016. How To Increase Your Lot’s Value Via Extensions (Into Common Property)

Savina Yang and I discuss two ways you can use part of the common property to increase the value and amenity of your unit.

Link mentioned:

Key Points/Timestamps

  • 00:27 – Introduction and Overview
  • 01:07 – How to increase the value of your Strata unit by extending into common property
  • 02:27 – Getting permission from the owner’s corporation to increase space and your lot’s value is not complicated
  • 03:54 – Methods to achieve approvals for lot extensions
  • Exclusive use by-law that gives you the right to use part of the common property
  • Subdivision of the common property
  • 04:30 – Exclusive use by-law is the most cost saving and less time-consuming method
  • 05:22 – Savina Yang’s shares a precedent around NSW by-laws relating to consent around lot extensions
  • 06:18 – The new Strata Schemes Management Act 2015 states that you only need consent of the lot owner who is getting the benefit the exclusive use of the lot extension
  • 07:57 – The owner’s corporation is allowed to ask you to pay for the privilege in the form of  a license fee
  • 09:56 – The by-law can be altered or repealed by an order from the Strata Schemes Adjudicator
  • 10:52 – Amanda Farmer explains the potential disadvantage of exclusive use by-law method
  • 11:17 – Savina Yang explains the second method – subdivision of the common property
  • 13:15 – The method of purchasing a subdivided part of the common property is more involved, costly, and it takes time to take effect
  • 14:01 – A benefit of purchasing a subdivided part of a common property (as opposed to gaining exclusive use of that part of common property)
  • 15:44 – Seek proper advice from your lawyer and/or surveyor to avoid unnecessary expenses
  • 16:26 – Have a chat with your fellow owners or committee members to get the lay of the land around extensions 
  • 17:29 – Thank you and Wrap Up
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15 Comments. Leave new

If an owner uses the subdivision option, you’ve said that this creates a new lot that is purchased from the Owners’ Corporation. How does this affect the person’s unit entitlement and strata levies? Do they become liable for a higher strata levy, with other owners ‘ proportional liability decreasing? How is the new unit entitlement determined? Thank you.

Reply

Could you comment on the following (true) scenario? An owner sought approval to extend the wall of their unit into common property. The Owners’ Corporation agreed (via letter sent to owners by the managing agent), but there was no bylaw or other instrument used, and no money changed hands. Plans were approved by Council without conditions. The extension was completed without any issues. Since then the property has been sold twice. The current owner probably isn’t aware of the history. Where does this leave them if someone challenges their lot boundary? Thanks.

Reply
Amanda Farmer
June 24, 2016 2:24 pm

Hi Margaret, thanks for both of those great questions. I have just recorded a podcast episode answering those for you. You should expect to see it within a couple of weeks. Keep an ear out!

Reply

Amanda
It would be a good thing that in the Heading of article introduction without having to listen to a podcast and then have issues
that you clearly state in this instance the commentary relates only to NSW strata law .By the way, I enjoy the podcasts particularly the podcast with Jenny Strong of Macquarie . Very clear and helpful.
Thank you
Michael

Reply
Amanda Farmer
July 6, 2016 8:25 pm

Excellent suggestion Michael, I will certainly take that one up. And I’m very glad you’re enjoying the content. Thanks for listening.

Reply

Hi great podcast it’s good to go back and listen to information that becomes relevant to current situations. I’m in a two lot scheme the other lot has an 2 car spaces which means they have 8sq mtrs more then my Lot. Our unit entitlements are 50/50 . Are the unit entitlements legal given the other lots extra carspace. My concern is if they have more entitlements they could rule the strata.The strata was registered in 1985 and not documented well over it’s existence so not sure if the extra carspace was even registered with the appropriate authorities. However it is on contract of sale. Thankyou Britt

Reply

    Hi Britt,

    The other owner won’t be able to change the unit entitlements without an order from the Tribunal. I expect they will have trouble getting an order that their unit entitlement be increased for precisely the reason you point out: you are a two lot scheme and this would give them majority rule. I suggest let them do what they wish, they will not get far.

    Amanda.

    Reply

Hi Amanda, thankyou for the e book on theStrata Schemes Regulations. I have a question. I am in a Strata Unit of 12 units. The Strata meetings in our building have been pretty laid back for years. Forthwith a lady upstairs who had two apartments got permission to go into the roof space and add onto her apartment some years ago. Just last year another unit upstairs was sold and the lady asked permission to go into the roof space. The meeting was not well attended but because the Strata Manager was present and she was able to get 4 people to give her permission (I also had 4 people to dismiss it) She had the go ahead.I was upset as I said that she should then be made to have the unit entitlements redone so that because she was gaining enough space to build a small bedroom and bathroom and verandah. I was howled down and the other lady sided with her and said that the footprint had not changed and therefore enitlements need not be paid. Ihave bern upset by what has happened. Could you tell me if that lady who has attained the extra space in the roof (it is a considerable renovation) is entitled to use this space for nothing now or can we enforce her to have the unit entitlements changed to bring her into line with her paying more for the privilege. She has also just sold the property with this by-law added and now she wants us to okay a clause that has not made it clear that the new owners have the special privilege that she thought she had. (She has made something like $500.000.00 on this deal where she has got the rooftop for nothing. ) Am I right or wrong by asking that she be asked to pay these extra levies? Thankyou

