VIC: Valid Common Property Lease or License

This video and article about valid common property lease or license has been provided by Rochelle Castro, RC & Co Lawyers.

Table of Contents:

• QUESTION: The developer of our block leased the roof space to himself at the inaugural AGM held 2 days before the owners took possession of their individual apartments and he was ‘technically’ still the owners of all lots. Is this valid?
• QUESTION: What are the risks, if any, in purchasing a unit predominantly because of its great courtyard if the courtyard is not on the title? Are there options to ensure exclusive use of the courtyard or to include it on the title?
• QUESTION: The committee members run their private business in the residential lounge and residents are locked out. The OC cannot find any lease or licence for them. So how can a special meeting be useful as these men represent hundreds of [non-english speaking] overseas owners?
• ARTICLE: Valid Common Property Lease or License

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Question: The developer of our block leased the roof space to himself at the inaugural AGM held 2 days before the owners took possession of their individual apartments and he was ‘technically’ still the owners of all lots. Is this valid?

The developer of our block leased the roof space to himself at the inaugural AGM held 2 days before the owners took possession of their individual apartments and he was ‘technically’ still the owners of all lots.

After the final settlement but before the owners had an opportunity to form an Owners Corporation Committee, he on-leased the roof space to a Telco Company.

While the leasing of the roof space to himself was done surreptitiously, was he nevertheless required to seek approval from the Owners Corporation committee for the use of the roof space.

Answer: It is possible that the developer passed a special resolution for the lease when he was the owner of all the lots. Check the dates closely.

The Owners Corporation is required to pass a special resolution to lease part of the common property according to section 14 of the Owners Corporations Act 2006. It is possible that the developer passed a special resolution when he was the owner of all the lots.

We suggest that you look at the date that the special resolution was passed (if any). The date that the special resolution was passed must be at least the day or date between the plan of subdivision registration and before settlement (sale to all other owners). The special resolution must also be in meeting minutes of a general meeting. In the absence of these, in my view, a special resolution was not validly passed and the no lease was granted. On the other hand, if evidence as above is available, the lease could be valid.

Rochelle Castro
RC & Co Lawyers
E: [email protected]
P: 1300 072 626

This post appears in Strata News #531.

Question: What are the risks, if any, in purchasing a unit predominantly because of its great courtyard if the courtyard is not on the title? Are there options to ensure exclusive use of the courtyard or to include it on the title?

I’m looking to purchase a unit in VIC. The unit has exclusive access to a courtyard through the living room. The courtyard is fenced off and currently the only way to access it is through the unit. However, it’s not included in the title. 

What are the risks, if any, in purchasing a unit predominantly because of this great courtyard if it’s not on the title? Can owners corporate decide to open it up to all other units at some point down the track? Can they turn it into, say, a carpark?

Are there options to ensure exclusive use of the courtyard or to include it on the title?

Answer: The first point of call is to get your hands on a ‘Plan of Subdivision’.

The first point of call is to get your hands on a ‘Plan of Subdivision’. Once you have this, a Strata Management firm will be able to confirm whether or not that courtyard is actually part of your title.

Presumably ‘exclusive use’ in this instance has only been defined by the ‘fenced-off’ area? It would be worth checking the meeting minutes record to see if there is any resolution that provides ongoing ‘exclusive use’.

In the absence of this, and if the courtyard is indeed common property, the Owners Corporation may retake possession at any time (by removing the fence or otherwise converting the courtyard for another use).

They could apply to the Owners Corporation to lease the area in question, though this may only be achieved by the existing lot owner, not a prospective purchaser. If they purchase it without confirmation of an existing lease, they can’t guarantee the Owners Corporation will grant it.

Tristan Veurink
VIC Branch Manager
Civium Communities
E: [email protected]

This post appears in Strata News #457.

Question: The committee members run their private business in the residential lounge and residents are locked out. The OC cannot find any lease or licence for them. So how can a special meeting be useful as these men represent hundreds of [non-english speaking] overseas owners?

Answer: It appears that it is not a leasing or licensing issue.

We understand the frustration in situations like these. If there is reasonable proof that particular members of the Owners Corporation use the common property and obstructs others’ use of the common property (locking out other members), it appears that it is not a leasing or licensing issue. Obstructing others’ use of the common property is a breach of the model rules.

Rochelle Castro
RC & Co Lawyers
E: [email protected]
P: 1300 072 626

This post appears in the November 2020 edition of The VIC Strata Magazine.

Article: Valid Common Property Lease or License

If you are claiming a lease or license over the common property of your development, it is not enough to rely on that document signed by the owners corporation which could be called a lease or license

Section 14 of the Owners Corporations Act requires that the owners corporation must pass a Special Resolution authorizing a lease or license over common property so that the license or lease that you are relying upon becomes valid

In the absence of Special Resolution proof you could risk having that piece of common property that you are relying upon to lease or license to be taken back by the owners corporation based on case law.

Rochelle Castro
RC & Co Lawyers
E: [email protected]
P: 1300 072 626

This post appears in Strata News #416.

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