To Airbnb or not to Airbnb: New rules for Owners Corporations regarding short-stay accommodation

How do these recent changes to the law impact apartment owners/occupiers and Owners Corporations?

Airbnb and other forms of short-stay accommodation have grown rapidly over the past few years, providing people with alternative options when travelling or looking to spend a night or two out of home. However, short-stay accommodation use in apartment buildings may cause issues for other owners, tenants and property managers, who can find themselves in the unfortunate position of having to deal with loud and destructive guests who interfere with others' enjoyment and use of the property.

In Victoria, recent amendments to the Owners Corporations Act 2006 introduced changes to the law regarding short-stay accommodation. As of 1 February 2019, apartment owners and occupiers who host Airbnb guests may now be held liable for damage, noise or loss of amenity caused by their Airbnb guests.

What do these changes mean for short-stay accommodation properties?

These new laws enable other owners and occupiers within a building to complain to the Owners Corporation about the conduct of Airbnb hosts and their guests. A complaint can be made that Airbnb guests are:

1. Creating an unreasonable amount of noise likely to substantially interfere with the peaceful enjoyment of an occupier or their guests, or
2. Behaving in a manner likely to unreasonably and substantially interfere with the peaceful enjoyment of other occupiers or their guests, or
3. Using the common property so as to cause a substantial hazard to the health, safety and security of other occupiers or their guests, or
4. Unreasonably and substantially obstructing the lawful use and enjoyment of the common property by other occupiers or their guests, or
5. Substantially damaging a unit or the common property, either intentionally or negligently.

The Owners Corporation can then choose to give the host a notice requiring them to rectify the issue. If the host fails to do so, the Owners Corporation may then elect to apply to VCAT, seeking an order prohibiting short-stay accommodation on the property. If granted, such an order can also require payment of compensation for either:

• The loss of amenity caused, or
• As a penalty for failure to rectify the damage, or
• Any other order that VCAT believes is appropriate.

What courses of action are available?

As an owner or tenant of the premises

If you believe that an Airbnb guest has engaged in the conduct listed above, you are entitled to make a complaint to the Owners Corporation. A complaint must be in writing, using a specific form. The Owners Corporation must make a copy of this form available to you upon request.

The Owners Corporation is then responsible for dealing with the complaint, and will inform you if no action will be taken. If you are unsatisfied with this response, you may then elect to make an application to VCAT for an order prohibiting short-stay accommodation on the property (as mentioned above).

You can find more information about commencing or undertaking proceedings at VCAT here.

Owners Corporation obligations

If a complaint has been made, the Owners Corporation must decide whether to take action regarding the complaint. An Owners Corporation can only do so if there is a strong belief that the Airbnb guest has committed the acts outlined in the complaint. Even so, there is no obligation on the Owners Corporation to take any action.

If the Owners Corporation decides to act on the complaint, the first step is to give written notice to the unit owner and to the Airbnb host, notifying them that a complaint has been made, and informing them of the allegations outlined in the complaint.

The notice will request that they rectify the breach by either:

• Fixing any common property that has been damaged, or
• Cease making unreasonable amounts of noise.

The Owners Corporation must also inform the unit owner and the Airbnb host that they may also choose to apply to VCAT for an order to resolve the matter.

If the breach is not rectified to the satisfaction of the Owners Corporation, they may then apply to VCAT for any of the orders set out above.

In addition to the above, the Owners Corporation has an obligation to provide a report at the Annual General Meeting regarding the complaints that have been made and the action, if any, that has been taken to resolve them.

Airbnb Hosts

Should a complaint be made about the conduct of your guests, these laws allow you to be held liable for any damage or disruption caused by them. If you receive a notice from the Owners Corporation requiring you to rectify a breach, a failure to do so could result in an application being made to VCAT for an order prohibiting you from using the property for Airbnb or other short-stay accommodation purposes.

You may also be required to make a payment, either as a penalty or as compensation to other lot owners, for the loss of amenity caused by your guests.

In order to prevent these outcomes, you should act in advance to protect your interests by taking reasonable steps to prevent your guests from engaging in the conduct outlined above. If this is not possible, steps should be taken to rectify any issues that arise as soon as possible, in order to avoid potential VCAT proceedings.

How can Sharrock Pitman Legal assist?

At Sharrock Pitman Legal, we have Accredited Specialists in Commercial Law and Property Law, and an experienced Litigation team. Our lawyers provide expert advice and guide you through any issues you may be experiencing within your Owners Corporation. Please contac us on 1300 205 506 or email sp@sharrockpitman.com.au. Alternatively fill in the form below.

The information contained in this article is intended to be of a general nature only and should not be relied upon as legal advice. Any legal matters should be discussed specifically with one of our lawyers.

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