Are your Body Corporate rules illegal?

Barry was the chairperson of a Body Corporate, which was having ongoing issues with troublesome tenants. The tenants were noisy, untidy, and had made unsightly alterations to the interior of the units they were renting.

As a result, the Body Corporate passed amended operational rules at its General Meeting to try and deal with the issues.

The operational rules passed by the Body Corporate included:

1. A requirement that any unit could only be leased with the Body Corporate’s consent; and
2. No alterations could be made to units without the Body Corporate’s consent.

A few days after notifying all unit owners, Barry started receiving complaints from some unit owners that these rules were ‘illegal’, and that they would not be complying with them. Some of the unit owners said that this was the advice they had received from their lawyers.

Body Corporates need to be careful that their operational rules are consistent with the Unit Titles Act 2010. This is particularly the case with operational rules that give powers to, or impose duties on, the Body Corporate. To be lawful, these rules must be “incidental to” the powers and duties conferred or imposed on the Body Corporate under the Act.

Unfortunately for Barry’s Body Corporate, the above rules were not lawful because they were not “incidental to” the powers of bodies corporate set out in the Act.

However, after getting some good legal advice the Body Corporate was able to pass amended rules that were lawful: requiring tenants not to disturb other unit owners, and providing that alterations affecting other units could only be made with the Body Corporate’s consent.

Another potential trap for bodies corporate is in relation to rules requiring unit owners to pay for damage. Generally, such rules will not be consistent with the Act if they require the unit owner to pay for damage that is already covered by the Body Corporate’s insurance policy.

Bodies Corporate should always ensure they have legal advice before finalising any proposed rules. For advice about your Body Corporate rules, give us a call on (04) 473 6850.