Installation and ownership of sustainability infrastructure
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The Unit Titles (Management) Act (Act) includes provisions to make it easier for OC's to install and operate sustainability infrastructure on common property. The most commonly installed infrastructure is solar panels for heating water or generating electricity.
S23 of the UT(M)A provides the primer on how to install sustainability infrastructure.
23 Installation of sustainability and utility infrastructure on common property
(1) An owners corporation for a units plan may, if authorised by an ordinary resolution—
(a) approve the installation of sustainability or utility infrastructure on the common property; and
(b) approve the financing of the installation of the sustainability or utility infrastructure; and
(c) grant an easement or any other right over any part of the common property for the purpose of the installation, operation or maintenance of the sustainability or utility infrastructure.
(2) The owners corporation may only approve the installation, and financing, of sustainability or utility infrastructure under this section if satisfied, after considering the following, the long-term benefit of the proposed infrastructure is greater than the cost of installing and maintaining the infrastructure:
(a) a site plan of the proposed infrastructure;
(b) a maintenance plan for the proposed infrastructure;
(c) if the proposed infrastructure is to be financed by a third party—the terms of the financing arrangements;
(d) the direct and indirect costs of the proposed infrastructure;
(e) the long-term environmental sustainability benefits of the proposed infrastructure;
(f) any other matter prescribed by regulation.
(3) The owners corporation may, by ordinary resolution, decide to hold sustainability infrastructure (including existing sustainability infrastructure) installed on common property and any income earned from the operation of the infrastructure as trustee for—
(a) if all the units are owned by the same person—the owner; or
(b) in any other case—the unit owners as tenants in common in shares proportional to their unit entitlement.
Example—income
income from an electricity feed-in tariff scheme
Note If the owners corporation does not decide to hold sustainability infrastructure as trustee for the unit owners, it holds the infrastructure as agent for the owners (see s 20 (1)).
(4) For section 71, an owners corporation is not carrying on a business if it receives income from the operation of the sustainability infrastructure and the income is used only to pay—
(a) costs, including financing costs, in relation to the installation and maintenance of the infrastructure; or
(b) costs of utilities used by, or provided to, the owners corporation.
The definition of utilities in the Act is broad and apparently gives the OC significant capacity to generate and sell excess electricity.
The Dictionary definition in the Unit Titles Act says
utility services includes:
(a) the collection and passage of stormwater; and
(b) the supply of water (for drinking or any other use); and
(c) sewerage and drainage services; and
(d) garbage collection services; and
(e) gas, electricity and air services (including airconditioning and heating); and
(f) communication services (including telephone, radio, television and internet).
The introduction to Subsection (2) of S23 seems to contemplate that the OC is bearing the cost of the installation and making a decision on the long term benefit of the installation. Then Ss23(2)(c) says the OC does not necessarily need to finance the installation itself but the financing arrangements need to be entirely transparent so they can be considered by the owners. As the owners corporation is able to both borrow for the purposes of managing and maintaining the common property and able to lease machinery for the purposes of managing and maintaining the common property, it can lawfully contemplate a variety of methods for financing sustainability infrastructure, so long as the OC is satisfied of “the long-term benefit of the proposed infrastructure is greater than the cost of installing and maintaining the infrastructure.”
Subsection (3) deals with the basis on which the OC owns the sustainability infrastructure and therefore the nature of any potential income. If the OC owns as trustee any tax is payable by the OC. If it owns as agent, any tax liability falls to the owners in line with unit entitlements.
Subsection (4) specifically exempts any income earned from the prohibition against carrying on a business in S71 and requires the income that the OC can earn is used to cover the costs of the sustainability infrastructure and the costs of other utilities.
It should be noted that the installation of electric vehicle charging facilities are not specifically mentioned as sustainability infrastructure but are required parts of a Maintenance Plan under S4A of the Unit Titles (Management) Regulation. It could be argued that electric vehicle charging does not enhance the sustainability of the OC but rather reduces the carbon footprint of residents using electric vehicles. ACAT may be called upon to resolve this issue.
So once the OC is appraised of all the costs and satisfied that the long term benefits of sustainability infrastructure outweighs the costs it can decide by ordinary resolution to borrow to purchase and install it and, it appears, use the income from selling the excess power to repay the loan and defray its various utility costs.
So installation by the OC on common land, usually apartment building roofs, seems to be a relatively straightforward process. It should be noted that no matter the technical difficulties of any particular site, the provisions of the Unit Titles (Management) Act or the Unit Titles Act apply and must be adhered to. However, as soon as we move away from that scenario difficulties emerge.
Leasing common land to a third party to install sustainability infrastructure
Several OC's in Class A apartment buildings are considering arrangements where a solar electricity company installs and owns PV panels on the roof, supplies some or all of the OC’s common property power usage at some sort of discount price and sells power on the market. The proposal includes the belief that S 23 of the Act overrides all other provisions of the UTMA and only requires an ordinary (simple majority) resolution to approve such an arrangement.
This does not appear to be the case. It would appear that OC's cannot enter such a contract as it may amount to a sublease of common property, which is banned by the Act.
20 Dealings with common property
(1) An owners corporation for a units plan may, if authorised by a special resolution, on conditions and for purposes stated in the resolution—
(a) grant or vary an easement over any part of the common property; or
(b) take or vary an easement granted for the benefit of the common property; or
(c) release an easement granted for the benefit of the common property.
Note The owners corporation may, by ordinary resolution, grant an easement or any other right over the common property for the purpose of the installation, operation or maintenance of sustainability or utility infrastructure (see s 23 (1) (c)).
(2) The owners corporation may not transfer, sublet or mortgage, at law or in equity, its interest in the common property.
