Strata Q&A: Ask the Expert – Can an unfinancial owner be denied access to common property facilities?

If an owner is unfinancial, can they be denied access to common property facilities?

If you live in a strata scheme, you know all too well how hard it can be to find the right answers to strata-related issues like these. There are so many rules and regulations to wade through, and legislation is often updated and amended. This can make it difficult to understand which rules apply and how they apply to your specific situation.

Tim Sara, our Associate Director of Client Management, is no stranger to these types of enquiries. With over a decade of experience delivering excellent strata management services and a reputation across the industry as a thought leader and an expert in all things strata, he’s able to provide clarity for those struggling with tough questions. Here’s what he had to say in response to a question regarding the use of common property facilities by an unfinancial owner in a recent Q&A with LookUpStrata.

In New South Wales, the Strata Schemes Management Act 2015 (SSMA) governs the rights and responsibilities of lot owners in a strata scheme, including the implications of being unfinancial.

Under Schedule 1, Clause 23(8) of the SSMA, an owner who has not paid their levies (including interest and recovery costs) is considered an “unfinancial owner.” This status restricts their participation in certain strata matters, such as:

• Voting at general meetings (except on motions requiring a unanimous resolution) (Schedule 1, Clause 23(8) SSMA).
• Being elected to the strata committee (Section 32(2) SSMA).

However, the Act does not explicitly prevent unfinancial owners from using common property facilities such as the swimming pool, gym, or barbecue areas. Restrictions on the use of such amenities must be set out in the by-laws of the strata scheme.

Can an unfinancial owner be denied access to the swimming pool?

If the strata scheme’s registered by-laws include provisions restricting access to common facilities for lot owners with unpaid levies, then enforcement may be possible. However, owners corporations should seek legal advice to determine whether such a by-law could be deemed harsh, unconscionable, or oppressive under SSMA Section 150, which may render it invalid.

It is also important to note that legal interpretations evolve over time. Even if legal advice was obtained when the by-law was first drafted, it may be prudent for the owners corporation to seek updated legal advice, as changes in legislation and case law may have altered the enforceability of such provisions. Legal advice given several years ago may no longer be relevant under current strata law.

What if the owner has been served by the courts?

If the owner has been served with court orders for debt recovery, this does not automatically strip them of access to common property facilities. The owners corporation would first need to have a valid, registered by-law restricting access in order to enforce such a rule. Even then, enforcement may require an NCAT order under SSMA Section 147 to ensure compliance, particularly if the owner challenges the restriction.

Key Considerations for the Owners Corporation

1. Check the by-laws – If the strata scheme does not have a by-law restricting access for unfinancial owners, the owners corporation cannot legally enforce such a restriction.
2. Assess the enforceability of the by-law – Even if a by-law exists, it may be challenged under SSMA Section 150 if it is deemed harsh, unconscionable, or oppressive.
3. Seek updated legal advice – Even if legal advice was obtained when the by-law was first introduced, it is advisable to reassess its validity given possible changes in law and case law developments. What was enforceable a few years ago may not be today.
4. Apply to NCAT if necessary – If an enforceable by-law exists, the owners corporation can apply to NCAT for an order ensuring compliance.

In Conclusion

Owners corporations with by-laws restricting access to facilities for unfinancial owners should not assume their enforceability without legal review. As strata law evolves, seeking updated legal advice is essential to ensure compliance with the current legislative and case law landscape. A by-law that once seemed enforceable could now be deemed harsh, unconscionable, or oppressive under SSMA Section 150, leaving the owners corporation unable to impose the intended restriction.

Importantly, without a valid, registered by-law, none of these restrictions are enforceable at all. There is no automatic right under strata law to deny an unfinancial owner access to common property facilities. If an owners corporation wants to impose such restrictions, it must first ensure a properly drafted by-law is in place—and even then, its validity may be subject to legal challenge.

Our Strata Management Team prides themselves on their attention to detail and knowledge of strata legislation, which allows them to achieve the best possible outcomes for their clients. They are committed to remaining at the forefront of the industry, building their expertise, and finding new ways to add value to the communities they manage.

If you want your strata scheme managed by an effective and responsive team that specialises in creating thriving communities, contact us today for your FREE quote.