Common Property Leases & Licences – Legal Checklist
Owners Corporations in Victoria have the statutory power under section 14 of the Owners Corporations Act 2006 to lease or licence the whole, or part of the common property to a lot owner or any other person.
In order to validly grant property leases or licences over common property, the Owners Corporation must pass a special resolution. In our view, the proposed Lease/Licence should be prepared in advance of the vote to pass the special resolution to ensure all parties are aware of what terms and conditions will apply if the special resolution is successful.
The Lease/Licence Area
The Lease/Licence Area should always be defined by reference to the Plan of Subdivision for the Property (the Plan). This is because the Plan defines the legal boundaries of common property. Other plans or drawings that are not the Plan itself, should not be used to define a Lease/Licence Area.
Issues to Consider
- Who will be responsible for maintenance, repair and rectification of damage?
- Owners Corporate Chattels and PPS Registration.
- What will happen if the licensee wants to make improvements?
- Who will maintain insurance?
- What are the height limits of the licence/lease area?
- What access rights to services will the Owners Corporation retain?
- Whether existing easements have to be considered.
- What ability the licensee will have to assign the Lease / Licence & what assignment requirements will apply?
- What will the parties’ termination rights be?
- What will the parties’ respective liability be?
- Will there be a prohibition on sub-letting?
- Cleaning.
- Hazards.
- Noise.
- Disruption to others.
- Permitted use and hours.
- Offices.
- Storage areas.
- Balconies.
- Courtyards.
- Car parks. (washing cars, storage, oil and petrol)
- Roof.
- Airspace.
- What time period will the Lease/Licence be for: e.g. 1 year, 5 years, 99 years or will there be options to renew?
- Will the licensee be required to give an indemnity?
- What inspection rights will the Owners Corporation retain?
- Compliance with Building Act. i.e. essential services.
Tisher Liner FC Law has a strong property law practice and specialist Owners Corporation legal division. We are available to prepare customised common property Leases and Licences for your Owners Corporation clients. Please do not hesitate to contact one of the Owners Corporation team.
