Owners of strata lots considering renovations may be tempted to “keep it simple” and not request a by-law and associated EGM approval. Executive committees of strata buildings may take a similar view, wishing to minimize the number of EGMs and the number of motions at EGMs. However, this is a bad idea, for both lot owners and owners corporations.
Some things to consider:
- Renovations will frequently involve some alteration of common property requiring owners corporation approval under section 65A of the Strata Schemes Management Act 1996, so an EGM is generally required anyway, i.e. whether or not a by-law is proposed.
- Making a by-law of this type is generally a quick and inexpensive exercise.
- A lot owner benefits from a by-law. A lot owner may not be able to retain or have exclusive use of the works without a by-law and registration of a by-law will make the lot more attractive to a buyer.
- The owners corporation benefit from a by-law, as a by-law can create clear and transferrable rights and obligations and can allocate maintenance obligations in relation to the works. This can reduce risk for executive committee members, who may have personal liability, which may not be covered by office bearers’ insurance, if they have approved renovations which required a by-law which has not been made.
- Something more than a by-law, e.g. a strata subdivision to transfer part of the common property to the relevant lot, may be more appropriate in some cases.
Prepared by David Bannerman and Mark Pollinger
11 May 2015