Understanding Body Corporates and Ownership Rights
Ownership rights within a body corporate / owners corporation contains an added governance as result of the building having in place OC rules – and the Owners Corporation Act 2006.
All residents – owner-occupiers and tenants alike – are obligated to comply with the owners corporation rules of the building. The added complication for OC Committees and OCs is: what is the legal relationship between the owners corporation and a tenant in a building?
Tenants are obligated to adhere to OC rules however they’re not members of the owners corporation nor do they have a direct nexus with the OC. The tenant relationship is with the landlord and the landlord is typically the registered owner and member of the OC.
Exploring the Legal Framework: Powers and Limitations
With tenancies, landlords will often lease their property through a real estate agency or on some occasions, landlords might lease directly to a tenant.
Often when landlords lease to tenants directly there can be situations where the parties not informed when it comes to the legislation (i.e. the Residential Tenancies Act 1997). [On this point, we also find this to be case when it comes to owners corporation self-managing as they’re not always fully informed when it comes the complex legislative framework (i.e. the Owners Corporations Act 2006, amongst others).]
With this in mind, the question for owners corporation is what to do and what can be done when a tenant breaches OC rules?
Consumer Affairs Victoria sets out a very clear process for tenants when they are in breach of the Residential Tenancies Act 1997, which includes:
- A prescribed ‘duty’ under the Act;
- Obligation to issue a breach of duty notice;
- Reasonable time for the tenant to rectify the breach; and
- Ability to pursue the matter via VCAT if the breach has not been rectified.
When it comes to Owners Corporations and through the process of appointing a professional owners corporation managers:
- Section 10 of the Owners Corporations Act 2006 gives managers to the authority to execute documents (i.e. a breach notice);
- Section 11 of the Act delegates the owners corporation managers the powers and functions to manage the owners corporation;
- Section 152 of the Act states “A lot owner or an occupier of a lot or a manager may make a complaint to the owners corporation about an alleged breach by a lot owner or an occupier of a lot or a manager of an obligation imposed on that person by this Act, the regulations, or the rules of the owners corporation”; and
- The owners corporation manager through these provisions is vested with authority to issue breach notices pursuant to Section 11 (Notice to rectify breach) of the Once again, reasonable time must be given to the person alleged to have committed the breach for them to rectify the breach.
A few other things to note:
- Pursuant to Section 158 of the Act, the issuance of the breach notice can be served electronically via email.
- The rental property manager may also be a source of assistance to the owners corporation when it comes to enforcing or rectifying the behaviour of tenants.
- The owners corporation should take or not take certain actions based on the nature, severity of the breach, and the person committing the alleged breach.
- Sometimes, smaller or minor issues can be resolved through a discussion or conversation – with input from your professional OC manager – rather than sending a breach notice. Tenants can sometimes be unaware of OC rules it comes to parking or noise.
- Conversely, OCs should be mindful that there is scope that the OC might be liable for failure to action some breaches of OC rules if they could result in wider risks.
Grounds for Eviction: Unraveling the Circumstances
When it comes to communal living of owners corporations, there are some behaviours that are more serious and go beyond simple parking or noise complaints. These are behaviours that either greatly damages property or puts other people at risk.
Model Rule 4.3.1 stipulates:
“An owner or occupier of a lot must not damage or alter the common property without the written approval of the owners corporation.”
And Model Rule 4.1 stipulates:
“An owner or occupier of a lot must not obstruct the lawful use or enjoyment of the
common property by any other person entitled to use the common property.”
In these situations, the owners corporation (and those impacted) should look at taking more serious action:
- Applying to VCAT may result in VCAT issuing orders for the offending party to comply by Model and Special Rules, and imposing fines/penalties.
- The Owners Corporation can issue legal proceedings is loss or damage can proven to have been caused by the offending party.
- Personal Safety Intervention Orders (PSIO) can impose that individuals cannot cannot come to the building or be within 20 metres of a certain person. Victoria Legal Aid has detailed the process in relation to applying for a PSIO.
- It may be necessary for the building to look to engage security contractors or call the police.
Due Process and Owner’s Rights: Ensuring Fairness in Eviction
When it comes to less innocuously matters, owners corporations should ensure that fairness and due process (including any applicable meditation and dispute resolution process is followed. However it comes to more serious matters such as the health and safety of other residents, then the owners corporation should be more robust in taking action.
Behaviour such the ignoring of requests to undertake necessary repairs that pose health and safety risks or disruptive behaviour such as harassment should not be tolerated.
Owners Corporation rules exist to ensure harmonious living within owners corporations. The management and enforcement of the OC rules are often greatly enhanced through having in place a professional, knowledgeable, and helpful owners corporation manager.
If your OC manager isn’t helpful or knowledgeable when it comes to enforcing OC rules, speak to us about changing owners corporation management companies.