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Certificates of title – soon a thing of the past

April 16th, 2019

An exciting development in property law has been announced.  After much anticipation, the Queensland Government has now passed legislation which will mean that from 1 October 2019, original paper certificates of title (also known as title deeds) for property in Queensland will no longer have any legal effect.

The titles of property in Queensland have been maintained electronically for many years and the dispensation of paper certificates of title marks one of the final changes to fully electronic titling.  While older certificates of title can be retained for historical value, many a grey hair is likely to be avoided from the stress of trying to locate lost certificates after many years or explaining the inadvertent destruction of certificates.  Currently the process for dispensing with a paper certificate of title is a fairly arduous process involving extensive enquiries, advertising and declarations.

Prior to 1994, every property in Queensland had a paper certificate of title issued for it.  This certificate was required in order to deal with property, by sale, transfer, mortgage or otherwise.  However, from 1994 the Queensland Titles Registry converted to an electronic titles register and has not automatically issued paper titles for property since then.  A paper certificate could only be obtained on request and for a fee.

Where a paper certificate of title is issued, it must be produced when any dealings with the land are to be registered with the Queensland Titles Registry.  Without it, a dealing affecting land (where a paper certificate is issued) cannot register.  It is an important document, that by itself, evidences ownership of property.  As a result, lost or stolen certificates can (and historically have been) a huge concern for owners of property, particularly when trying to complete a sale of their property within the time frames of a standard conveyance.

More recently, the Titles Registry has been working to phase out the paper certificate of title.  When a certificate of title has been issued for a property and a dealing lodged for registration (such as a transfer of ownership which required the deposit of the original paper title), the original certificate would be destroyed and not reissued.

As a result many properties no longer have paper certificates issued today.

Please feel free to contact us on 07 4036 9700 if you have questions about how these changes will affect your property if you have a paper title for your property issued.  Miller Harris Lawyers would be happy to assist you with all your property law questions.

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A home buyer’s nightmare – property inspections failing to find fault

February 15th, 2019

A buyer is awarded only $500.00 for a building inspection report that missed extensive termite damage.

Building and pest inspection conditions are incredibly common in property contracts these days.  When purchasing a house or unit, it is always recommended that you engage a qualified inspector to look over the property for problems.  Building and pest inspection conditions generally allow a buyer to terminate the contract if significant problems are discovered with the buildings or improvements.

But what happens when major issues are not picked up in the building and pest inspection?

A recent decision of the Victorian Civil and Administrative Tribunal (“VCAT”) highlights the importance of reading the ‘fine print’ in building and pest inspection reports if you are purchasing a property.

Garrett v Elim House Pty Ltd [2018] VCAT 1862

The Garretts purchased a 100 year old timber house in 2014, for $172,000.00.  As part of the conveyancing process they engaged Elim House Pty Ltd (“Elim”) to conduct a pre-purchase inspection of the property.

After receiving the report, they decided to go ahead with the purchase.  Shortly after the sale was finalised, the Garretts discovered that there were significant structural issues with the house, including extensive termite damage.  Following the discovery of these issues, it was suggested by their builder that the house was beyond repair and should just be demolished and they should start fresh with the building.

The Garretts commenced proceedings in VCAT against Elim, claiming (among other things) that:

  1. the representations on Elim’s website, which they relied on when selecting Elim to inspect the property, were misleading and deceptive; and
  2. the inspector failed to inspect the property with due care and skill as required by the Australian Consumer Law.

Elim’s website marketed their services as thorough and technologically advanced as well as gave the impression that hidden problems would be found.  However, the report that was produced by Elim limited the scope of the inspection to a visual inspection only.  A visual inspection is standard for pre-purchase building inspections completed as part of the conveyancing process.

The report also specifically excluded some areas of the property from inspection because they could not be accessed.  This included the sub-floor where the majority of the damage was later found.  The property was tenanted at the time of the inspection and furniture obstructed some of the view of the property, particularly areas of the internal perimeter wall.  Termite damage was also later found to have been present in these areas.

