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The Shared Facility Frustration: Navigating Common Property Use

What Property Buyers Need to Know About the Contract for Sale #39: How do I handle shared property facilities?

Introduction

Shared property facilities, such as common areas, driveways, swimming pools, and gardens, are a common feature in many residential and commercial properties in New South Wales (NSW). Proper management and understanding of the rules governing these shared facilities are essential to avoid disputes, ensure smooth co-ownership, and maintain the property’s value. This section explores the different types of shared property facilities, potential challenges, legal considerations, and practical steps for handling these facilities effectively.

Types of Shared Property Facilities in NSW

  1. Common Areas in Strata Schemes: In strata properties, common areas may include lobbies, hallways, elevators, gardens, parking lots, and recreational facilities. These areas are owned collectively by all lot owners and managed by the owners' corporation.

  2. Shared Driveways and Accessways: Shared driveways or access paths are common in properties with multiple units or semi-detached homes. These facilities require agreements on usage rights, maintenance responsibilities, and access arrangements.

  3. Shared Utilities and Services: Some properties may have shared utilities such as water, electricity, or gas meters, as well as shared waste disposal or recycling facilities.

  4. Shared Recreational Facilities: Properties such as apartment buildings or gated communities may have shared recreational facilities, such as swimming pools, gyms, or playgrounds, that require collective management and cost-sharing.

  5. Common Gardens or Landscaped Areas: Common gardens or landscaped areas may be shared among residents, requiring agreements on usage, maintenance, and contributions to upkeep costs.

Potential Issues with Shared Property Facilities

Handling shared property facilities can present several challenges, including:

  1. Maintenance and Repair Disputes: Disagreements can arise over who is responsible for maintaining or repairing shared facilities, especially if costs are significant or frequent.

  2. Usage Conflicts: Conflicts may occur over the use of shared facilities, such as disputes over parking spaces, access times, or the use of recreational areas.

  3. Cost-Sharing Disagreements: Disputes may arise over how costs associated with shared facilities, such as maintenance fees, utility bills, or repair costs, are divided among the property owners or tenants.

  4. Lack of Clear Agreements: Issues often arise when there are no clear agreements or rules governing the use, maintenance, or costs associated with shared facilities.

  5. Breach of By-Laws or Rules: Breaches of by-laws or rules set by the owners' corporation or other governing bodies can lead to disputes and, in some cases, legal action.

Legal Considerations in Handling Shared Property Facilities in NSW

There are several legal considerations to be aware of when dealing with shared property facilities in NSW:

  1. Strata Schemes Management Act 2015 (NSW): This Act governs the management of strata properties, including rules for maintaining common areas, making decisions about shared facilities, and resolving disputes.

  2. By-Laws and Rules: Strata properties have by-laws that outline rules for the use of shared facilities. These by-laws are legally enforceable, and breaches can result in penalties or legal action.

  3. Common Law Rights: For properties not covered by a strata scheme, common law principles and agreements govern shared facilities. Owners must establish clear agreements regarding use, maintenance, and cost-sharing to avoid disputes.

  4. Easements and Rights of Way: Some shared facilities, such as driveways or access paths, may be subject to easements or rights of way. These legal rights must be respected, and any changes or restrictions must be negotiated and documented.

  5. Owners' Corporation Responsibilities: The owners' corporation (or body corporate) is responsible for managing shared facilities in strata properties. They must maintain common areas, enforce by-laws, and handle disputes related to shared facilities.

Practical Steps for Managing Shared Property Facilities

To effectively manage shared property facilities, property owners, tenants, and managers should consider the following steps:

  1. Review By-Laws or Agreements: For strata properties, review the by-laws that govern the use, maintenance, and costs associated with shared facilities. For other properties, ensure clear agreements are in place.

  2. Establish Clear Rules and Responsibilities: Clearly define rules and responsibilities for the use, maintenance, and repair of shared facilities. This may involve drafting new agreements or updating existing ones.