Reply

    Hi Cher, thanks for your comment. It is difficult for me to say whether or not her use of the space is legal. It sounds like there is a by-law and I would need to see the terms of the by-law. I would also need to fully understand the circumstances of the by-law’s resolution and registration. Even with a by-law, you can apply to the Tribunal to have the by-law set aside and get the space back (I have done this successfully before) or require the owner to pay something for their use of the space. In relation to changing the unit entitlement, this is something that you could only do via the Tribunal. Unit entitlements do not always change when someone gets the exclusive use of common property – rather, what usually happens is that the owner benefiting from the use is required to pay an ongoing licence fee, which obligation is part of the terms of the by-law. There is not a simple answer to this question and I would need to know all the circumstances of the case to be able to fully advise. You can contact my team at enquiries@lawyerschambers.com.au if you’d like some legal advice on this. I will also add this as a discussion point for an upcoming podcast.

    Reply

Hi there, thank you for this podcast. We have a situation where three owners in four have agreed for the owners in the top floors to access the rooftop for storage, then a new owner came in and objected, threatening legal action. One owner has already received access to the roof and installed an access ladder and skylights, done in prior years. The other owner has received permission from 2 owners (one was absent) including the entire executive committee. The numbers in the previous vote were 3-1 for rooftop (one owner absent), confirmed via email to proceed, then in the subsequent meeting 2-1, whereby the new owner objected to the previous permissions (one owner absent). What would this mean in terms of revoking previous permission or keeping it ?

Reply

    Hi Price, thanks for your question. A special resolution at a general meeting is needed for this kind of access to common property. What comprises a special resolution is going to depend on your schedule of unit entitlements, and who turns up and votes at meetings. If, for example, you all have equal unit entitlements, and everyone turns up to the meeting and only one out of four votes against, the special resolution will pass. If the lots have different unit entitlements, it becomes more complex. As for revoking ‘previous permission’ it depends on how that permission was given. If it is not enshrined in a properly resolved and registered by-law (ie – also requiring a special resolution), there could be grounds to have the ‘permission revoked’. More detailed knowledge of this situation is definitely required before I could give any accurate guidance.

    Reply

HI Amanda,
Thank you so much for sharing your knowledge; it’s invaluable. I wonder if you can comment on the below?

We are a block of six, with one previous Lot owner buying the entire roof terrace (153 sq m) from the remaining five lots owners, some time ago for apparently $20k. The Lot’s ownership is indicated on the strata plan. However, when extensive damage was done to the roof membrane (a previous lot owner hammering in floorboards) a few years ago, every lot owner had to pay to fix the damage. Now the Lot concerned wants to convert the old laundries/storage structure on the roof terrace into an office, with kitchen and bathroom. Regarding the special bylaw for this to be done, we’v’e asked for insertions for that Lot to be responsible for any damage they do to the roof, and also that it’s “office use only” as we’re worried it could be a self-contained studio apartment on the roof.

In recent queries about the special bylaw to be passed allowing this renovation, the lawyer advising the Lot concerned has said it “appears” the lot owner has ownership of the roof terrace, raising the possibility in our minds that there’s a possibility they don’t! “Appears” is vague? Not definitive?

So my question to you is, even if it indicates on the strata plan that the Lot owner concerned owns the roof space, is there a possibility that a mistake has been made? So therefore it’s’ not legal? Should we be asking to see the original minutes of the meeting where the transfer of ownership was granted? What should we be looking for to be assured that the transfer of ownership was legal? In the podcast, your guest said in sub-dividing common property, these steps need to be taken – and do ALL these steps need to have been taken in order for the transaction to be considered legal? 1. Need strata plan of subdivision registered – that seems to have be done as it’s on the strata plan. 2. Lodge transfer form from OC interests to the lot – should we check it has been lodged at LPI? 3. Should we see the contract for sale? And how do we know if its was legally approved by the OC? 4. Need a proper valuation done? Is this a legal requirement? Apparently the entire rooftop was sold for $20K, but some years ago. 5. And depending on the size, the sale that needs council approval? Do you think it should have had council approval at 153 sq m? And how do we find this information?

We would be so grateful for your suggestions, as it is bamboozling to us.
Thank you in anticipation.
Cheers,
Diana

Reply

    Hi Diana, thank you for listening to the podcast and reaching out. This is a complex question and not one that I can helpfully answer without knowing all the details around your particular situation. I recommend you contact my legal office on enquiries@lawyerschambers.com.au or 02 8262 6100 and my team will be able to explain how best to set up an initial meeting with me, and how you can obtain my preliminary advice on these issues. I hope to hear from you again soon.

    Reply
Sean Davisob
June 19, 2019 9:49 am

Hi Amanda,
I am an owner of a top floor unit who is looking to access the roof space , along with my neighbour .
We are having trouble finding a Valuer with experience in this area – could you recommend one please.
Kind regards – Sean Davison.

Reply

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