Elim had noted in its report that it was ‘reasonable’ to discern that there was termite activity in some parts of the property that were not able to be inspected.  Elim also had advised the Garretts of the problems with the floors of the property, advising them that parts of the floor were ‘soft underfoot’ and would need attention in any renovation work.

Decision

VCAT found that:

  1. some of the representations made on Elim’s website were misleading, including the representation that Elim’s inspections were especially thorough and utilised high-level technology; and
  2. Elim conducted the inspection of the property with due care and skill, as the reason the termites were not identified was because of the stated restrictions to the inspection noted in the report and the structural issues were appropriately identified.

The tribunal ordered that the Garretts be refunded the $500.00 they paid Elim for the property inspection because of the misleading representations on Elim’s website.

However, the Garretts were not successful in their claim of $344,528.00 to cover the cost to them of demolishing the house and building a new home on the land.

What does this mean for buyers?

This decision highlights the importance of reviewing a pre-purchase inspection report thoroughly and, properly considering the limitations contained in the report.  It is very common for areas of a property to be excluded from building and pest inspection reports due to inaccessibility.  It is also important for purchasers to realise that a visual inspection (which is the type of inspection that is done as part of the building and pest inspection conditions in Queensland conveyancing contracts) may not identify all issues with the property.

Some problems, such as termite damage can only be identified through an invasive inspection.  This type of inspection is unlikely to be allowed by a seller as it may, by its nature, cause damage to the property.

Prospective buyers should carefully consider the contents of a pre-purchase inspection report and the weight of any recommendations made by the inspector, along with factors such as the age and relative condition of the house.  A great way to get more information is to attend the inspection with the building inspector or speak to them following the inspection to ask them questions.

If there are items in the report that you do not understand the nature of or the consequences attaching to, seek advice.  As learnt from this decision, building and pest inspection reports are not infallible and the limitations contained in these reports reduce the scope and liability of an inspector.

An experienced lawyer or conveyancer can help you to limit the risks involved in purchasing a property and deal with issues that arise from a pre-purchase inspection.

Miller Harris Lawyers would be happy to assist you with the purchase of your next property, please feel free to contact our conveyancing team on 07 0436 9700.

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It’s not just the purchase price – costs to consider when buying a house

January 10th, 2019

One of the most important questions for buyers to ask when considering purchasing a house is – can I afford it?

When purchasing a property and planning your budget, it is more than just the purchase price that you should anticipate.

You should keep in mind the following costs:

  1. Transfer duty (stamp duty)

If you are buying a property for the first time, or buying a property to live in, there are concessions available for transfer duty.  However, in many instances duty will be payable on the transaction and it is not cheap!

You can calculate a cost estimate of how much duty you will need to pay using the online calculator from the Office of State Revenue.  This will tell you how much you should be setting aside.

The calculator can be accessed here.

  1. Bank fees and charges

It is common for banks to approve a loan and then take their fees from the amount of the loan.  This means the amount they will actually provide for you to purchase the property, may be less than the amount you have been approved for.

Loan fees vary from bank to bank and can depend a lot on what type of loan you are taking out.  You should ask up front for an estimate of the bank fees associated with the loan to make sure you have enough to cover all the costs at settlement.

You may also be required to pay for a valuation for the property.  In some instances your bank may require a valuation to decide whether they will lend you money for the purchase and how much they are willing to provide.

  1. Land registry fees

The Queensland Government charges a fee (which changes based on purchase price) to register the change of ownership of a property and to register a mortgage.  This fee is paid by the buyer so don’t forget to factor this in to your budget as well.

You can calculate the lodgement fees here.

  1. Adjustments

Usually in a conveyancing matter, the outgoings for the property, such as council rates, body corporate levies, rent and water usage, are apportioned at settlement.  For outgoings already paid, this means the buyer makes a further payment to the seller (by way of an adjustment at settlement) to cover their share of costs.

Depending on the time of year you are purchasing and the particular outgoings, this could add a few hundred dollars to the overall amount required for settlement.

  1. Insurance

Under most contracts, the risk in the property passes to the buyer from the day after the contract is entered into, not when settlement actually happens.  This means that buyers need to take out insurance as soon as the contract is signed, not when it’s time to move in.