  3. Communicate with All Parties: Open communication between all parties (owners, tenants, managers) is essential to avoid misunderstandings and resolve issues promptly.

  4. Set Up a Maintenance Schedule: Establish a regular maintenance schedule for shared facilities, detailing who is responsible for various tasks and how costs will be divided.

  5. Use a Dispute Resolution Process: Implement a process for resolving disputes related to shared facilities. This may involve mediation, arbitration, or referring the matter to the owners' corporation or legal professionals.

  6. Ensure Compliance with By-Laws and Regulations: Ensure that all parties are aware of and comply with the by-laws, rules, and regulations governing the shared facilities.

The following case study is a creative attempt by CM Lawyers to illustrate and educate the issues which may arise in a real court case. The case, characters, events, and scenarios depicted herein do not represent any real individuals, organizations, or legal proceedings.

Case Study: Managing Shared Property Facilities in NSW – A Strata Dispute

Case Overview

In the case of Smith v. Owners Corporation SP 12345 [2020] NSWSC 543, a dispute arose over the maintenance of a shared garden area in a strata property in Sydney. The property, a four-story apartment building, had a common garden space that required regular upkeep. The owners' corporation had failed to maintain the garden adequately, leading to complaints from residents, including Mr. Smith, who argued that the lack of maintenance was diminishing the property's value.

Behaviour of the Participants

Mr. Smith, a long-time resident, was frustrated with the state of the shared garden and repeatedly raised the issue at owners' corporation meetings. However, the owners' corporation, citing budget constraints, voted against allocating additional funds for garden maintenance. Tensions escalated when Mr. Smith took it upon himself to hire a gardener and demanded reimbursement from the owners' corporation.

The owners' corporation refused to reimburse Mr. Smith, arguing that his actions were unauthorized and not approved by a majority vote. The disagreement led to a breakdown in communication and the initiation of legal proceedings by Mr. Smith, who claimed that the owners' corporation had failed to meet its obligations under the Strata Schemes Management Act 2015 (NSW).

Legal Process and Court Involvement

The case was brought before the NSW Supreme Court, where Mr. Smith argued that the owners' corporation had breached its duty to maintain common property as required by law. The court found that the owners' corporation had indeed failed to fulfill its responsibilities under the Act and ordered it to allocate sufficient funds for the garden's upkeep. Additionally, the court directed the owners' corporation to reimburse Mr. Smith for his expenses in hiring a gardener.

Financial Consequences

The legal dispute resulted in financial consequences for both parties. The owners' corporation faced legal fees of $30,000, the cost of reimbursing Mr. Smith ($5,000), and additional expenses for future garden maintenance. The dispute also caused friction among residents, affecting community relations and the building's overall harmony.

Statistics

  • Disputes Over Shared Facilities: Approximately 20% of disputes in strata properties in NSW relate to the use or maintenance of shared facilities.

  • Legal Costs for Disputes: Legal fees for resolving disputes over shared property facilities in NSW range from $5,000 to $50,000, depending on the complexity of the case.

  • Common Types of Disputes: The most common disputes over shared facilities involve maintenance costs (40%), usage rights (30%), and access issues (20%).

  • Time to Resolve Disputes: The average time to resolve disputes over shared facilities in NSW courts is 6-12 months.

  • Role of Owners' Corporations: Around 70% of owners' corporations in NSW manage shared facilities without professional assistance, leading to higher dispute rates.

  • Use of Mediation: About 60% of disputes over shared facilities in NSW are resolved through mediation or negotiation, avoiding court action.

  • Maintenance Cost Sharing: In NSW, approximately 80% of strata schemes use a levy system to fund the maintenance of shared facilities.

  • Compliance Awareness: Around 75% of property owners in NSW are aware of the by-laws and regulations governing shared facilities.

  • By-Law Breach Penalties: Penalties for breaching by-laws related to shared facilities can range from $550 to $5,500 in NSW.

  • Impact on Property Value: Poor management or unresolved disputes over shared facilities can reduce property values by 5-15%.

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