Flat Chat Strata Forum Common Property Current Page

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  • #8663
    kiwipaul
    Flatchatter

      I know that disputes regarding use of common property are one of the biggest bains of most EC’s. But what about charging residents to use the common property and the funds going into the Admin fund to reduce overall fees for everyone (I realise the income would be taxable @30%).

      What would be a reasonable charge for allowing residents to leaving various items on common property (I realise it is location dependant just want ballpark figures).

      1) Car $100 per month ???

      2) Rubbish bin $10 per month (assuming bins are generally kept within the lot and no bin area within the common property). ???

      As far as I can see this would be legal in all states and would ensure those people who exploit the situation are made to pay.

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    • #17687
      Sir Humphrey
      Strataguru

        I don’t think you can charge people money to use property they already own! On the other hand you can create by-laws to govern reasonable shared use. 

        The exception would be where an owner is granted a ‘special privilege’ (is this the same in NSW jargon?) for exclusive use of an area of common property. In that case all sorts of conditions can be included. In our case, many owners have been granted special privileges for exclusive use of particular parking spaces on common property. We have ensured that these are equitably distributed among owners because of the fundamental principle that all owners should have the opportunity for equitable use and enjoyment of the common property. Had it not been equitable the resolution would not have passed (unopposed is required in the ACT, special resolution in NSW). The special privilege allows the storing vehicles with limitations on the storage of anything else that might be a hazard or eyesore. In exchange for the special privilege, the benefitting unit owner is obliged to meet the owners corporation’s costs for the construction of a carport roof over the area and subsequent maintenance costs. 

        As for bins, a common by-law would be one that specifies where bins may be stored on common property (say, purpose built bin enclosures). It is then a breach of the by-laws to leave bins anywhere else. 

        #17689
        kiwipaul
        Flatchatter
        Chat-starter

          @PeterC said:
          I don’t think you can charge people money to use property they already own!.

           

          Their is always in any strata complex residents who find their lot is not big enough for them and so start appropriating the common area for their use.  Why should an owner who obeys the rules have to put up with these people but they generally turn a blind eye because they want a quiet life.

          BUT if they realize these people can be asked to pay for their seizing of common property they might be inclined to support people who enforce the bylaws.

          On another post regarding car parking one owner was prepared to pay to use a part of the common property (which I think is reasonable if the EC or OC agree).

          If their is common property available why shouldn’t the residents be allowed to use it for a fee, rather than it being a free for all scramble which applies to most complexes.

          How you implement it would vary depending on which state you are in, but I’ve not seen anything that says it’s illegal.

          #17697
          Jimmy-T
          Keymaster

            Our building has converted empty storage space into rented storage cages. They are cheaper than commercial storage and they are very convenient and rarely unoccupied. The money goes into the general fund so every owner does benefit – it’s better than leaving valuable space unused ‘on principle’.

            The opinions offered in these Forum posts and replies are not intended to be taken as legal advice. Readers with serious issues should consult experienced strata lawyers.
            #17699
            Sir Humphrey
            Strataguru

              @kiwipaul said:


              @PeterC
              said:
              I don’t think you can charge people money to use property they already own!.

               

              …How you implement it would vary depending on which state you are in, but I’ve not seen anything that says it’s illegal.

              On reflection, I think you are right. An OC could grant special privileges for specified exclusive uses of particular bits of the common property to individual members with any conditions, which could include charges.

               

               

              #17704
              scotlandx
              Strataguru

                I don’t think there is anything wrong with an OC reaching an agreement with someone to use part of the common property and charging for it.  In a lot of scenarios it makes sense and everyone benefits.

                On the subject of who owns the common property, there is a very fine distinction.  The individual owners don’t own it, the Owners Corporation (a legal entity) owns it and effectively holds it on trust for the benefit of the owners as a whole.  While this may seem like splitting hairs it does make a difference.  We had someone who moved in a while ago who started demanding to be allocated various bits of the common property for his use, stating that it was communal property and he had a right to use it in that way.  We had to tell him that that was not the way it worked.  As he wanted to be given exclusive use of a part of the common property that was used as a thoroughfare by everyone else, we said no.

                #17668
                Sir Humphrey
                Strataguru

                  @scotlandx said:
                  …On the subject of who owns the common property, there is a very fine distinction.  The individual owners don’t own it, the Owners Corporation (a legal entity) owns it and effectively holds it on trust for the benefit of the owners as a whole.  While this may seem like splitting hairs it does make a difference. …

                   

                  You are right but to split the hair even further: It depends what state or territory you are in whether the Owners Corporation holds the common property as ‘agent’ for the individual members or ‘on trust’ for the individual owners. If the OC derives non-mutual income from the common property, say by renting out a parking space, the tax office regards it differently depending on whether the state legislation defines the relationship as agent or trustee.

                  Where it is ‘trust’ the OC should declare the income and pay the 30% corporate tax rate. Owners simply see their levies reduced a little as a consequence of the OC having some extra income and not needing to levy as much. All is simple.

                  Where it is ‘agent’ the OC is supposed to prepare a statement to issue to each owner so that they can declare their share of the income divided up according to unit entitlements. Owners still get their levies reduced because the OC has other income but this time it is the individual owners who have to declare their little fraction on their tax returns. Some owners might find they have pensions reduced, others are likely to be on different marginal tax rates. It is unlikely the benefit will be spread equally among owners. This applies even though the OC just reduces levies rather than actually issuing a little cheque to each owner.

                  Unfortunately, it is ‘agent’ in most places. 

                  All this was relevant to our OC because we wanted to put in a PV (solar electric) system that would off-set the OC’s electricity costs. Our gross feed-in tariff is regarded as income whereas a net tariff would not have been. We gave a copy of our tax ruling to the review of the ACT’s Unit Titles Act and the result was a change in the legislation that allows us to pass a resolution to hold sustainability equipment ‘in trust’ for the owners even though common property is otherwise held as ‘agent’ by default. Without this legislative change the use of OC funds would not have led to returns to all owners in the same proportion to their previous contributions to the OC’s funds, there would have been considerable nuisance value to every owner’s tax affairs, and it might have been harder to convince owners to go ahead with the proposal. 

                  If the OC gets income from unconventional sources you should check tax ruling IT2505 and perhaps get a private ruling. I have explained all this further in 
                  https://tinyurl.com/9yufydw

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                Flat Chat Strata Forum Common Property Current Page