This is another upfront cost that is important to remember.

  1. Legal fees

We always recommend that you engage a lawyer to assist you with the conveyancing process.  While this is an additional cost, buying a house is often the biggest financial investment you will make in your life, so it pays to engage a professional to assist you through the process, so it is done right.

At Miller Harris Lawyers we have an experienced property law team that can assist you with the conveyancing process.  Please feel free to contact us for further information.

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Exclusive use areas in community titles schemes

December 13th, 2018

We have seen a few examples recently of buyers not being aware of the truth about garden areas, balconies and the like which are exclusive use areas associated with their unit or townhouse.  Areas such as these are often overlooked in the negotiation of the sale, or worse still, the buyer assumes that they are included or is given incorrect information by the real estate agent.  They can have a big impact on the use and enjoyment of the property, and its value.

What is an exclusive use area?

An exclusive use area is a part of the common property of the community titles scheme which has been designated for the exclusive use of the owners and occupiers of a particular lot, through the by-laws of the scheme.  The by-laws will usually specify which lot has the benefit of the area, for what purpose, and any conditions or other requirements which apply to the use.  Examples of areas which are often the subject of exclusive use by-laws are:

  • car parks;
  • courtyards;
  • gardens;
  • balconies or patios; and
  • roof top areas.

Such areas are not always exclusive use areas – often they will be “on title”, and form part of the legal, freehold title to the lot.

How do I know whether an area is an exclusive use area, part of the lot, or neither?

You cannot tell, either from a title search of the property or from a physical inspection of the property what areas are included on the title, what areas are exclusive use, and what are just general common property.  It is not uncommon for an area of yard to be fenced off for a particular unit, or even for a deck to be built over it, but with the owner having no legal title or exclusive use of the area.

The only way to know what areas are included in the title to the lot, and what areas are exclusive use for the lot, is to obtain a copy of the registered survey plan and community management statement.  The survey plan will show where the boundaries of the lot are.  The plan may show that the lot is made up of several areas in different parts of the building – such as the residential unit on one level and a car park on another.  The community management statement contains the by-laws for the scheme.  If there are any exclusive use areas, they will be recorded here, in a by-law and on a plan showing the location and boundaries of the area.

Is exclusive use as good as the area being part of the lot?

No, not quite.  An owner of a lot with an exclusive use area does have the right to stop others from using the area, and the exclusive use right cannot be taken off them without their written consent, so it is quite secure, but it is not the same as owning the area.  Here are some of the advantages and disadvantages of exclusive use compared to legal title:

Advantages: 

  • Flexibility – provided the body corporate is co-operative, it is relatively easy to change the size or shape of an exclusive use area, or to transfer it to another owner or swap areas with another owner in the complex (particularly handy in the case of underground car parks).
  • Easy to create – new exclusive use areas can be created and allocated without having to mess around with the title to the lot or pay stamp duty.

Disadvantages: 

  • You do not own it – The area is still common property and still owned by the body corporate, so you will normally need permission from the body corporate to make any substantial changes or improvements – such as installing a storage shed or swimming pool in a yard.
  • You can only use it for the purpose for which it was granted – car parks can only be used as car parks and not for storage or building a shed. Private yards can only be used as yard, and not for adding another room to the villa.
  • You still have to maintain it – ultimately your rights will depend on what the relevant by-law says, but in most cases the person who has the exclusive use of an area is also obliged to maintain it. That will include an obligation to maintain gardens, trees, walls, decks and pergolas etc in the area.

What can go wrong?

As mentioned above, exclusive use rights are quite secure, so the main area where things can go wrong is where the reality of them does not match up with a buyer’s (or owner’s) intentions and expectations.  For example:

  • Is a fenced off yard around a unit or townhouse actually exclusive use for that unit or townhouse?
  • Is the car park being used by the seller the correct car park allocated to the unit? Sometimes car park numbers do not correctly correlate to the exclusive use allocations in the by-laws.
  • Is that nice, big garden around the unit exclusive use for the unit, or can anyone use it? If it is exclusive use, are you prepared to maintain it (including any large trees), or do you expect the body corporate to do so?
  • If you want to put a pool, shed or garage in the yard, can you do this, or will you need body corporate permission?

