Strata by-laws: How they are created and dispute resolution

by The FindLaw Team

One common sight in the hip inner city suburbs of Australia’s capital cities is the appearance of units or large residential blocks. We should clarify that units and large residential blocks are also a feature of the rest of the country as well, however, we’re only trying to paint a pretty picture here – but we digress. Getting back to the original point, units and residential blocks can be found everywhere and most of these properties have multiple owners who also share common areas, and as a consequence, the creation of by-laws becomes necessary in strata or community corporations to ensure that every person within the strata is able to enjoy the benefits of their residence.
 

Strata by-law creation

The creation of by-laws relating to strata property is expressed to be binding in the majority of jurisdictions in Australia, and requires the strata corporation and unit holders to use the common property in-line with the by-laws.

A strata or community corporation is able to set out a schedule or a similar list in the legislation, outlining the articles or by-laws in regards to the scheme. Furthermore, the corporation is able to adopt different articles or by-laws and amend the articles and by-laws as they see fit – however, there are some legislative restrictions.

In order to get a sense of some of the limitations of by-laws, we can look to s 49 of the Strata Schemes Management Act 1996 (NSW) as an example, with the section stating:

“ (1) By-law cannot prevent dealing relating to lot No by-law is capable of operating to prohibit or restrict the devolution of a lot or a transfer, lease, mortgage, or other dealing relating to a lot.

(2) By-law resulting from order cannot be changed If an order made under Chapter 5 has effect as if its terms were a by-law, that by-law is not capable of being amended or repealed except by a by-law made in accordance with a unanimous resolution and, in the case of a strata leasehold scheme, with the consent of the lessor of the scheme.

(3) By-law cannot restrict children a by-law for a residential strata scheme has no force or effect to the extent to which it purports to prohibit or restrict persons under 18 years of age occupying a lot. This subsection does not apply to a by-law for a strata scheme for a retirement village or housing exclusively for aged persons.

(4) By-law cannot prevent keeping of guide dog A by-law has no force or effect to the extent to which it purports to prohibit or restrict the keeping on a lot of a dog used as a guide or hearing dog by an owner or occupier of the lot or the use of a dog as a guide or hearing dog on a lot or common property.”

Additional examples can be found in other jurisdictions as well, and another example is s 140 of Victoria’s Owners Corporations Act 2006 (VIC), which states that no rule may be inconsistent with any law, or unfairly discriminate against any lot owner.
 

What are the requirements if someone wishes to amend any of the strata by-laws?

Generally speaking, the adoption or amending of strata or community corporation by-laws requires a special resolution to be made via a special resolution of the corporation.

Furthermore, in certain jurisdictions, special resolutions require at least two-thirds of the vote and the rules imposed, and the exercising of powers must not harm the interests of the minority. The overarching requirement is that the by-laws are created to benefit the strata or community scheme as a whole, as for example, outlined in s 138(3) of Victoria’s Owners Corporations Act which reads; “A rule must be for the purpose of the control, management, administration, use or enjoyment of the common property or of a lot.”

The requirement for a by-law to benefit the community is to ensure – and we’re paraphrasing the theme song of Neighbours here – that the residents of a strata or community corporation are not only neighbours, but also become good friends.
 

How are disputes handled?

Disputes within a body corporate do arise, and members have a right to raise any concerns during meetings of the corporation. Additionally, a person can put forward their matter in the various State tribunals if they wish to seek a remedy in regards to their matter, and a declaration or order can be made regarding the issue at hand.



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