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Expanded Short Stay Powers for Owners Corporations

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Expanded Short Stay Powers for Owners Corporations

SHORT STAY

With the increase in the popularity of Air BNB and other short stay providers, new legislation has sought to clarify Owners Corporations’ rights and powers against Short Stay Occupants and Short Stay Providers.

Short Term Accommodation Arrangement: a lease or license for a maximum period of 7 days and 6 nights to occupy a lot or part of a lot affected by an owner’s corporation’ that is in a classified residential building (class 2 of the building code).

Short-stay provider: any of (1) the owner of a lot (2) a lessee or sub-lessee of the owner or (3) an agent provider.

Short-stay occupant: means a person who occupies a lot or part of a lot under a short-stay accommodation arrangement.

A WRITTEN COMPLAINT IS MADE UNDER SECTION 159A

If a Lot Owner, Occupier or Manager wishes to make a complaint about an alleged breach by a short-stay occupant of a conduct proscription:
(a) The complaint must be in writing;
(b) In the approved form.

CONDUCT WARRANTING COMPLAINT

In order for a complaint to be made, there must be a breach of conduct proscriptions by the short stay occupant. The types of conduct proscriptions are—

(a) unreasonably creating any noise likely to substantially interfere with the peaceful enjoyment of an occupier or a guest of an occupier of another lot (other than the making of noise where the owners corporation has given written permission for that noise to be made);
(b) behaving in a manner likely to unreasonably and substantially interfere with the peaceful enjoyment of an occupier or a guest of an occupier of another lot;
(c) using a lot or the common property, or permitting a lot or the common property to be used, so as to cause a substantial hazard to the health, safety and security of any person or an occupier;
(d) unreasonably and substantially obstructing the lawful use and enjoyment of the common property by an occupier or a guest of an occupier;
(e) substantially damaging or altering—

i. a lot or the common property, intentionally or negligently; or
ii. a structure that forms part of a lot or the common property, intentionally or negligently.

It is necessary that the breach be substantial rather than trivial. We consider that the following matters would likely to be found as a breach of the conduct proscriptions:

• Drunk and disorderly behaviour in common areas and on balconies so that occupants of other lots use and enjoyment is disturbed;
• Excessive noise;
• Public nudity in the hallways or leisure areas;
• Substantial damage caused to Common Property such as conduct resulting in a breakdown of the lifts or holes in common property walls. However, minor stains and spillage is unlikely to be considered substantial damage to common property.

THE OC’S RESPONSIBILITY

Once a Complaint is lodged, the OC must decide whether to act or not.

If the OC does not act, it:

1. must give notice of the decision to the person/s who made the Complaint and must set out the reasons for the decision – the reasons do not have to be length but must provide the general basis for not taking any further action.

If the OC does act, it:

1. must collect the necessary information to identify the apartment is being used as a short stay and by whom (as in the operator or owner)
2. must ensure they believe on reasonable grounds the short stay occupant has committed a breach;
3. must give notice of the allegation to the lot owner (and short-term accommodation provider) in an attempt to rectify the breach (section 159D notice);
4. may give the section 159D notice of the allegation to the short-stay occupant;
5. the section 159D notice must be in the approved form and specify the alleged breach and state that:

a. the person to whom the notice is given is required to rectify the breach if this has not been done so already; and
b. in any case, the OC may decide to apply to VCAT to resolve a short-stay accommodation dispute in relation to the breach.

TIME FOR RECTIFICATION

There is no legislated time frame to rectify the breaches and given it is concerned with accommodation arrangements that are for a maximum period of 7 days and 6 nights, the response time should fit within this timeframe. It is our view that where the breach relates to conduct then the timeframe for rectification of the breach may be immediate.

VCAT CAN HEAR AND DETERMINE THE DISPUTE

The OC; a lot owner or former lot owner; a lot owner on behalf of an OC; an occupier; and/or an agent provider may apply to VCAT to determine a dispute.

Once a person has been given a section 159D notice, the OC may decide to apply to VCAT without the need for a Final Notice and seek one or more of the following orders:

1. Prohibition Order;
2. an order for a civil penalty under new section 169G not exceeding $1,100 to be paid into the Victorian Property Fund;
3. an order compensation in favour of an occupier for a loss of amenity compensation with the maximum amount of compensation of $2,000 for each affected occupier for each breach.

A prohibition order is where the Tribunal may prohibit the use of a lot or part of a lot for short stay accommodation for a specified period. The relevant factors in issuing a Prohibition Order are:
• a section 159D notice must have been given on a short-stay provider on at least 3 separate occasions within 24 months to seek this relief; and
• each notice must have related to an alleged breach by a short-stay occupant of the proscribed conduct specified above;
• any measures the short stay provider took to prevent the breach as well as severity and nature of the beach are considered by VCAT in determining whether to make a prohibition order.

LIABILITY UNDER ORDERS

Both the short stay provider and short stay occupant are jointly and severally liable for satisfying any order made under section 165(1)(c) to compensate for loss or damage incurred as a result of the short-stay occupant substantially damaging or altering a lot or the common property, intentionally or negligently; or a structure that forms part of a lot or the common property, intentionally or negligently; or section 169E to compensate for loss of amenity; or section 169G to pay a civil penalty.

The OC Act also provides that the lot owner cannot seek to avoid its joint and several liabilities because it engaged an agent provider. However, it is a defence to the joint liability if the short-stay accommodation provider can show that it took all reasonable steps to prevent the relevant breach.

KEY TAKE AWAY POINTS

• Lot Owners, Occupiers or Managers may make a complaint in relation to Short Stay Occupants under a new but substantially similar complaints system;
• The OC may serve a Section 159D requiring rectification within a reasonable time;
• If Short Stay Provider or Occupant fails to address the matter, an Application to VCAT can be made to seek compensation and/or a Prohibition Order;
• A Prohibition Order will not be made lightly, and multiple complaints and consistent defiance would be necessary.

If you wish to learn more about these changes, please contact Zac Cleal, Annabel Clarke or Kathryn Finemore.

Disclaimer: This article is general commentary on a topical issue and does not constitute legal advice. If you are concerned about any topics covered in this article, we recommend that you seek legal advice.

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