NSW: Q&A Renting or Selling a Parking Space in Strata Apartments

Lot owners from NSW have questions about swapping parking spaces or putting a parking space up for sale in strata apartments.

Table of Contents:

• QUESTION: Our building manager has increased our parking space rent substantial with little notice. Can they do this?
• QUESTION: I am a lot owner living in my apartment in Sydney. The lot includes a lock-up garage space however I do not own a car. Can the strata Owners Corporation stop me from renting out this car space?
• QUESTION: To assist residents with car parking issues in our strata we would like to rent a portion of our visitor car park bays to residents. Is this legal?
• QUESTION: I want to swap my parking space for another. What is the approval process and how long should it take?
• QUESTION: A lot owner wishes to put their parking space up for sale. I’m interested in purchasing. What are the procedure, pitfalls, legalities involved in starting this sale process? Is it possible?

Question: Our building manager has increased our parking space rent substantial with little notice. Can they do this?

My building manager today has emailed everyone renting a car park space stating that rent will increase by $1 per day from the beginning of the month.

Can they legally do this under strata laws, and, how much notice should be given?

I currently already pay $3 per day for my parking space in Waterloo, Sydney.

Answer: To determine whether the announcement from the building manager is legal, one must look at the by-laws and terms of the lease.

Section 33 of the Strata Schemes Development Act allows an owners corporation can lease part of its common property by passing a special resolution.

When leasing common property, an owners corporation should always have a proper lease agreement in place (much like one would for leasing an apartment). The lease agreement stipulates the terms such as the rental amount and term, how the lease can be terminated, how rental increases work and so on.

Alternatively, the owners corporation may have a special by-law in place which stipulates the terms of the lease and the motion to approve the lease may refer to the terms of the special by-law as being the terms of the lease agreement.

If there is no lease, these terms are unknown (unless they were specified in the motion to enter the lease) and very difficult for either party to try and unravel. Legal advice would have to be sought as to what rights exist without a proper lease agreement.

To determine whether the announcement from the building manager is legal, one must look at the by-laws and terms of the lease – particularly looking at the terms of rental increases (e.g. how much notice must be given, how frequently rent can be increased and so on).

Tim Sara
Strata Choice
E: [email protected]
P: 1300 322 213

This post appears in the August 2022 edition of The NSW Strata Magazine.

Question: I am a lot owner living in my apartment in Sydney. The lot includes a lock-up garage space however I do not own a car. Can the strata Owners Corporation stop me from renting out this car space?

Answer: An owners corporation cannot prevent a lot owner renting out a car space that is on their lot title.

An owners corporation cannot prevent a lot owner renting out a car space that is on their lot title.

This position arises because an owners corporation cannot have a by-law that restricts a lot owner renting out their lot including part of the lot such as the car space. This prohibition is found in section 139(2) of the Strata Schemes Management Act 2015 which provides:

Restrictions on by-laws

No by-law is capable of operating to prohibit or restrict the devolution of a lot or a transfer, lease, mortgage or other dealing relating to a lot.

But this is not the end of the story.

There may be a development approval condition applying to a strata building that prohibits a lot car space being rented out. If so, then it is important to understand that it is the local council that imposes this prohibition and not the owners corporation. The condition must be complied with by any lot owner or occupant. This position arises under sections 9.45 and 9.46 of the Environmental Planning and Assessment Act 1979. Under those sections, where a development approval condition is breached, any person including an owners corporation may commence a case in the Land & Environment Court to seek an order in the nature of an injunction to restrain the breach.

In addition, if the owners corporation has adopted model by-laws (or some variant of them), then it is likely to have model by-law 18(1) under schedule 3 of the Strata Schemes Management Regulation 2016. By-law 18(1) provides:

18 Compliance with planning and other requirements

The owner or occupier of a lot must ensure that the lot is not used for any purpose that is prohibited by law.

