BY-LAWS

By-laws are the rules by which a building or community operates. All owners and occupiers of lots are legally bound to comply with the by-laws and they can be enforced in one of a number of ways:

·        By service of a By-Law Contravention Notice by the owners corporation (followed by a pecuniary penalty if the notice is not complied with).

·        By an application to the Consumer Trader and Tennancy Tribunal for an order requiring compliance (followed by an offence and fine if the order is not complied with).

·        By an application to the Supreme Court for an order enforcing the by-laws, which may take the form of an injunction (but this application may only be made in limited circumstances).

Because of the ability to enforce the by-laws a purchaser should check them carefully to ensure that they do not conflict with their plans for living in or owning the lot. For example, if they have a family pet and pets are prohibited under the by-laws, then the particular scheme is not appropriate for the purchaser. The purchaser should read the by-laws carefully and assess their likely impact.

By-laws may also confer exclusive use and enjoyment or special privileges in relation to designated parts of the common property. For example an “exclusive use by-law” may allocate a courtyard for the exclusive use of the owner or occupier of the lot that adjoins that courtyard. Car spaces are commonly allocated to lots by means of an exclusive use by-law. A purchaser should check carefully the terms of any exclusive use by-law that attaches to the lot they are purchasing to ensure that:

·        The area to which the by-law relates is appropriate for the lot being purchased.

·        The conditions of the by-law are acceptable because the purchaser will be bound by those conditions, including any obligation to pay a licence fee or other money. (A common condition passes responsibility for maintenance of the subject area to the lot owner.)

By-laws are recorded by the Land and Property Information Division of the New South Wales Land and Property Management Authority. The purchaser’s solicitor or conveyancer will usually obtain a copy of the by-laws as part of the conveyancing process and the purchaser should obtain a copy of them from their solicitor or conveyancer. If a rule or by-law does not appear on the register kept by the Authority it has no legal effect. Although by-laws can be changed by the owners corporation, the process is not easy and a purchaser should never assume that a change can be arranged or a owners corporation consent (required by a by-law) will be given.

The legislation sets out “model” by-laws which an owners corporation can adopt (with or without changes). Some schemes have simply adopted these by-laws while others have had a complete set of by-laws tailored for the particular building or scheme. The last approach is to be preferred.

Do the records suggest that the By-laws have been changed or added to in the past three months?
By-law changes are first approved by a resolution of a general meeting and then registered in Land and Property Information Division of the New South Wales Land and Property Management Authority within 3 months by means of a special notification. The answers to this and the next two questions are intended to alert you to any changes that are “in process” and which may affect you after you acquire your lot.

If so, does it appear that these changes or additions have been registered?
See commentary to the previous question.

If not particulars are:

See commentary to first question. The particulars are intended to allow you to assess the likely affect of the by-law on you. 

Does it appear that the proprietor of the subject lot(s) is entitled to exclusive use of a parking space or other exclusive use right or special privilege?
The answer to this question seeks to confirm whether or not exclusive use rights exist in relation to the lot. If they do then you should re-read the commentary above and ensure that the area is appropriate and the terms of the by-law are acceptable. You will most likely need to refer to the actual by-laws to do this.

An exclusive use by-law has always required a resolution of the owners corporation (originally a unanimous resolution, but more recently, a special resolution) and the written consent of the recipient lot owner. Locating the resolution and written consent were often a challenge with the result that it was difficult to establish the validity of the by-law. Today the legislation provides that after 2 years from the making of the by-law all conditions and preliminary steps are conclusively presumed to have been complied with and performed. Therefore, once the 2 years have expired these questions of validity do not arise. This is why the inspector will try to indicate whether the by-law was registered within the last 2 years.

It is also important to note that an exclusive use by-law may require payments of a capital or recurring nature. Capital payments are usually equivalent to the “purchase price” for the right or privilege while recurrent payments are usually in the nature of a license or occupancy fee. They can also be intended to cover maintenance of the area where this remains the responsibility of the owners corporation. The purchaser will be liable to continue with these types of payment. The purchaser should therefore be aware of any requirements of this nature by carefully perusing the terms of the by-law.