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My flat is at the top of a listed building, in Scotland. I have been paying less to our communal buildings insurance, as verified by our factor. We now factor the building ourselves and the other flat owners think I should pay the same insurance. The flats on the ground floor are huge and have been valued at twice the amount as mine. They also have many embelishments, such as ceiling roses and similar. The rooms are significantly larger, even though they have the same number as me. The flat opposite me also pays less.

2 Answers 2

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Units in a strata title have a unit entitlement set when the plan is first registered - this establishes not only the monetary contributions but also the voting power of each unit owner. Since 2016, this is based solely on the value (as assessed by a qualified valuer) of each unit at the time.

An application may be made to the NSW Civil and Administrative Tribunal (NCAT) for reallocation of unit entitlements if:

  1. they were unreasonable when the plan was lodged,
  2. they are unreasonable following a (re)development scheme,
  3. they became unreasonable following a change to a permitted land use (e.g. a rezoning).
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There is no single preferred system for allocating common insurance costs among the proprietors. Typically encountered options include an equal rate per unit; making it proportional to floor area; making it proportional to the rateable value (when that concept applied to dwellings); or proportional to the feu duty (no longer actually payable to a feudal superior, but still theoretically available for the calculation). The various "proportional" options probably work out similarly in the end, but floor area has the advantage that it is easy to calculate without reference to external and outmoded documents.

But any particular tenement could have its own unique arrangement. Everything goes back to what is actually written in the title conditions for the building and individual flats. You should have a copy of yours from when you acquired the flat, or it can be obtained from the Registers. If the deed of conditions is silent on some point, then there are statutory rules which kick in instead.

For example, if the deed of conditions gives a set rule (e.g. you contribute a 1/8 share, you contribute in proportion to what's listed on the Valuation Roll as of 1989, etc.) then the other owners could not increase your contribution unless the condition itself is varied. That could happen by agreement - presumably you do not agree - or else as a result of an application to the Lands Tribunal. If that took place then the other proprietors would have to argue that the current regime was unfair. There's no specific threshold for that but if the amounts are wildly disproportionate then a variation is more likely, whereas if they do roughly correspond to the size of the flats then it is less likely. For example, where ground-floor flats were historically used as shops, their rateable value might be much larger than upper-floor flats, even if they are not shops any more. In general, if there has been no change in circumstances of that kind, and the present proprietors knew the rules when they bought their flats, then it's hard for them to convince the tribunal that anything should be shifted.

Alternatively, the rule might be that costs are allocated by the factor at their discretion, often explicitly also stated as "on an equitable basis". This is also the resulting situation where there is no rule in place from the title condition, as there is then a statutory scheme for the proprietors to divide the cost of insurance in an "equitable" way. An equal allocation can be equitable but it depends on the circumstances. If some flats have a 2x valuation and are much larger, then equal is probably not equitable: for certain other costs, a 1.5x disparity in size between the largest and smallest flats is enough to trigger a default liability rule on the basis of floor area, as opposed to an equal share. While there is no such threshold in the case of common insurance, it is indicative of the equitable standard.

But what really matters in that scenario is what you and they can do in the decision-making process. The detail depends on what, if anything, is laid out in the deed - and it can become very complicated if it's truly contested. Legal advice would become important in navigating situations where, say, a majority of owners have made a decision which a minority consider to be improperly made.

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  • Thank you. My circumstance is that I pay less, as does my neighbour and one other flat.
    – Mavis
    Feb 12 at 11:21

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