Owners Corporations and their Statutory Rules

Our earlier blog gave a summary of the changes to the Owners Corporations Act 2006 which commence on 1 December 2021 as a result of the passing of The Owners Corporations and Other Acts Amendment Act 2021. It is available on our website.

Owners Corporations may either use the Model Rules or make their own rules. Section 138 of the Owners Corporations Act gives the power to the Owners Corporation to make rules by special resolution in respect to particular matters set out in schedule 1 of the Act providing that they are for the purpose of the control, management, administration, use or enjoyment of the common property or of a lot.

Section 140 of the Owners Corporations Act provides that a rule of an owners corporation is of no effect if it—

• unfairly discriminates against a lot owner or an occupier of a lot; or

• is inconsistent with or limits a right or avoids an obligation under the Act or any other Act or regulation.

So what is new?

From 1 December 2021, an owners corporation may make rules in respect of proposed works to renovate or alter the external appearance of a lot—

• to protect the quiet enjoyment of all other lots and the common property during those works; and
• to protect the structural integrity of any building on the plan of subdivision from those works; and
• to ensure the market value of any other lot does not decrease as a result of those works.

Sustainability Items

An owners corporation must not make rules that unreasonably prohibit the installation of sustainability items on the exterior of a lot.

A prohibition on the installation of a sustainability item only on aesthetic grounds is taken to be unreasonable; and a requirement that the location of, or the works involved in installing, the sustainability item must not impede reasonable access to, or the use of, any other lot or the common property is taken to be reasonable.

Under the Act, a  sustainability item means any thing that eliminates or reduces a reliance on non‑sustainable energy sources and includes—

(a)     a solar hot water system; and

(b)     solar energy panels; and

(c)     a roof with colours having a particular solar absorption value.

Broadening of determining that a rule is unfair and unenforceable

Section 140 (a) set out above will be deleted and replaced with “Rules cannot be oppressive to, unfairly prejudicial to or unfairly discriminates against, a lot owner or an occupier of a lot. This broadens the scope of ensuring that rules are unenforceable if they go too far.

Guests Liable for Breach of Rules

Prior to the amendments, Owners Corporations could take action against tenants and lot owners. The amendments mean that tenants/occupiers must ensure that their guests comply with the rules.

If a guest to a lot breaches the rules of the owners corporation, the occupier of the lot and the guest are jointly and severally liable for satisfying any penalty or compensation payable as a consequence of the guest’s breach.

However, an occupier of a lot is not liable for a guest’s breach if the occupier of the lot provides the guest with a copy of the rules of the owners corporation.

The onus to prove that a copy of the Rules were provided to a Guest will be on the occupier.

This provision will not impact on short stay operators and guests which will still have certain obligations under Division 1A of the Owners Corporations Act 2006.

It is important for Owners Corporations to enforce the rules so that all lot owners can equally enjoy their lots and common property.

Need Advice?

Phillip Leaman, principal of the Owners Corporations practice group of Tisher Liner FC Law and his very experienced team can provide assistance to owners corporations, committees, lot owners and managers in a range of owners corporations legal matters. We have substantial experience advising Owners Corporations on dealing with drafting, reviewing and enforcing Owners Corporations Rules.

We believe Owners Corporations want to maintain peaceful, functional living environments for owners. Our mission is to provide a fresh perspective on resolving legal disputes and to inspire Owners Corporations to achieve outcomes that preserves the value of assets and restores harmony. We are expert Owners Corporations lawyers.

For advice or assistance, please contact Phillip Leaman on 03 8600 9314 or by email [email protected].

To see earlier spotlights on the amendments check out our website. Our website also has more information on Owners Corporations as well as a range of helpful blogs and podcasts.