Subleases are not actually defined in ACT law, unfortunately. However the general definition is that it is an agreement between the party who already holds a lease to a property and another party, who wants to use part or all of that property. The lessee assigns or gives certain rights to the sublessee under an agreement and the sublessee pays a rent or fee to the lessee to exercise his rights under the agreement.
If an OC makes an agreement with a solar power company for the company to rent all or part of the roof to install PV panels and generate power and pay ‘a rent’, the OC would appear to be creating a sublease, even though the sublease is unlikely to be registered. The OC is not foregoing any of its obligations to maintain or insure the roof, but it cannot use it for OC purposes because it has a formal arrangement with the solar company for the solar company to have exclusive use of that part of the roof. It cannot allow owners to install antennae and cannot install its own solar system on that part of the roof.
It appears the OC does not have legal capacity to enter such a contract which involves a sublease and the contract would be void.
S23 1 (c) does enable the OC to grant “an easement or any other right over any part of the common property for the purpose of the installation, operation or maintenance of the sustainability or utility infrastructure.” An easement is a right of access; for example, utility conduits are located in easements across property that is not owned by utility companies. The easement would give an installer/repairer access to the roof and a right to bring suitable equipment on site to achieve that access. But it could not be the basis of a contract that would allow the solar company exclusive occupation of that part of the roof for an extended term of years. And it is unlikely that any owner of the sustainability infrastructure would operate with such an insecure right to place and operate their equipment.
On balance S23 does not seem to contemplate the OC having no ownership of the infrastructure. This issue needs to be decided by ACAT.
An OC cannot make rules prohibiting the installation of sustainability infrastructure
The UT(M)A is quite specific on this point.
108 Owners corporation may make alternative rules
(1) An owners corporation may, by special resolution, make alternative rules amending its rules.
(3) An alternative rule is not valid to the extent that it results in the rules—
(a) being inconsistent with this Act or another territory law; or
(f) prohibiting or restricting the installation, operation or maintenance of sustainability or utility infrastructure in or on the common property or a unit; or amendment, of rules, includes variation, rescission, substitution or addition.
An individual owner seeking approval to install sustainability infrastructure on common property
An individual owners could seek to install solar hot water or photovoltaic panels on the common property roof of a Class A.
S 23 would appear to be of little if any benefit to that owner. Instead Default rule 4 and S112A dealing with special privileges lasting more than 3 months would come into effect, both of which require special resolutions.
1.4 Erections and alterations
(1) A unit owner may erect or alter any structure in or on the unit or the common property only—
(a) in accordance with the express permission of the owners corporation by special resolution; and
(b) in accordance with the requirements of any applicable territory law (for example, a law requiring development approval to be obtained for the erection or alteration).
(2) Permission may be given subject to conditions stated in the resolution.
(3) However, if the structure is sustainability infrastructure, the owners corporation’s permission must not be unreasonably withheld.
Examples—permission not unreasonably withheld
safety considerations
structural considerations
Example—permission unreasonably withheld
external appearance of a unit or the units plan.
The owner is seeking to gain access to a section of the common property to the exclusion of other owners, so a grant of a special privilege rule would appear to be needed. And presumably easements to allow cabling and connections.
112A Grant of special privileges in relation to common property
(1) The owners corporation may, by special resolution, make a rule granting a special privilege for a period of 3 months or more (a special privilege rule) to—
(a) a unit owner; or
(b) someone else with an interest in a unit in the units plan.
(2) A special privilege rule must—
(a) only be made with the grantee’s written consent; and
(b) must include a provision that states the maintenance requirement is the responsibility of 1 of the following:
(i) the owners corporation;
(ii) the grantee.
(3) A special privilege rule that states that the maintenance requirement is the responsibility of the grantee—
(a) must state the type and frequency of maintenance the grantee must undertake; and
(b) relieves the owners corporation of its obligations under section 24 (Maintenance obligations) to the extent the rule places this obligation on the grantee.
(4) A special privilege rule may be made to have effect for a specific period.
(5) A grantee must not unreasonably withhold consent mentioned in subsection (2).
(6) A special privilege rule that is registered is taken to have been validly made after a period of 2 years from the day the rule was made, or purportedly made, despite any defect or irregularity in relation to making the rule.
Note An amendment to the rules of the body corporate must be registered with the registrar-general under the Land Titles (Unit Titles) Act 1970, s 27.
The individual owner would presumably take all benefit of any potential on-selling of power.
An individual owner seeking approval to install sustainability infrastructure on unit title property
In the case of a Class B dwelling, the owner would be most likely seeking to use their own roof space and so would not need a special privilege, but would need a special resolution approval to alter or erect under Default Rule 4.
1.4 Erections and alterations
(1) A unit owner may erect or alter any structure in or on the unit or the common property only—}
(a) in accordance with the express permission of the owners corporation by special resolution; and
(b) in accordance with the requirements of any applicable territory law (for example, a law requiring development approval to be obtained for the erection or alteration).
(2) Permission may be given subject to conditions stated in the resolution.
(3) However, if the structure is sustainability infrastructure, the owners corporation’s permission must not be unreasonably withheld.
Examples—permission not unreasonably withheld
· safety considerations
· structural considerations
Example—permission unreasonably withheld
external appearance of a unit or the units plan.
Should permission be unreasonably withheld, the owner has recourse to ACAT.
Many OC's have amended Default rule 4 to vest the decision in the Executive Committee (EC) of the day with or without guidance on how decisions are to be made. Some OCs have included in their Rule an automatic grant approval for certain specified alterations.
Again if permission is unreasonably withheld the owner has recourse to ACAT.
If the owner wanted to use part of the common property outside their title to install equipment a Special Privilege would also be needed. If the Special Privilege was rejected on unreasonable grounds the owner would have recourse to ACAT.