3D Property Rights – An Analysis of Key Factors Based on International Experience Jenny Paulsson Doctoral Thesis in Real Estate Planning Real Estate Planning and Land Law Department of Real Estate and Construction Management School of Architecture and the Built Environment Royal Institute of Technology (KTH) Stockholm, Sweden 2007 Academic Dissertation for the Degree of Doctor of Technology Author: Jenny Paulsson Title: 3D Property Rights – An Analysis of Key Factors Based on International Experience TRITA-FAT Report 4:99 ISSN 0348-9469 ISRN KTH/FV/R--04/99--SE ISBN 978-91-7178-742-2 © Jenny Paulsson 2007 Real Estate Planning and Land Law Department of Real Estate and Construction Management School of Architecture and the Built Environment Royal Institute of Technology (KTH) SE-100 44 Stockholm Sweden Abstract The objectives of this thesis are to establish the fundamental principles in the field of 3D property rights by studying such systems in different countries with a particular focus on management questions, to systemize the acquired know- ledge and demonstrate different ways of dealing with key factors essential to a well-functioning 3D property rights system. A theoretical background to the 3D property concept is given by presen- ting proposals as to a definition of 3D property and a classification of the primary forms of 3D property rights examined into specific types and categories, as well as an overview of international 3D property use. A general description of the characteristics of 3D property, with a focus on the condominium form, is also presented. A presentation of three different 3D property rights models is given as exemplified by the countries investigated, including the independent 3D property model in Sweden, the condominium form model in Germany, and a combination of the independent 3D property form and the condominium form as evidenced by the legal systems of two Australian states, New South Wales and Victoria. It has been possible to discern from this study a number of key factors related to 3D property rights that seem to be common for most forms and systems. These include the delimitation of property units, the content of the definition of common property, the creation of easements, the forms of cooperation between property units, management and regulation issues, as well as the settlement of disputes and insurance solutions. The problems experienced within the 3D property systems studied to a large extent have concerned issues within these mentioned key areas, where the management aspect seems particularly difficult. Changes in society and the creation of new development forms to a large extent have also contributed to the need for statutory amendments. More or less substantial amendments have been required in both the Australian and German statutes studied, with shortcomings still remaining after many years of use. However, these systems in general seem to be working well, and the condominium form in particular seems to be a well-functioning concept. Based on these systems, it has been possible to discern a tendency that the more detailed and complex the legislation, the greater the need for gradual amendments. In conclusion, it would be of benefit for countries planning on introducing a system for 3D property rights to utilize the experiences of other countries, while not forgetting to consider differences in legal systems, society, etc. Keywords: 3D property, property rights, condominium, apartment ownership, flat ownership, strata title, stratum iii iv Acknowledgements This thesis has been written at Real Estate Planning and Land Law Division (Fastighetsvetenskap ) at the Royal Institute of Technology ( Kungl. Tekniska Högskolan, KTH ), Stockholm, Sweden. A part of this work has been carried out within a research project entitled “Processer för planering, byggande och förvaltning av bostäder under konkurrens .” Financial support for that part of this study was provided by the Swedish Research Council for Environment, Agricultural Sciences and Spatial Planning (Formas) and a consortium of organisations and companies, to which I am very grateful. First and foremost, I want to thank my supervisor, Prof. Hans Mattsson, for his guidance, suggestions and encouragement during the entire process. I am indebted to those individuals who took the time and effort to read parts of my thesis, pointing out shortcomings and giving comments and suggestions for improvements, namely Dr. Barbro Julstad at the Swedish National Land Survey for the chapter about Sweden, Ms. Stefanie Gerdes at Humboldt University in Berlin for the chapter describing the German system, Mr. Anthony Allen at A Allen Consulting Surveyors, Mr. Mark Deal at the Land and Property Information in Sydney and Mr. George Panagakis at Mallesons Stephen Jaques for the part about New South Wales, and Ms. Kellie Dean at Reeds Consulting for the Victorian part. My thanks also go to Dr. Laura Carlson, who helped me with language refinements. I am, however, solely responsible for any remaining errors. During my study trips to Australia and Germany, I received generous assistance from many people, without which I would not have been able to carry out this study. To all these people I am very grateful, and I especially want to direct my gratitude to Prof. Peter Butt at the University of Sydney, Ms. Kate Dalrymple at the University of Melbourne and Prof. Rainer Schröder at Humboldt University in Berlin. There are many experts and practitioners also well deserving of my gratitude for the Swedish part of my study. Finally, I want to express my thanks to my colleagues at Real Estate Planning and Land Law and to all other people that have helped and supported me during my work. Stockholm, August 2007 Jenny Paulsson v vi Table of Contents 1. Introduction..................................................................................1 1.1 Background .............................................................................................................1 1.2 Objectives................................................................................................................5 1.3 Selection of Countries and Other Limitations ..................................................6 1.4 Methods...................................................................................................................9 1.5 The Method of Comparative Law and its Problems......................................12 1.6 The Structure of the Study..................................................................................22 2. 3D Property Rights ....................................................................25 2.1 Definitions of 3D Property ................................................................................25 2.2 Forms of 3D Property Rights ............................................................................32 2.2.1 Categorisation...........................................................................................32 2.2.2 Independent 3D Property......................................................................33 2.2.3 Condominium Rights .............................................................................34 2.2.4 Indirect Forms of Ownership...............................................................39 2.2.5 Granted Rights ........................................................................................42 2.3 International Overview .......................................................................................43 3. The Characteristics of 3D Property ...........................................51 3.1 Introduction..........................................................................................................51 3.2 Interdependence as a Fundamental Feature....................................................51 3.3 The Nature of the Condominium .....................................................................54 3.4 Fields of Application ...........................................................................................57 3.5 Legal Framework..................................................................................................59 3.6 Subdivision............................................................................................................61 3.7 Boundaries.............................................................................................................63 3.8 Easements..............................................................................................................64 3.9 Common Property...............................................................................................64 3.10 By-laws.................................................................................................................67 3.11 Owners’ Associations........................................................................................68 3.12 Management........................................................................................................71 3.13 The Settlement of Disputes..............................................................................75 3.14 Insurance .............................................................................................................76 vii 4. The Independent 3D Property Case: Sweden ...........................77 4.1 Background ...........................................................................................................77 4.2 Development of the 3D Property Legislation.................................................78