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Strata By-law Traps For The Unwary

Strata by laws are the common set of rules for a strata scheme which all lot owners in a strata scheme implicitly agree to abide by when they purchase a lot in a strata scheme. They are not laws in the sense that legislation from a parliament is considered a law, but they can be enforced through the application to the Commercial and Consumer Division of NCAT. That being said, the other day a by-law came across my desk which contained the following “remarkable” condition:

“A lot owner shall be liable to compensate the Owners Corporation for the costs of the Owners Corporation successfully defending an adjudication, tribunal or other legal application made by a lot owner…”.

Most strata lawyers would be aware that:

* a by-law has no force or effect to the extent that it is inconsistent with the SSMA or the law; and

* section 176 of the Strata Schemes Management Act 1996 (SSMA) states that an Adjudicator may not, in connection with an application under this Part (Part 4), make an order for the payment of costs.

I am amazed at how an owners corporation is prepared to risk the validity of the by-law being challenged by a lot owner on the grounds that a condition of the by-law is inconsistent with section 176 of the SSMA. Whether or not an Adjudicator would declare the entire by-law invalid or simply sever the offending condition from the by-law is a different issue which goes beyond the scope of this article.

Pobi Lawyers can assist you with the process of drafting new by laws as well as helping you to understand whether a by law might be invalid.

If you have any queries, please contact us on (02) 8710 3430.

Please note that the information contained in this article is not legal advice and should not be relied upon. You should obtain legal advice before you take any action or otherwise rely upon the contents of this article.