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Common questions and answers

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 a community scheme, the corporation’s approval is not needed. However, as well as any Council approval that may be needed, any building work must comply with the requirements of the scheme description. In addition, the corporation’s by-laws may include requirements in relation to building work.

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:

Property matters

  • 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 unit or lot? Do the boundaries of the unit/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?

Financial matters

  • 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?
  • Is the corporation planning any major expenditure that I may be asked to contribute to?
  • Are there any structural problems in the building?
  • Is there a ‘sinking fund’ or reserve of money held by the corporation for emergency expenses and major maintenance costs such as painting?
  • What maintenance services are provided? What are the charges for these?
  • In relation to insurance, whether the corporation is insured for public liability for at least ten million dollars, and whether the common property is sufficiently insured.
  • In the case of a shared wall, does the adjoining owner have a current building insurance policy?

Management matters

  • Is there a body corporate manager?
  • Is there a management committee?
  • What system does the corporation have for resolving disputes?
  • If the scheme is for two lots, have certain requirements of the Act have been exempted, such as the requirement to hold annual general meetings?

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 title

I live in a company title; is it the same as a community title?

A company title is where the property is owned by a company and each shareholder is entitled to occupy a particular 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 title.

Contributions

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). What's involved in converting and would we be better off?

To convert to a community strata plan the strata corporation must resolve, by ordinary resolution at a properly convened meeting of the corporation, that the Community Titles Act 1996 and not the Strata Titles Act 1988 will apply to the scheme. The resolution will not take effect until a copy of the resolution is lodged with the Registrar-General and filed with the Strata Plan.

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
  • whether there are units existing above other units, and
  • whether the units are physically separate.

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.

A full conversion to define the lots by measurements (that is, conversion to a community scheme) would result in the members owning the entire structure on their lot. This would require:

  • unanimous agreement of lot owners
  • a new survey of the site and all building boundaries
  • an amendment to the plan, and
  • agreement of local and state authorities.

It pays to obtain a quote from a surveyor and a conveyancer. It may be worthwhile converting if the value of each lot increases significantly upon conversion to a lot.

Our strata corporation has lodged a Lodgment of Resolution to adopt the Community Titles Act 1996 (SA); does this mean we can now insure our unit separately?

No. The strata scheme will become a community strata scheme, and so the corporation will still be responsible for insuring the buildings, which are common property. A full conversion to community title would need to be done before owners could insure separately.

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?

The corporation can grant a right to occupy the whole or a part of the common property to the exclusion of all or some of the owners or occupiers of the community lots. A unanimous resolution is needed to do so, and the right must be consistent with the scheme description and not contrary to the by-laws.

In a community scheme, exclusive use of the common property can be granted on an ongoing basis; that is, it does not have to be for a set period.

A unanimous resolution of the corporation would be needed to reverse the decision to grant exclusive use.

Fences

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 you are part of a community strata scheme, the dividing fence will usually be common property, 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.

Fines

A visitor to my apartment received a letter from the corporation stating she could be fined $500 for unauthorised parking. Is this legal?

A corporation’s by-laws may give the corporation the power to impose fines of up to $500 for breaches of its by-laws. The by-laws apply to owners, residents and visitors. A fine against a visitor or tenant could not be enforced without a court order.

Insurance

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.

Managers

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? For example:
    • Is there an after hours emergency service?
    • Will the manager, or an employee of the manager, attend your corporation as needed?
  • 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?
Restrictive rules

The rules of my apartment complex are very restrictive. I can't hang washing on my balcony or have a barbeque. What can I do about it?

The by-laws (rules) that govern a scheme can be amended by a special resolution passed at a properly convened meeting of the corporation. A copy of the by-laws as amended must be lodged with the Registrar-General within 14 days of the passing of the resolution.

By-laws that are inconsistent with the scheme description (if any) are invalid. Therefore a consequential amendment to the scheme description (if any) may also need to be made.

If the scheme is a secondary or tertiary scheme, the by-laws and scheme description of the other schemes may also need to be amended.

In some situations, it may be possible to negotiate a resolution and mediation may also be helpful.

Rules

What rules am I bound by when I own a community lot?

By-laws contain the rules by which the scheme is to be run and bind all of the owners, occupiers and visitors to the scheme. By-laws are written exclusively for the particular scheme they relate to. If the community scheme is a secondary or tertiary scheme, it is bound by not only the by-laws written for that scheme but also the by-laws of the scheme or schemes above.

Trees

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 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 get 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.

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. 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 of the driveway.

Primary community strata schemes

The photograph and plan below are of a primary community strata plan. In a community strata scheme the lot boundaries must be 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 was previously a strata scheme under the Strata Titles Act 1988 (SA) and has converted by resolution to adopt the Community Titles Act 1996 (SA).

The structure itself is common property and it is therefore the responsibility of the corporation to maintain and insure it. In this regard, 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 this includes the external walls and floors, the foundations, the roof, the space in the roof, gutters and eaves immediately below the gutters. 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 but are the owner’s to maintain.

Water rates

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 there are separate water meters for each lot, there is no way to determine a lot's water usage. Contributions are normally paid by lot entitlement; a unanimous resolution is needed to change this arrangement. SA Water offers the following billing options: sending one lump sum bill for water usage every three months to the corporation secretary; dividing the bill in percentages nominated by the corporation and billing owners separately; dividing the bill equally between the lot owners and billing them separately. Whatever the billing arrangement, the community corporation is ultimately responsible to SA Water for the bill. Private water meters may be installed on each lot to determine how the SA Water account should be divided. There are costs associated with the installation and reading of private meters.

Common questions and answers  :  Last Revised: Fri Nov 7th 2014
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.