What resolution is needed for an improvement to the common property?
The first question you have to ask is – Who will be doing the improvement? Will it be done by an owner or by the Body Corporate?
If it is an owner and it is viewed to be a major improvement then that owner will need permission from all the other owners and the improvement will become part of the common property – to be maintained by the BC. (It is important to first determine if the improvement does not constitute the extension of a section)
If it is not the extension of a section it is advisable in such instances that exclusive use rights be created over the area where the improvement needs to be done. If it is an EUA where an improvement will be done then the owner need an ordinary resolution to be passed by the Body Corporate as seen earlier on in this module.
Quote from the STSM Act:
PCR 4(1) The owner or occupier of a section must not, without the trustees’ written consent, mark, paint, drive nails, screws or other objects into, or otherwise damage or deface a structure that forms part of the common property.
If the BC will be responsible for the work it needs to be determined if it is maintenance or an improvement. If it is maintenance the BC can go ahead with the work (ito the budget), but if it is not maintenance it must be an improvement.
Improvements are classified as either necessary (previously called non-luxurious) improvements or not necessary (previously called luxurious) improvements.
Necessity is not necessarily determined by the costs involved but rather by the necessity of the improvement. If it is not really necessary and can be seen as a luxury then it will be a “luxurious” improvement – if it is necessary then it will be a “non-luxurious” improvement.
The classification will differ from scheme to scheme – for example for a scheme situated in very hot dry areas it could be argued that a swimming pool is not a luxury but a necessity. For a scheme in an upmarket area a swimming pool may be deemed to not be a luxury but in a scheme in a less affluent area it will be deemed as a luxury. All the factors will have to be taken into consideration. Remember if there is a dispute a judge or the Ombud will have to make a ruling. Amongst the factors that the court and Ombud will take into account will be the level of prosperity of the owners and the financial standing of the body corporate as well as the usefulness of and the necessity for the improvement.
To do an improvement to the common property that is not necessary (luxurious) the BC will need a unanimous resolution to be passed.
Quote from the STSM Act :
PMR 29(1) The body corporate may on the authority of a unanimous resolution make alterations or improvements to the common property that is not reasonably necessary.
To do an improvement to the common property that is necessary (non-luxurious) the BC will need to follow the procedure set out in PMR 29(2):
- The Trustees need to give written notice to the owners of what they intend to do. The notice must include the following:
- The fact that the Trustees intend to do the improvements 30 days after the notice was sent
- Details of the improvements
- How it will be paid
- A motivation for the proposal including drawings showing their effect and a motivation for the need
- Should any owner – during the 30-day period request (in writing) a meeting to be held to discuss the improvement the Trustees must call a SGM for a special resolution to be passed regarding the improvements
- In such an instance the Trustees may not start with the improvements until they had the meeting and the special resolution passed
- If the Trustees think that some owners will definitely request a meeting they can pre-empt it and call the SGM at the same time that they are sending out the notice with their proposals.
Quote from the STSM Act:
PMR 29 (2) The body corporate may propose to make alterations or improvements to the common property that are reasonably necessary; provided that no such proposal may be implemented until all members are given at least 30 days written notice with details of —
- the estimated costs associated with the proposed alterations or improvements;
- details of how the body corporate intends to meet the costs, including details of any special contributions or loans by the body corporate that will be required for this purpose; and
- a motivation for the proposal including drawings of the proposed alterations or improvements showing their effect and a motivation of the need for them;
and if during this notice period any member in writing to the body corporate requests a general meeting to discuss the proposal, the proposal must not be implemented unless it is approved, with or without amendment, by a special resolution adopted at a general meeting.
Some people incorrectly think that a “non-luxurious” improvement is a special resolution straight off – it is not – you have to follow this procedure.
The same procedures apply for the removal of an improvement from the common property. For instance, where the BC has a swimming pool and it is proposed by the Trustees to rather fill up and close the pool. It will first need to be determined if the installation of the pool was a “luxurious” or “non-luxurious” improvement in the first place. That will determine what resolution will be needed to fill up the pool.