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Owners’ Corporation Law - June 2014

04 Jun 2014

It has long been an issue for apartment dwellers in Victoria and all around Australia –the common scenario is that a residential unit is let out to a person for a set amount of rent each week; that person then sets out partitions and curtains throughout the apartment, then sub-lets the apartment to groups of (mainly female) students and / or non-English speaking persons.

The results are usually a large profit to the head-lessee, squalid conditions for the sub-lessees, and increased wear and tear on common property facilities for owners corporations from increased rubbish and drainage blockages.

However, there is an added sting in the tail for owners corporations – their insurance policies will most likely contain a clause requiring full and frank disclosure of circumstances that may cause damage to the building, and the duty of utmost good faith requires an owners corporation to take positive steps to mitigate those risks, otherwise coverage by the insurer may be denied.

In 2013, three students living in an over-crowded apartment in Bankstown ignited a fire after lighting a cigarette on the balcony. In high winds, the embers lit the partitions and curtains inside the apartment. Next to go were the LPG canisters in the kitchen that doubled as alternate cooking facilities.

The results were catastrophic – one student was killed leaping to the ground floor, and another was critically wounded and burned. The apartment building suffered extensive smoke damage, with 80 per cent of the apartments unable to be resided in for at least six months. In this instance, members of the owners corporation knew of the overcrowded apartment, yet took no action.

An owners corporation should report all instances where they suspect overcrowding of apartments to the City of Melbourne.

Council officers have the powers to inspect private property, and the above scenario would most likely offend town-planning rules and would be considered to be a boarding house activity in the Docklands and Southbank precincts.

The council would most likely eject those that are unlawfully residing there, and impose a heavy fine on the landlord responsible.

Tom Bacon is the principal lawyer of Strata Title Lawyers. (JavaScript must be enabled to view this email address)

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