a complex process, but it helps us to avoid disputes later on, and also helps us not to have to go trawling through records to find when approval was given (as a by-law is registered on title).

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