Published: 04 January 2010.

Contributed by Frank Higginson of Hynes Lawyers

With the annual schoolies ‘festival’ there has been a lot of press and other comment about the ability of a body corporate to restrict schoolies style tenancies.

In addition, from an internal industry perspective there has been an increasing comment and concern about the mixing of short and long term tenancies (the usual owner occupier vs short term holiday maker argument).

So what is the legal position?

To start with it must be realised that a body corporate only has the legal ability to regulate common property. Unit owners’ lots are not common property – they are privately owned. As such, a body corporate’s rights to impose conditions on that lot are minimal, unless there is some external impact from the use of that lot, for example:

• Noise – via late / loud parties, loud music etc.
• Amenity – bbq’s on the patio.
• Appearance - hanging towels over railings, visible external signs through windows.

Take the position where a body corporate decides that every internal feature wall in a lot had to be green! It simply is unlawful and not enforceable.

The legal position is very clear. A scheme’s by-laws provide the individual rules for the body corporate. Section 180(3) of the BCCM Act provides that ‘If a lot may lawfully be used for residential purposes, the by-laws can not restrict the type of residential use.’

So a by-law seeking to impose a minimum term stay for a lot is simply unlawful.

So, what about the letting agreement?

Some letting agreements seek to impose conditions on the letting agent about the minimum length of a tenancy. The validity of these types of condition have not yet been fully tested. Again, from a legislative perspective, a body corporate can only ‘authorise’ a letting agent. Can it impose conditions on that? The answer is unlikely to be determined by litigation anytime soon as most owners of management rights do not seek to change the nature of what they have purchased.

But even with such a condition in the letting agreement, there is nothing that can stop an owner engaging an outside agent to seek short term lettings. This is an inalienable property right.

What is next?

Then there is the latest concern. Building classifications and planning restraints. Town planning is a dark science at the best of times, and it would be a brave body corporate to engage in litigation from a planning perspective.

Arguments over building classifications for short and long term lettings are likely to be the next battleground open to interpretation. We have recently advised several clients on these issues, and each client had their own individual set of circumstances to consider. It appears to have been presented to some committees as a fait accompli, but these sorts of matters are far from that, even at the best of times. The next 12 months will be interesting on the classification front, to say the least.

We wish you all the best for 2010.
 

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