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Flat Chat

Balcony battles

It's tough when someone in your building doesn't want to fix, maintain or improve anything.

But when that person is the only other owner in a two-terrace strata, and they are prepared to go to the Consumer Trader and Tenancy Tribunal 10 times - losing every time - and use five separate solicitors who failed in a total of 100 challenges at council, life becomes a war of attrition.

That was what happened to a couple of Flatchatters who just wanted to fix up common property - including fire safety issues and asbestos removal - as well as undertake improvements to their own terrace including the addition of a small balcony.

And on that issue (raised here a couple of weeks ago), they offer some sound advice.

First of all, be meticulous in notifying, holding and documenting all meetings related to the works. Get proper plans drawn up by an architect and get expert reports for engineering before the first meeting. Pay a construction bond to the owners corporation for the duration of the works. Get a registered valuer to put a "value" on the airspace and pay "compensation" as determined by them.

To calculate the compensation paid to the Owners Cproration for the use of common property, the current and final value must be determined for each lot with and without the balconies. The cost of works (and standard legal and finance costs) can be subtracted from the gain in value. The difference must then be paid to the OC.
For example if a balcony adds $100,000 to the value of an apartment, but only costs $50,000 to build plus say $10,000 in miscellaneous other costs, then the "compensation" that must be paid is then $40,000. This precedent was set in the Supreme Court of NSW and has been upheld many times since.
If the cost is low and the benefit is high, the 'compensation' may be hefty. Apparently there was a case of a window that cost only $10,000 to build but added more than $100,000 in value, so the compensation was close to $90,000. Ninety grand for a window - that's what you call a transparent anomaly.

You can read the full text of this extensive and detailed case by clicking on Balcony Battle Background in the "Recent Columns" list.

First published SMH April 2007