In relation to strata disputes concerning building defects, it is important to know the difference between lot and common property to determine whether the lot owner or the Owners Corporation respectively is liable for rectifying such defects. Under the Strata Schemes Management Act 2015 (NSW) (SSMA), an Owners Corporation has a strict statutory duty to maintain common property in a state of good and serviceable repair. However, grey areas exist where the line between common and lot property is unclear, necessitating the court to refer to the strata plan and the conditions at the time of its registration.
What is the difference between common property and lot property?
“Lot property” refers to individually owned spaces within the strata plan. Generally, where the cubic space comprising a lot is fully enclosed, the boundaries of the lot are the inner surface of the walls, the upper surface of the floor, and the under surface of the ceiling: SSMA, s 6(1)(a).
On the other hand, “common property” is owned collectively by all owners and maintained by the Owners Corporation through levied strata fees. Examples of common property include driveways, swimming pools, and common hallways.
What are the “grey areas”?
Grey areas often exist when defects occur in spaces technically classified as common property but not used by lot owners or vice versa. In The Owners SP 35042 v Seiwa Australia Pty Ltd [2007] NSWCA 272 (Seiwa), the respondent claimed that the appellant breached the s 106 duty to maintain and keep in a state of good and serviceable repair the steelwork enclosing a balcony and the waterproofing membrane that sealed the concrete floor of an external terrace of the unit.
Tobias JA (Giles and Basten JJA agreeing) found that the rusted balcony steelwork and waterproofing membrane were common property, such that the Owners Corporation breached its statutory duty to maintain and keep them in repair. As His Honour states at [37]:
Accordingly, in my opinion the primary judge was correct in construing the notation on Sheet 8 of the Strata Plan as describing for the purposes of s 5(2)(b) only the upper horizontal boundary of the cubic space of which the terrace formed the base. As the notation did not purport to define the lower horizontal boundary of that space, that boundary is to be determined in accordance with s 5(2)(a)(ii), namely, as the upper surface of the floor of the terrace being the upper surface of the tiles. It follows, therefore, that the membrane is part of the common property to which the provisions of s 62(1) apply to impose upon the appellant the statutory duty to keep the membrane in a state of good and serviceable repair, which it failed to do.
Further, it was stated by Tobias JA at [38]–[39] that if at the date of registration of the strata plan, tiles have been affixed to the slab, the “upper surface” of the floor is the top of the tiles; but if at the time of registration, the floor is bare concrete, to which tiles are added later, the “upper” surface of the floor is the top of the concrete surface (under the tiles).
Finally, His Honour presents us with a critical question to ask in such circumstances at [40]:
Careful consideration will need to be given by, for instance, a developer who is constructing a building which is proposed to be the subject of a strata scheme to what is intended to constitute the vertical and horizontal boundaries of the cubic space or spaces comprising a lot. Are they to be the surfaces of the concrete floor and ceiling slabs or brick walls or the surface of any tiles, timber or other material affixed to those slabs or walls?
Key takeaways
In summary, understanding the distinction between lot and common property is essential in strata disputes. Seiwa clarifies how it is important for property developers to determine beforehand the vertical and horizontal boundaries of the lot space so that conflict is minimised in the event of a defect arising.