Strata By-Law Limitations & Owner Rights NSW

23 March 2025 in Property Dispute Lawyers | 5 min read | skip to FAQs

This article discusses the limitations on a Body Corporate’s ability to pass resolutions and by-laws. Body Corporates are primarily governed through the Strata Schemes Management Act 2015 (NSW) (the Act). This article will use body corporate as the synonym for terms such as owner corporations and strata schemes. For more information about Body Corporates and their obligations, please see our related article, Body Corporate Property Obligations.

General Restrictions on by-laws

Section 136 (2) of the Act invalidates by-laws that are inconsistent with the Act itself. Therefore, any by-law that seeks to prohibit owners’ conduct that is allowed under the Act will be unenforceable.

Section 139 (1) of the Act holds that “a by-law must not be harsh, unconscionable, or oppressive”. What constitutes these qualities is not explicitly laid out in the legislation, however, case law provides useful precedents.

When is a by-law harsh, unconscionable, or oppressive?

In Gurram v Owners Corporation SP 36589 [2018] NSWCATCD 39, it was determined that a by-law that prohibited owners from installing hard floors to alleviate their child’s asthma was found to be “harsh, unconscionable, and oppressive”. The by-law appearing to contradict section 110 of the Act itself, which permits minor renovations such as flooring works, and so was a breach of section 136 (2) independent of the considerations of section 139 (1).

However, the Tribunal held that the requirements of section 110 regarding owners to give the Corporation written notice and repair damages to common property arising from the renovations were reasonable in protecting the Corporation’s interests in preventing damage to common property and protecting the interests of other owners. Imposing a blanket prohibition when the Corporation can rely upon a preexisting approval scheme under section 110 of the Act to properly consider renovation requests was determined to be harsh, unconscionable, and oppressive.

Short Term Rentals

It is important to note that section 139 (2) of the Act prohibits by-laws that seek to prevent the dealing of a lot through dealings such as a lease. However, the proliferation of AirBnB and other short-term rental services has implications for body corporates and their ability to regulate the operation of such services in their properties, as the interests of an owner-landlord need to be balanced against the wider interests of other owners and the body corporate.

What constitutes short-term rental accommodation is defined under the Fair Trading Act 1987 (NSW) in section 54A. The time period for rental accommodation to be considered short-term is no more than 3 months.

Section 137A (1) of the Act permits body corporates to make by-laws prohibiting lots being used for short-term rental accommodation if the owner operating as the landlord does not use the lot as their primary residence.

However, 137A (2) makes any by-laws that seek to enforce this prohibition unenforceable if the lot in question is the owner’s primary residence.

Estens v Owners Corporation SP 11825 [2017] NSWCATCD 63

While this case predates the inclusion of section 137A in the Act, it still sets a useful precedent regarding other elements inherent in short-term rental accommodation. Crucially, the Tribunal determined that an AirBnB tenancy (and those of similar platforms) was a tenancy with a specific commencement and end date. Therefore, AirBnB tenants would enjoy the same rights afforded to tenants in other properties, under the interpretation of section 139 (2) of the Act.

While the Strata Manager raised concerns about the greater wear and tear arising from AirBnB tenants moving luggage before and after their stay, as well as greater issues with security and noise, neither the conduct of Estens as a landlord nor that of her tenants had caused these potential concerns to be raised as actual problems.

Nuisance

However, the potential concerns that ultimately did not manifest in the Estens case do still have relevance to the operation of the Act. Under section 153 (1), those who own or occupy a lot in a strata plan cannot use or permit the lot to be used in a way that creates nuisance for the occupiers of other lots.

In The Owners Strata Plan No 2245 v Veney [2020] NSWSC 134 what constituted nuisance under the Act was determined through the common law understanding of an actionable nuisance – whether the use of the lot, unreasonably interfered with the use and enjoyment of another lot by another owner or occupier.

Due to the obligation imposed on users of a lot under section 153 (1), it follows that body corporates can create by-laws to prohibit conduct that would cause nuisance, so long as these by-laws are not inconsistent with other sections of the Act.

Pets

One of the most noteworthy amendments to the Act has been section 137B, which operates on the default assumption that by-laws prohibiting the presence of animals in lots are unenforceable. Moreover, under section 105A, body corporates cannot impose bonds or fees for keeping animals on any lots or require that pet insurance be obtained.

Section 137B was influenced by cases such as Yardy v Owners Corporation SP 57237 [2018] NSWCATCD 19, which relied on section 139 (1) to prevent the operation of by-laws prohibiting animals in lots. Among the considerations the Tribunal made in that case was the benefits of pet ownership and its widespread acceptance in contemporary Australian society.

Of course, body corporates can impose reasonable restrictions and by-laws regarding pets, not least if the regulations seek to give effect to section 153 (1). Conditions such as keeping an animal within any lot, supervising it on common property, maintaining the pet’s cleanliness and health, can all be enforced through by-laws, as demonstrated in the post section 137B case of Bruce v The Owners – Strata Plan No. 98803 [2022] NSWCATCD 83.

How can BSM Sydney Lawyers assist you?

Navigating restrictions and by-laws imposed by body corporates can be difficult, and if trying to speak with the committee running the body corporate proves futile, it is recommended to seek legal advice. The experienced and knowledgeable property dispute lawyers at Brander Smith McKnight law firm Sydney are adept at achieving positive results both in and out of Court and NCAT. Our property lawyers have extensive experience in all disputes with body corporates. The BSM property dispute lawyers Sydney offer a free 20 minute, no obligation consultation.

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