024. Short-Term Letting Following the Watergate Decision – with Robert Savage (references to VIC and NSW legislation)

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  3. 024. Short-Term Letting Following the Watergate Decision – with Robert Savage (references to VIC and NSW legislation)

3 Comments. Leave new

  • Serafina Froio
    August 24, 2016 10:50 am

    Hi Amanda
    Does the Victorian decision asserting proprietary right also mean an owners corporation cannot make rules about By-Laws about recovering the additional costs for the impact of Class 3 activities in a building?

    I live in a building near the CBD which is multi-classed, including Class 3, so short-term lettings are permitted. We have a few airbnb owners but the greater impact is from a company who (among their directors) own around 25% (so have voting rights) and manage others on behalf of some owners. Around 60% of occupants are residents, the rest are short-terms which can range from overnight to several months.

    The short-term activity does affect amenity of the building in a range of ways, but the greater issue in my building is the additional costs to manage and maintain. Ironically the owners who permit their properties to be used this way are the same people who complain about the cost of strata fees so a clearly not making the connections! Even more ironically, most are not earning significantly more than they would from a residential tenant who would not have anywhere near the cost impact of short-term overcrowding.

    One example of this is short-term guests using emergency exits to leave the building which triggers alarms that entail costs to response to. The drain on utilities like hot water is another – the units are not separately metered, so I am paying for my neighbour to permit their studio property to be furnished with 2 queen beds and a pull-out sofa and be regular occupied by 5/6 people each of whom have 2 showers a day.

    To some extent noise, nuisance and parties can often be dealt with more easily, such as calling police for serious matters but recovering costs for repairs and call out fees is more difficult. The owners corp. has no relationship with the short-term guests – we don’t even know who they are. The letting operator will make the process as difficult as possible to recover expenses so the OC needs a simply process to recover additional costs associated with the impact of short-term lettings.

    If the Victorian decision is a precursor to similar decisions in other states and owners are free to use their properties for short-term lettings (notwithstanding the council issue) this issue will become a critical issue for owners corporations everywhere.

    Are By-Laws the solution?

    Reply
    • Amanda Farmer
      August 29, 2016 4:20 pm

      Hi Serafina, thanks for listening and thanks for your great question. I have passed that on to Robert Savage so that he can provide some VIC expertise. If he isn’t able to respond for any reason, I will reach out to my other contacts and get back to you ASAP. Stay tuned…

      Reply
  • Hi Serafina, I finally have an answer for you! Sorry for the delay.

    Lawyer Nicole Wilde of Tisher Liner FC Law in Melbourne (www.tlfc.com.au) has kindly provided the following information in response to your question:

    “A Victorian Owners Corporation’s ability to raise money that is legally due and payable by its members is confined by the powers to raise funds prescribed by sections 23 and 24 of the Owners Corporations Act 2006 (the Act). Section 30 of the Act gives an Owners Corporation the power to recover validly raised fees from its members in a court of competent jurisdiction as a debt due.

    Any registered Owners Corporation Rule that purports to give a Victorian Owners Corporation a power to raise money from its members that a Court would perceive as inconsistent with sections 23, 24 or 30 of the Act, would in our view, be open to the risk of being declared invalid and unenforceable.

    For example, a registered Owners Corporation Rule that sought to give an Owners Corporation the power to direct-charge a lot owner an additional cost (other than validly raised annual or extraordinary fees raised under sections 23 and 24) without the need for the Owners Corporation to sue the lot owner for the debt, would be seen as inconsistent with the legislation and likely declared invalid and unenforceable. Ultimately, whether a registered Rule will be declared invalid or unenforceable will involve an assessment of the wording of the rule itself, the particular property to which it relates, relevant circumstances and the legal principles set out in the recent Supreme Court of Victoria case of Balcombe.”

    Reply

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