Not having exclusive use of an area which you thought would be included can adversely impact on your ability to use and enjoy the area, as well as the privacy of your lot, and ultimately its value.  On the other hand, being saddled with the care and maintenance of an exclusive use area which you do not really need can be an unwanted burden.

There is nothing in the standard contract used for community title lots which identifies whether there are any exclusive use areas allocated to the lot, or the extent of them.  At Miller Harris, we always do a search of the survey plan and community management statement to identify exclusive use areas.  Some other lawyers do not.  However, even if the searches are done, a lawyer is not going to know what you expect to be included unless you tell them, and it can be difficult to terminate a contract due to an unmet expectation with regard to exclusive use areas, except in very clear cases.  It is better to check them out and get it right before the contract is signed.

What should buyers do?

The old principle of “buyer beware” applies, so:

  • ask questions of the selling agent about what is included in the lot, and any exclusive use areas, when you inspect the property;
  • be aware that agents do not always get it right, so ask to see the plan and community management statement, or better still, get your solicitor to check these out before you sign;
  • if you have specific plans for the property, such as making extensions or additions to it, discuss these with your solicitor before you sign; and
  • even if you have already signed a contract, tell your solicitor if you expect any exclusive use areas to be included with the lot, especially if they were important to your decision to buy the property.

If you are looking at purchasing a unit or townhouse and need advice about exclusive use areas please contact Nigel Hales, Accredited Property Law Specialist and partner at Miller Harris Lawyers on 4036 9700.

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Badgering, Bullying and Bodies Corporate: The Fair Work Anti-Bullying Laws extend further than you might think

September 27th, 2018

Following a recent decision of the Fair Work Commission on bullying in the workplace, you may be surprised to learn just how far the anti-bullying laws extend.  The definition of “worker” under the Fair Work Act is given a much wider meaning than just the traditional employee/employer relationship.  Bodies corporate and strata managers in particular should be aware of this decision.

Application by Ms A [2018] FWC 4147

The application involved a body corporate committee of a residential strata complex in Brisbane and the company engaged by the body corporate under a management agreement. The company provided maintenance, cleaning and other services to the complex and required that the manager live on site.  It was one of the directors of the company, Ms A, who brought the application alleging she was bullied at work by Mr C, the Chairman of the body corporate committee.

The conduct complained of included constant emails from Mr C, up to seven times per day at all hours of the day, as late as 11.00 pm at night.  The emails were about a number of different issues to do with Ms A’s performance of her duties under the management contract.  Some of the items complained of by Mr C included:

  • the prompt performance of the clearing of leaves and other vegetation on a daily basis;
  • attending to garden maintenance including the trimming of trees;
  • pool maintenance;
  • conducting of regular inspections;
  • keeping the common area toilets clean;
  • being contactable and actually living on site; and
  • the enforcement and policing of by-laws.

Mr C argued that his conduct was not bullying, but reasonable management action carried out in a reasonable manner.

The Fair Work Commission found that the issues raised by Mr C were in fact reasonable issues to raise about Ms A’s performance of the services.  However, a “war engaged in by email” was not an appropriate way to raise them.  Particularly, the use of sarcastic and derogatory language in Mr C’s emails to Ms A combined with the excessive amount of emails (sometimes well outside business hours) and the publication of those exchanges to other members of the committee was unreasonable.

The Commissioner pointed out that, as a member of the body corporate committee, Mr C had access to the resources and information to deal with any disputes in the proper manner.  The strata management company engaged by the body corporate could have advised Mr C on the formal dispute resolution process for body corporate matters.

Mr C was ordered to stop bullying Ms A and given direction as to the subject matter, timing and content of future email correspondence.  The orders also required that telephone communication be used in the first instance to assist with the repair of the working relationship between Ms A and Mr C.

The parties in the proceeding were not indentified in order to avoid any impact on other residents of the complex and to facilitate the resumption of a safe working relationship.

