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Hi,
I currently own 2 ground floor apartments in a small block of 6. I would like exclusive use for both ground floor apartments – currently classified as common property, however I get a lot of resistance from other owners. There is a very modern rooftop terrace that the rest of the building use, however at the same time, nobody else wants to spend the money on the courtyards to bring them in-line with the rest of the building (because access is so difficult and it feels like you’re in someone else’s home).
Access can only be gained to the courtyards either side of the building by climbing over multiple bins and through a gate at each side of the building (access for the ground floor apartments is via the back doors which lead directly onto each courtyard). There is a high fence between both the yards (in effect they are private courtyards).
During our last AGM, ‘renting’ the courtyards was discussed along with proposed by-laws. The by-laws included access to the yards for other owners for maintenance purposes (window cleaning / drains) with prior notice, for the ground floor apartments to take on costs for the area etc etc etc.
The outcome was that we had to approach Real Estate to see how much the space was worth and what it would rent for. After speaking with 6 real estate companies, they told me that the yards have zero rental value as only the ground floor apartments can use them and the space couldn’t be used for development or sub-let. Speaking with a valuer, he wouldn’t increase the value on our property if we did have exclusive use, as by default the apartments have that anyway.
We did discuss a nominal fee of $1000 per year per yard to be put into the sinking fund, however the other owners seemed to think we should be paying tens of thousands of dollars a year for each yard – we thought this a little greedy on their part. There was also concern by one owner that this could affect the owners negatively if the building was to be sold to developers or, currently devalue their properties.
If any owner did want to use either courtyard, it would be like sitting in someone else’s property and a mighty hassle to do so.
Any advice on the best way to get exclusive use rights as the current situation seems so unreasonable?
Thanks,
Sasha
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Replies
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Sasha – I assume that you’re aware of the process (in NSW) to obtain the Owners Corporation’s consent to an exclusive use arrangement, but briefly that requires:
- A Motion on the Agenda for a General Meeting, and the passing of a “special resolution” by a minimum 75% of those entitled to vote (i.e. including proxies), with that percentage being calculated from the units of entitlement (UoE) of those voting and the aggregate UoE of all those in attendance (a “poll vote”); and
- A further Motion passed by the same means (i.e. a special resolution) to approve of and register (with NSW Land & Property Information) a Special By-Law to cover the conditions of the exclusive use privilege, including responsibilities for the maintenance of the area and any fee payable by the beneficiary (i.e. yourself) on an initial and possibly an on-going basis to the Owners Corporation (O/C).
In answer to your question about how the initial fee might be calculated, a method that’s been discussed here in other posts and which it’s thought was established by the High Court for situations where a Lot is added to by an Owner, but is nonetheless applicable to exclusive use, is:
X = A – (B+C), where…….
X is the amount payable to the Owners Corporation
A is the market value of each Lot with the exclusive use area included as if part of it, as determined by a Registered Valuer
B is the the market value of each Lot as it currently is, determined as above
C is the costs to the proponent of, in this case, convening the General Meeting (unless it’s an already scheduled AGM), obtaining the Valuations, and having the Special By-Law legally prepared and Registered.
I’ve referred to an initial fee, because there’s also the matter of an on-going fee to reflect the difference between A and B above in the context of Levy Contributions, where a hypothetical increase in value of the Lot/s of say 10% might be expressed as an additional / separate fee payable (quarterly?) by the beneficiary to the O/C that equates to 10% of the Levy Contributions then applicable.
Not an overly simple process, but is nonetheless a way forward if you can garner sufficient support from another three (3) Owners (assuming equal UoE for each).
Div 4 of the NSW Strata Schemes Management Act applies
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