Common challenges of exclusive use being misinterpreted as ownership in sectional title schemes

Sectional title complexes frequently face challenges related to unauthorized alterations made to common property areas.

These alterations are often carried out by section owners who mistakenly believe they ‘own’ exclusive use areas (EUA) and can make changes without obtaining approval from the body corporate’s permission. However, it’s important for them to understand that these areas are considered common property, and any construction or modifications require proper authorization through a body corporate approval process.

Here are three options that trustees can consider when dealing with a large number of unauthorized common property alterations in commercial properties:

 

1. Seek assistance from the local council:

In cases where common property alterations, whether authorized or not, may require written approval from the local council under building regulations, trustees can approach the council for assistance. If the owners involved have not obtained the necessary approval, they would be in violation of the National Building Regulations, which is a law governing common property. Trustees have a responsibility to ensure compliance with all relevant laws regarding the property. They may work with the local council to order individual owners to remove any illegal structures.

 2. Make an application to the Community Schemes Ombud Service (CSOS):

The body corporate can opt to file individual cases with the Community Schemes Ombud Service (CSOS) to challenge owners who have made unauthorized alterations to common property areas. However, trustees should be aware that owners may raise various defences in response to such cases.

For instance, owners may claim estoppel, arguing that the body corporate had previously shown consent, either explicitly or implicitly, to the alterations. If a significant amount of time has passed since the alterations were made and the body corporate has not taken any action until now, the body corporate’s inaction could be interpreted as implied consent. Similarly, if a unit has changed ownership since the alterations were made, implied consent may be inferred from the issuance of a levy clearance certificate, indicating that there were no outstanding issues related to the unit or its previous owner.

Trustees should also consider the significant financial and time costs associated with this approach. Moreover, there is a risk that the adjudication orders may not provide the desired relief or that the owner may refuse to comply with the order.

3. Introduce a conduct rule to legalize the alterations:

Another option is to regularize and legalize all acceptable alterations to the common property rather than attempting to force their removal.

To achieve this, a proposed conduct rule can be drafted, preferably with the assistance of an attorney knowledgeable in sectional title management law. The conduct rule should be presented to the body corporate for approval through a special resolution. This resolution would approve the existing common property alterations, subject to reasonable conditions that safeguard the interests of the body corporate and ensure proper management of these common property areas.

If trustees choose this route, it is important to consult with the local council as their approval of the existing alterations should be one of the conditions attached to body corporate approval under the new conduct rule.

Regardless of the approach chosen, whether it involves seeking removal through the local council or CSOS or regularizing and legalizing the alterations, it is advisable for trustees to gather support from an accredited and experienced managing agent.