This by-law would permit an owners corporation to enforce a development approval condition as if it were a by-law such as through issuing a notice to comply with a by-law, applying for Fair Trading mediation, and applying to NCAT to restrain the breach.

Carlo Fini
Lawyer (NSW)

This post appears in the March 2022 edition of The NSW Strata Magazine.

Question: To assist residents with car parking issues in our strata we would like to rent a portion of our visitor car park bays to residents. Is this legal?

Our strata consists of 175 townhouses with one garage each. Some of the townhouses have an additional driveway in front of the garage for one additional car to be parked on the driveway. The remaining townhouses do not have a driveway and are entitled to park one car only in their garage.

Our strata complex has 35 common property visitor parking bays. In order to assist residents with car parking issues in our strata we would like to provide 15 visitor car park bays for residents to rent. We would give first preference to townhouses with no driveway to rent on a daily basis.

Can the Owners Corporation do this legally. Or is renting of common property visitor car parks to not allowed in NSW? Of course all monies collected would go to the sinking fund of our strata.

Answer: Visitor parking spaces have to be provided for bona fide visitors and cannot be used or leased to owners or occupiers.

It is likely that the development consent conditions imposed by Council when the building was constructed require a certain number of visitor parking spaces. Visitor parking spaces have to be provided for bona fide visitors and cannot be used or leased to owners or occupiers.

If the owners corporation wish to lease visitor parking spaces to owners or occupiers, the owners corporation will need to approach Council and seek to vary the development consent conditions.

If the parking spaces are not visitor parking spaces or the owners corporation is successful in varying the consent conditions, the owners corporation can then lease the spaces on a daily basis. An agreement and/or by-law is likely required as the owners corporation requires a special resolution under section 112 of the Strata Schemes Management Act 2015 to grant a licence to an owner or occupier to use common property.

Matthew Jenkins
Bannermans Lawyers
E: [email protected]
P: 02 9929 0226

This post appears in Strata News #482.

Question: I want to swap my parking space for another. What is the approval process and how long should it take?

I want to change my parking space for another one nearby.

After getting Owners Corporation approval what do I have to do? Could you also give me an opinion of how much it costs?

Does it matter if one of these spaces is a visitors car park? If the “swap” goes ahead my space would become the new visitors parking area.

Are you able to estimate how long the whole process will take after the Owners Corporation gives approval?

Can the Owners Corporation approve this or does it need a special general meeting to approve it?

Answer: You may be up for thousands of dollars in legal, consultant, strata, planning and registration fees.

In NSW, this can be achieved through one of two processes, one more expensive than the other, but in either case you may be up for thousands of dollars in legal, consultant, strata, planning and registration fees so it is difficult to say at the outset how much either process would cost.

For the purpose of this answer, I assume your current car space is on your lot title and the visitor’s car space is common property.

Regardless of which process you take, you should have a preliminary conversation with your local council to see whether you need planning approval and if so what you can do to increase the chance of getting that approval. This may be complicated if the original planning approval for the building requires the visitor’s car space to be in a particular location. You will need planning approval for the second option discussed below.

The first option is a common property rights by-law that would give you exclusive use of the visitor’s car space and the owners corporation a license or lease over your car space. If the visitor’s car space is superior to yours and has a higher value than yours, then the owners corporation would likely require you to pay it the difference as the purchase price for the exclusive use rights. You would need a lawyer to draw up the by-law and license/lease document, and you would need both to be passed by special resolution of a general meeting and then registered. So you would have to pay the costs of that: a lawyer, the strata management fee for the general meeting and the costs associated with getting the by-law and lease registered. If the owners corporation decided to have its own lawyer check the paper work, then you would be expected to pay its lawyer’s costs as well. If planning approval is required, then you would have to pay all the costs associated with getting that approval.

It is important to note that under a common property rights by-law, you would not become the owner of the visitor’s car space; all you acquire is the right to use it to the exclusion of others (this is more in the nature of a licence or a lease rather than outright ownership). There is also the slight possibility that NCAT could revoke the by-law.

