Maintaining and improving common property

If you own an apartment or a townhouse, you most likely collectively own the common property with the other lot owners as “tenants-in-common”. As the collective owners of common property, i.e. the owners corporation or body corporate, you have a duty to manage, administer, repair and maintain common property.

To assist you with your maintenance approach, our team at PICA Group have answered the 4 most common questions:

1. Who is responsible for what, and how are common property areas determined?
2. What are the maintenance responsibilities for common property?
3. What are the requirements for planning maintenance?
4. What happens if there is failure to maintain common property?

1. How to determine common property areas

Common property includes any parts of the land, buildings and airspace that are not lots (private property) on the subdivision plan. Common property may include the building structure and associated equipment such as gardens, passages, walls, pathways, driveways, lifts, foyers and fences.

Understanding who is responsibilities for repairs

The subdivision plan shows the boundaries between private land and land collectively owned. It also includes a schedule of each lot owner’s interest in the common property and the portion of expenses they are obliged to pay.

All owners, especially committee members, should review the subdivision plan to understand common property boundaries and responsibilities for each area and asset.

While it seems simple enough to determine responsibility, it is not always straightforward, as confusion arises about whether a building element is considered common property or part of a lot. A well-prepared maintenance plan that correctly identifies common property areas and assets can help owners corporations, and body corporates understand their responsibilities.

2. What are the maintenance responsibilities for common property ?

When it comes to common property, responsibilities in maintenance activities vary from state to state.

For VIC and NSW, the Owners Corporations Act 2006 states that the owners corporation are responsible for repairing and maintaining:

• Common property
• Fixtures, fittings and services related to the common property
• Equipment and services that benefit some or all the lots and common property
• Any property or asset that is its responsibility

The types of maintenance requirements that an owners corporation is accountable for can be divided into three categories:

1. Corrective maintenance: This is daily maintenance to keep your building at an acceptable standard, such as cleaning foyers, maintaining lawns and landscaping, changing light bulbs, and annual lift servicing.
2. Scheduled maintenance of capital items: To prevent major capital items from failure or falling into disrepair, such as painting the exterior of the building, replacing railings, and significant repairs to the roof, pool or other facilities.
3. Emergency corrective maintenance: These critical repairs must be made immediately for health, safety, and security reasons. It includes repairs to avoid rapid deterioration of the structure or fabric; for example, roof repairs after storm damage or repairing broken glass. Generally, replacement and reinstatement insurance covers these costs.

However, for QLD, the body corporate and owners are both responsible for maintaining common property under the Body Corporate and Community Management Act 2006. Having a clear understanding of the lots, common property boundaries, survey plan, and the regulation module is essential to determine the maintenance responsibilities of the body corporate and each lot owner.

In QLD, community title schemes are registered under a subdivision plan, which clearly represents the boundaries of the common property and the individual lots within the scheme.

Click on the links below to learn more about the maintenance responsibilities for the two common types of survey plans:

• Building format plans
• Standard format plans

3. What are the requirements for planning maintenance?

Owners corporations create a maintenance plan with a maintenance fund and hold regular inspections.

Create a maintenance plan

Under the Owners Corporation Act 2006, only “prescribed owners corporations” (large schemes with more than 100 lots or raise over $200k) must have a maintenance plan. However, any owners corporation with more than ten lots would benefit from a maintenance plan to help them plan works and determine what fees need to raised to support the works.

Your maintenance plan should include the following:

• Major capital items requiring repair or replacement over the next ten years.
• The present condition of those items.
• When the items or components will need to be repaired or replaced.
• The estimated cost of their repair and replacement.
• The expected life of those items or components once repaired or replaced.

In QLD, the responsibilities and requirements of maintenance differ across standard format plans (formally known as group title plans) and building format plans. Click the links below to learn more about these plans’ specific requirements.

• Standard format plan generally includes individual lots with a building and yard, such as townhouse complexes.
• On the other hand, building format plans usually apply to multi-story unit complexes. However, this can also include villas, duplexes, housing estates and townhouses

Create a maintenance fund

A maintenance fund/sinking fund is required to support future capital works for a maintenance plan. This fund will include any annual fees designated for the maintenance plan, such as money received under insurance policies for property damage. Interest earned on the fund must be paid into that fund.

In NSW, an ordinary resolution at a general meeting is required to withdraw money from the maintenance fund for items listed in the maintenance plan, so maintenance items must be on the AGM agenda. A special resolution is required for payments from the maintenance fund for an urgent matter not listed in the maintenance plan.

Hold regular inspection checks

Once the plan and budget are determined, an owners corporation or body corporate should develop a maintenance cycle to:

• Inspect common property
• Carry out maintenance requirements
• Regularly surveying residents about maintenance issues

To help keep the value of the property, maintenance should be an agenda item at every annual general meeting so the owners corporation or body corporate can agree to the upcoming expenditure.

4. What happens if there is a failure to maintain common property?

Good maintenance helps retain the value of the building and makes the property more enjoyable to live in. Poor maintenance or neglect can lead to severe damage and safety hazards. As many people have access to common property, it is essential to ensure adequate management so that it serves its purpose. Appropriate public liability insurance cover for the common property is also crucial, as accidents often result in significant claims and legal expenses.

Important note

An owner took legal action against an owners corporation for damage to the owner’s property caused by water penetration via a balcony (a common occurrence).

The court concluded that the balcony was common property and had not been adequately maintained. Therefore the lot owner had a cause of action in negligence against the owners corporation for damage to her lot. Failure to maintain common property can have more serious consequences, such as injury or death.

Although public liability insurance covers incidents on common property, all owners are liable as tenants-in-common, so maintenance requirements should not be taken lightly. If you’d like to learn more about building compliance for your strata property, download our FREE Community Living guide. Or ask a question at StrataFAQ.com.au.