Strata Rules, By-Laws & Covenants

Strata rules, by-laws, and covenants have had a bad rap recently. But, they still offer the strata experts and DIY strata owners the best tools to customise [or even hot-rod] their strata buildings to make them perform better than standard models. Vroom vroom …

Introduction

Strata building rules, by-laws, and covenants are a fundamental part of strata building legal, management and operational structures.

But they have been restricted, overturned, modified, and criticised by strata law reforms, Court decisions, and commentators [including me] for while now.

In many cases, those outcomes and comments have been appropriate as they reflect a desire to make better rules, by-laws, and covenants, because some of them don’t properly reflect societal changes, and, as a result of poor drafting or application.

However, rules, by-laws, and covenants still provide strata stakeholders with the best ways to modify how their strata buildings work to better suit strata owners and managers, to adapt to changing circumstances, new challenges, crises, and to deal with strata law changes.

So, how do rules, by-laws, and covenants work, what issues exist for them, and how have they been used to customise strata buildings?

At the end of this article, I’ve also included links to other articles I’ve written about rules, by-laws, and covenants for further reading.

How strata rules, by-laws, and covenants work

Rules, by-laws, and covenants are a fundamental feature of strata buildings as they are used to define building operational matters that don’t need to apply universally to all strata buildings and allow more building-specific issues to be handled.

The rules, by-laws, and covenants operate to add to the ordinary property rights and obligations of strata owners and/or to modify those rights between strata owners and the strata corporation.  They can also add to the powers and authorities of strata buildings in relation to their management of the building.

Around Australia, there are standard or defaults sets of rules, by-laws, and covenants that apply to all strata buildings.  And, in some states, there are different sets for different kinds or sizes of buildings.

Strata buildings can opt-in or out of the standard rules, by-laws, and covenants.

Strata buildings can change their existing rules, by-laws, and covenants and can make extra rules, by-laws, and covenants by following prescribed procedures [usually requiring a three-quarter majority vote at a strata owners’ meeting].

Sometimes rules, by-laws, and covenants can also be used to give strata owners temporary or permanent rights to use common areas in groups or exclusively on conditions including making payments.

Strata rules, by-laws, and covenants must be registered at state land titles offices on the common property title to be effective.  But registration does not make rules, by-laws, and covenants valid.

Courts and Tribunals [like VCAT, QCAT, NCAT, etc] can make orders about rules, by-laws, and covenants including making new rules, by-laws, and covenants or modifying or cancelling existing rules, by-laws, and covenants.

Most strata stakeholders are familiar with and like using rules, by-laws, and covenants to address issues in strata buildings and they have become the ‘go-to’ answer to many strata challenges.

Effectiveness, limitations and problems with rules, by-laws, and covenants

There are many issues that impact the effectiveness of strata rules, by-laws, and covenants which don’t always apply in the same ways everywhere, at all times or for all strata stakeholders. Some of them are as follows.

Firstly, there’s always a risk that a strata rule, by-law or covenant is invalid or unenforceable because it is outside the core powers of strata buildings as it does not relate to the strata building operations or because it is specifically prohibited [like a by-law restricting the sale of apartments].  It’s likely that there are many rules, by-laws, and covenants that are invalid for those reasons.  But that invalidity or unenforceability won’t be known until the end of a lengthy and costly court case.

Secondly, a strata rule, by-law, or covenant may contravene or be inconsistent with the strata laws [like a rule that says strata owners pay levies differently to their lot entitlements].  When that happens, the strata laws will prevail and the strata rule, by-law, or covenant will not operate as intended or at all.  But, again, that won’t be known until the end of a lengthy and costly dispute or court case.

Thirdly, a strata rule, by-law, or covenant may contravene or be inconsistent with non-strata laws [like a rule or covenant that prohibits brothels when the local planning laws permit them].  When that happens, the strata laws usually say that the other laws will apply and the strata rule, by-law, or covenant will not operate as intended or at all.  But, again, that also won’t be known until the end of a lengthy and costly dispute or court case.

Fourthly, a strata rule, by-law, or covenant may be poorly written or expressed or is internal inconsistent so that it does not mean what strata stakeholders think, means something very different when properly read, or, does not have any effective meaning or usefulness at all.  This was my point in the article ‘The Dogs of Strata War or The By-Law is Dead: Long Live the By-Law’ about the need for better-drafted by-laws. But, since the interpretation of written words is fraught and clouded by the readers’ perceptions of strata intentions, these kinds of problems also won’t be known until the end of a lengthy and costly dispute or court case.

Fifthly, even the best strata rules, by-laws, and covenants will be relatively useless unless strata owners and residents are aware of them [at least to prevent undesired behaviours].  And, despite being registered on strata titles, displayed on notice boards, attached to leases, sent to tenants, etc, there’s a surprisingly low level of awareness of strata rules, by-laws, and covenants in most strata buildings.