The costs of this first option (common property rights by-law) would probably be a few thousand dollars.

The second option is a strata plan of subdivision. This would make the visitor’s car space part of your lot, that is you would own it, and would make your current car space common property, that is owned by the owners corporation. Because this creates property rights, NCAT cannot undo it so it is more secure than a common property rights by-law. However, this option is a lot more expensive and will take a lot longer than it takes to pass and register a common property rights by-law. It could take at least one year to complete.

Under a strata plan of subdivision, you are effectively acting like a property developer and this explains the complexity and expense of the second option. On the flip side, your lot may be more valuable after a strata plan of subdivision than it would be if you simply had a common property rights by-law in your favour.

Under a strata plan of subdivision, you will need to pay a surveyor to draw up a new strata plan showing the visitor’s car space as part of your lot and your current car space as common property. You will need to pay a valuer to work out the value of what you are acquiring and what the owners corporation is acquiring. A transfer of each car space would need to be registered and there will be stamp duty payable on that. You may be expected to re-imburse the owners corporation for any stamp duty it has to pay. The valuer will also need to work out new unit entitlements in the strata scheme following the strata plan of subdivision. Once all this is done, it needs to be approved by special resolution of a general meeting and you would have to pay the strata management fees for that meeting, and then all the costs associated with getting the strata plan of subdivision and the transfers of the car spaces registered. If there is a mortgage on your lot, you will need your bank’s permission to do this and you would have to pay the bank’s fees for giving that permission.

In the second option, you would enter into a conditional contract for the sale of land with the owners corporation to purchase the car space and another to sell your current car space. Each would cover the above steps and would be conditional because you need planning approval and the approval of other people you do not control (eg bank’s permission) and if all those approvals cannot be obtained, then the contracts can be cancelled.
You can easily see that the costs involved in the second option could be several tens of thousands of dollars so before embarking on this option, you would need to do a cost/benefit analysis (just like a developer would do).

In either option, because rights in land are being created and sold, there are likely to be both capital gains tax and income tax implications, for both you and the owners corporation. Therefore, both should get advice from a tax consultant and you may be expected to pay for the owners corporation to get its own tax advice.

Carlo Fini
Lawyer (NSW)

This post appears in Strata News #481.

Question: A lot owner wishes to put their parking space up for sale. I’m interested in purchasing. What are the procedure, pitfalls, legalities involved in starting this sale process? Is it possible?

I am an owner with a two bedroom unit and one car spot. A neighbouring lot owner wishes to sell one of their parking spots to me.

What are the procedure, pitfalls, legalities involved in starting this sale? Is it possible?

Answer: This is a very technical legal process and you would need to check the certificate of title for any restrictions on selling car spaces.

Yes this is possible and not unusual. This is a very technical legal process and you would need to check the certificate of title for any restrictions on selling car spaces. We understand in some cases that there may be a restriction that the car space may not be sold except to an owner within the building.

Usually the sale is effected by way of a strata plan of subdivision. The strata plan is re-drawn by a surveyor to show you both own one car space each. A valuer is required to value the sale price. You will also need to pay stamp duty on the sale price and also the cost to re-allocate unit entitlements and you will likely require local council consent and various special resolutions need to be passed by the owners corporation.

Should you need a strata lawyer for further assistance, please let us know.

Leanne Habib
Premium Strata
E: [email protected]
P: 02 9281 6440

This post appears in Strata News #448.

Please note: This is not legal advice. You should seek legal advice particular to your situation.

Have a question about putting an apartment parking space up for sale or something to add to the article? Leave a comment below.

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Read Next:

• NSW: Q&A Stopping the Abuse of Visitor Parking Spaces
• NSW: Can a Parking Offender’s Car be Towed from Strata?
• NSW: Q&A Do We Need a ByLaw For That?
• NSW Case Study: Is your illegal parking notice just an empty threat?

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