What are the Anti-Bullying Laws

At the beginning of 2014, the Fair Work Act was amended to include anti-bullying provisions that allow the Fair Work Commission to make decisions and orders about bullying in the workplace.

The changes allow a worker who reasonably believes that he or she has been bullied at work to apply to the Fair Work Commission to make an order to stop the bullying conduct.

A worker will be bullied at work if, while at work, an individual or group of individuals repeatedly behaves unreasonably towards the worker and that behaviour creates a risk to health and safety.  In this application the Fair Work Commission was satisfied that bullying had occurred.

Who is a worker

In the Fair Work Act anti-bullying provisions, the term “worker” is given a particularly broad meaning.  It includes an individual who performs work in any capacity, including as an employee, a contractor, a subcontractor, apprentice, trainee or volunteer.

As a result the body corporate (and by extension the body corporate committee) have duties to provide a safe working environment to third party contractors.

This is the first time the Fair Work Commission has applied the anti-bullying provisions to a situation outside of the traditional employment relationship.  The decision demonstrates that the anti-bullying laws will extend to all contractors who are performing services or work.

There is also no requirement that a contractor be an individual person.  In this case the ‘contractor’ was a company and it was the director of the company, Ms A, who brought the application under the anti‑bullying rules.

Key points to take away from this decision

The key points to take away from this decision for bodies corporate and strata managers are:

  • The Fair Work Commission found that it had jurisdiction where the resident manager was a company (not just an individual person providing the services). This means that the scope of the anti-bullying laws apply to third party contractors as individuals but also to the employees or directors of third party contractor companies.  Due to the constitutional limits of Commonwealth legislation, the commission may not have jurisdiction if no corporations are involved.
  • It also found that the manager and its employees were “workers” who were owed duties by the body corporate. The anti-bullying legislation applies to workers as defined by the Fair Work Act and this goes well beyond a standard employment relationship.
  • While the chairperson of the body corporate committee was found to be justified in raising many of the issues which he had with the management, it was the manner in which they were raised which was inappropriate.
  • Civility, courtesy and reasonableness in interactions with contractors will not only improve working relationships, but also protect the body corporate from potential liability.

If you would like any further information about this decision, the roles and responsibilities of bodies corporate generally or advice on the resolution of disputes in a strata complex, please contact Lauren Doktor in our property law team on 07 4036 9700.

 

 

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4 Tips for Buying into a Retirement Village

May 3rd, 2018

Are you considering moving into a retirement village?

At first the numerous facilities and up front prices may seem to be perfect for you but it is important that you are aware of all of costs of retirement living.

The most important piece of advice for those considering selling up and buying a property in a retirement village is that you should not be doing it for a financial investment, what you are buying is a lifestyle.  Retirement village contracts have long-term financial consequences which come in the form of exit fees.

Do your research

There are different structures and services that different retirement villages offer, so it is important to make sure you shop around, that the prices you are looking at are fair and that you are aware of the services that you will receive.

Get advice early on

There are only limited periods in which you can change your mind about entering into a retirement village contract so it is extremely important to get advice early on, so that you do not find yourself locked into a contract that you are not happy with.

Know about the exit fees

There is more than the upfront and ongoing costs to consider when buying into a retirement community.  Exit fees are usually the most significant financial obligation associated with retirement village contracts. This is the business model that retirement communities operate on – residents get a higher standard of  services and lifestyle than what they might otherwise have access to and they pay for it on exit.

Most retirement village contracts include an exit fee which increases over time (up to a cap) and there are huge differences in the fees to be paid between different retirement villages.

What if things change?

Many retirees think that the exit fees will not be much of a concern to them, thinking that they will remain in the village for the rest of their lives.  But you should think about how a change in circumstances might affect this:

  • If you have moved to a retirement community to be close to your family and they move away. What if you want to go with them?
  • What if your children’s circumstances change and they need more assistance from you in the care of your grandchildren?
  • What if your health circumstances change and you need a higher level of care which the retirement village cannot offer?
  • What if you simply do not enjoy retirement community living like you thought you would?
  • What if your financial circumstances change?