Sixthly, even when strata rules, by-laws, and covenants are known, many strata stakeholders don’t or won’t comply with them due to things like:

• poor understanding of the committee’s expectations for compliance,
• a lack of guidance as to what’s expected [on upfront and ongoing bases],
• bad attitudes towards compliance in strata buildings, and
• individual temptations to act selfishly.

Seventhly, there are significant challenges to enforcing most strata rules, by-laws, and covenants which often makes them toothless.  That’s because:

• informal enforcement processes like letters and notices to comply rely on strata owner or resident goodwill,
• formal enforcement process can require meeting pre-approvals,
• there are often long delays between breaches, enforcement action and outcomes,
• where tenants are involved, they may have left the strata building before enforcement proceeds or concludes,
• identifying strata rule, by-law, or covenant breachers can be problematic,
• proving breaches to the required legal standards is hard,
• enforcement via Courts and Tribunals can be costly, and
• enforcement can lead to lingering animosity between strata owners.

Legality versus effectiveness

But, it’s not all bad news for strata rules, by-laws, and covenants because despite all these problems most strata rules, by-laws, and covenants work even if they are invalid, ineffective or unenforceable.

Since most strata stakeholders don’t know strata laws and aren’t reading strata cases, they can’t tell if a strata rule, by-law, or covenant is valid or not.  Plus, land title registration gives them formality and validity even though it’s not true.

So, it’s likely that most people will believe a strata rule, by-law, or covenant is valid if it’s registered to base their compliance propensities on.

Plus, it’s usually only after lengthy legal action that a formal decision about the legality of a strata rule, by-law, or covenant is made and there are not many of those cases.

To illustrate my point: many years ago, a strata manager asked me to prepare a by-law that was clearly invalid and unenforceable.  I told him about the invalidity and explained why.  He politely told me that he understood all that, but still wanted the by-law prepared and registered, plus he also told me that he was happy for me to provide separate legal advice to him telling him it was invalid.

As he sagely said, once registered most strata owners will believe it’s valid and I can tell them to comply with it.

This type of thinking and the ‘compliance’ effect encourages most strata stakeholders to make more strata by-laws and rules with less concern about their validity relying on their existence for impact and effectiveness.

Some typical [and not so typical] examples

There are many custom rules, by-laws and covenants in Australian strata buildings and more and more are being created every day.

So, here’s a selection of the kinds of customisations that I’ve seen here and overseas with strata rules, by-laws, and covenants. I’ve described them in general terms since otherwise there’d be pages and pages of them.

• Controls on things done in apartments and common areas like smoking, barbecuing, playing the piano or drumming; trying to limit anti-social or disturbing behaviours.
• Limiting access to parts of the common property like plant rooms, equipment rooms, unfenced rooftops and terraces, etc: trying to reduce potential interference with building equipment and prevent injuries.
• Controls on the use of common facilities [like gyms, pools, spas, libraries, gardens, etc] covering hours of use, access, person limits, what can [and can’t] be taken in, noise, dress, etc:  trying to control, reduce and/or appropriately share those resources.
• Specifying precise details [style, colour, make, etc] for things in the apartments that can be seen from the outside like blinds, shutters, fasteners, fly screens, security doors, etc; trying to preserve a uniform building appearance.
• Making strata owners pay for things done by their tenants or guests when the strata building can’t find them or get them to pay; trying to delegate financial responsibility to someone that can’t disappear and has other financial obligations to the strata building.
• Giving general and standard permission for popular strata owner works or alterations [like installing air conditioners] on conditions about the style, location and installation protocols; trying to streamline approvals whilst restricting the variety of those things.  Sometimes, these also try to bypass stricter or softer strata laws that control works.
• Prohibiting popular strata owner works or alterations [like installing hard floors]; trying to prevent those things and to bypass softer strata laws that control works.
• Deeming payments due under rules, by-laws and covenants to be treated like strata levies: trying to include them on levy notices, charge interest on them and recover them in the same ways when unpaid levies.
• Controlling pets in more or less strict ways like types, sizes, weights, numbers, behaviours, etc; trying to restrict or prevent some [or any] pets in strata buildings and to bypass strata laws about pets.
• Mandating access arrangements in relation to things like security or access devices, car parking, lift use, moving in or out, etc; trying to control and manage use of common areas.

I could go on and on with more examples, but my 3 all-time favourite strata rules, by-laws and covenants are.

1. A Singaporean strata by-law in the statutory model set that limited the hours during which strata residents could pound chillies in their kitchens.
2. A South African strata by-law that specifically prohibited keeping wild game/safari animals in the apartments and common areas.
3. A one-off New South Wales strata by-law that required strata residents to urinate on the side [and not the middle] of the toilet bowl after 10PM to limit disturbing splashing noises.

As you can see strata rules, by-laws, and covenants are only limited by your imagination, creativity and writing skills.