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A brief look into subdivision of common property
We have recently seen an increasing number of lot owners consider constructing balconies for their apartments. There are two methods of approving the construction of such balconies.
The first involves an owners corporation granting a lot owner a common property rights by-law that confers on that owner a special privilege to undertake the construction of the proposed balcony, and a right of exclusive use and enjoyment of the balcony once constructed.
The second involves the owners corporation granting a lot owner a common property rights by-law for the construction of the proposed balcony, the transfer of the relevant common property space to that owner and the registration of a strata plan of subdivision.
The appropriate method to explore is dependent on various factors. The starting point is for an owner to establish whether they wish to simply have exclusive use over the proposed balcony or obtain a right of ownership over same.
This article will only address the second option – by-law for construction and subdivision.
An owner may construct a balcony in the common property airspace and then acquire that part of the common property to form part of their lot. This process will generally involve:
- a by-law for the works to construct the balcony;
- a contract of sale between the owners corporation and the owner for the transfer of part of the common property;
- a valuation of the common property to be transferred (including for transfer duty purposes);
- a strata plan of subdivision;
- a re-assessment of the unit entitlements for all lots in the strata scheme;
- a development application to be lodged with the local Council;
- obtaining consent of any mortgagee registered on title for the lot;
- the passing of various special resolutions by the owners corporation to approve, amongst other things the strata plan of subdivision.
Whilst this type of subdivision may add value to a lot and may result in an increase in that lot’s unit entitlement, the process can be time consuming and expensive without appropriate legal advice from the beginning.
If you are considering subdivision, Bugden Allen Graham Lawyers have the expertise to help you.
Author: Sinem Mutlu, Associate in our NSW Office