Generally, you will not receive back enough capital on exit from a village to pay for an equivalent lifestyle elsewhere.  So, make sure you have a contingency plan in place.

Miller Harris Lawyers can help you traverse the process and enter into retirement living with your eyes wide open to avoid unwanted surprises later on.

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5 things you need to know when buying your first home

March 22nd, 2018

You’ve been saving for ages, you have found “the one” and you want to make an offer.  There is so much to think about when choosing to buy your first home – deciding if you want build, buying a renovator’s delight,  co-ordinating the big move, getting funds in order and everything seems to happen so fast.

Here are some helpful tips to help you prepare for the challenge of buying your first home:

1.  The dollars

Most first home buyers have been saving for a long time for their first home.  It can be easy to get swept away with the price when you have your heart set on a particular property.  Thankfully, there are some great incentives for first home buyers that can save you money, but there are also some incidental costs that you may not expect.

It is not just the purchase price you need to factor in when buying your first home.  Below are some other costs to consider:

  • transfer duty (stamp duty): this tax has been around for a while so it may not be much of a surprise to have to pay it, but it can be a fair chunk of cash, so make sure you don’t forget about it and plan ahead.  Thankfully,  there is a concession for most first home buyers which is a great help, and a majority of first home buyers will not have to pay duty on their purchase if the price is $550,000.00 or less;
  • loan fees, solicitor fees, registration fees and insurance: all these costs probably do not come as much of a shock but it does not take much for them to add up.  A lot of first time buyers are not aware that pursuant to the terms of most contracts, they need to get insurance for the property on the next business day following the contract being signed.  If your savings have been cleaned out by paying the deposit you may struggle with the other costs.  The Queensland Government also charges a fee for registration of a transfer of property and these costs generally come out of your loan;
  • first home owner’s grant: the good news is that the first home buyer’s concession is still available in Queensland for new builds.  Subject to certain eligibility criteria, until 30 June 2018 you can receive $20,000.00 towards your purchase of a brand new home  (this is set to go back down to $15,000.00 shortly); and
  • outgoings and adjustments: at settlement, outgoings such as rates, water usage and body corporate levies will be adjusted on the final amount you pay.  Depending on the particular property and when you settle, this amount may be a little or a lot.

2.  What is in the contract

Putting in an offer on a place is usually in the form of a contract, so it is very important to have your solicitor look over a contract before you sign on the dotted line.  Once the contract is fully signed, it is often too late to make any changes unless the other party agrees.  Make sure you have a good think about what it is you want out of the property.  If you are planning major renovations do you need to know if the council is going to approve the changes you have in mind?  If you are building, are there any restrictions on what type or style of home you want to build that will not fit in with your plans?

3.  Searches matter

Searches are often underutilised by buyers in general.  They can seem like a big cost for a little return but the reality is that you might spend a couple of hundred dollars on searches that could save you thousands in the long run.

Having a building and pest inspection completed on the property (and including this as a condition in the contract) is a must if you are buying an existing house.  You do not want to find out about any nasty surprises after settlement.

4.  Do your homework

Make sure you do your research.  Knowing the area, your long term goals and the property values in the area are very important factors before you jump in and purchase your new home.  There are many things that are not covered by the contract, and which you should check out before you sign.  For example: what are the neighbours like? Does the property flood?  Is it affected by road or aircraft noise?  If you are buying a unit or townhouse, do you understand how community titles schemes work, and are you ready for community living?

5.  Be prepared

Time stands still for no one!  In Queensland, time is of the essence in contracts to purchase land.  This means that you may lose your contract, and possibly your hard earned deposit, if you are late with a condition or being ready for settlement.  The best way to avoid problems is to be prepared ahead of time, get on top of things early and engage a good solicitor to help you through the process.  Before or as soon as you have a contract in place, you should be speaking to a financier about a loan (having a pre-approval in place is often a good thing to do, but just be aware that banks may not give the final okay until they have completed a valuation on a property, which can take time).  Also, you should arrange building and pest inspections as soon as possible following execution of the contract.  Do not leave things to the last minute!

Buying your first home is a big commitment and is bound to be a little stressful, but it is all worth it in the end to have a place to call your home.  Using Miller Harris Lawyers for your conveyancing can help take a lot of the stress out of the process, and save you a lot of time.

For more information, contact Lauren Doktor.

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Short term (holiday) accommodation in community title schemes – an international issue

February 6th, 2018

For years there has been tension in some community (strata) title schemes involving conflicts between holiday makers and permanent residents. There have been attempts by schemes which are predominantly permanent residential complexes to outlaw holiday letting via by-laws, and even some attempts by schemes which are predominantly holiday let to outlaw permanent residence.  So far, these attempts have failed in Queensland, with the by-laws being found to be invalid.  The town planning and development approval laws are effectively the only controls, but many local planning schemes and approvals are not sufficiently clear to offer any help.

The popularity of short term accommodation booking services like Airbnb have added further fuel to the fire, and last year saw some significant decisions about the issue. In fact, the issue went all the way to the Privy Council in London, the highest court in the British Commonwealth[1], in an appeal from a case in the Turks and Caicos Islands[2].  The Turks and Caicos Islands are a collection of islands located in the northern Caribbean, almost as beautiful as Far North Queensland. In that case, a body corporate was attempting to enforce a by-law which said that units in the complex could only be used for the private residence of the owner, or the owner’s guests and visitors, but could be rented out for periods of not less than one month.

One of the owners was letting his unit for a week at a time to holiday makers. He argued that the by-law was invalid, because it was a restriction on the sale, disposition or letting of the unit, and contravened a prohibition on such restrictions contained in the relevant strata title legislation. A similar restriction can be found in the strata title legislation in most states of Australia, including Queensland.

The Privy Council found that the by-law was valid, because it did not restrict or prohibit letting, but rather related to the use of the lot, and sought to preserve the fundamentally residential character of the complex.  In doing so, the Privy Council had regard to a similar decision made by the Court of Appeal in Western Australia in June 2017[3].

So will this decision help bodies corporate in Australia who want to impose such by-laws?  Well in some jurisdictions, yes, but not in all.  New South Wales, Western Australia, Northern Territory and ACT will all benefit, as they all have directly comparable legislation to that considered in the Privy Council decision. South Australia has a similar provision, but also has a section allowing a court to strike out a by-law which reduces the value of a lot, which might prove problematic.  The Privy Council decision might also be helpful in Victoria, but the by-law will have to be very carefully worded due to differences in the legislation.  Tasmania has a section in its legislation which specifically allows by-laws to prohibit short term letting, so it should be less of an issue there.  Queensland is different again.

In Queensland we have a section of the Body Corporate and Community Management Act which corresponds with the legislation considered by the Privy Council[4].  However, we also have sections which prohibit by-laws restricting the type of residential use[5], and prohibit by-laws which discriminate between types of occupiers[6].  Short term and long term accommodation have both been regarded as residential uses in Queensland, and there have been several examples of by-laws dealing with the issue having been declared invalid.  There is also a possible argument that it is unreasonable for a body corporate to adopt a by-law which prohibits a use of a lot which would otherwise be lawful, and that doing so breaches the body corporate’s duty to act reasonably under section 94(2) of the act.  That argument has been successfully used to invalidate by-laws which prohibit having animals in a community titles scheme. So whilst the recent decisions offer hope to much of the rest of Australia, it is likely that Queensland will need to await legislative change before bodies corporate can regulate short term letting through by-laws.

[1] It was once possible to appeal to the Privy Council from Australian Courts, but that was abolished in 1986.

[2] O’Connor (Senior) and Others v The Proprietors, Strata Plan No. 51 [2017] UKPC45

[3] Byrne v The Owners of Ceresa River Apartments Strata Plan 55597 [2017] WASC 104

[4] Section 180(4) Body Corporate and Community Management Act

[5] Section 180(3)

[6] Section 180(5)

For more information about this article, please contact Partner Nigel Hales.

Nigel is also the only Accredited Property Law Specialist in Cairns.

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