Rules and house rules

Rules and house rules

The content - including publications - on this website is intended only to provide a summary and general overview on matters of interest. It is not intended to be comprehensive nor does it constitute legal advice. We attempt to ensure that the content is current but we do not guarantee its currency or accuracy. We are not lawyers and any communications between the OCN and its members do not constitute legal advice and must not be relied on as legal advice. You should seek legal or other professional tailored advice to your circumstances.  You should seek legal advice before acting or relying on any of the content in this website and any communications from the OCN. OCN will not be liable to you or anyone else for any loss suffered in connection with the use of this website or any of the content.

An owners corporation is a body corporate that can sue and be sued in its corporate name.  (S9) The Unit Titles (Management) Act (Act), defines the legal functions and responsibilities of Owners Corporations (OC's). It sets out the things which corporations may or must do and the responsibilities of the Executive Committees (EC's) which are elected at each AGM to exercise the functions of the corporation until the next AGM.

Life in a unit plan means not only that you share the common property with the other residents but the closer proximity of units means that the way you act within the confines of your unit can adversely affect or offend your neighbours.  So the Act provides (at S107) for OC's to have legally binding Rules that set out the limitations within which individual members of the corporation may exercise their rights. The Rules are intended to allow owners and residents of units to be able to enjoy the use of their property in reasonable peace and harmony. Members who breach the Rules may be served a Rule Infringement Notice by the executive committee requiring them to remedy the contravention. Failure to do so is an offence which may be referred to the ACAT for adjudication. The maximum penalty is 5 penalty units ($800).

The Unit Titles (Management) Regulation includes a set of “Default Rules”, which apply from 1 November 2020 to all OCs except as amended by OCs with valid non-standard Rules (S169). OC's are given (S 108 of the UT(M)A and S7B of the UT(M)R) the power, by special resolution (three quarters majority of a quorum), to amend or add to Default Rules 1.4 (Alterations and Additions), 1.5 (Pets in Units) and 1.6 (Assistance Animals) to suit their circumstances and may include rules relating to the adoption of differential levies and Special Privileges over the common property.

Note that while a corporation can adopt, amend, or add to its Rules, it cannot give itself powers or functions beyond those given to it by the Act, and it must also comply with any other laws that are applicable to it.

To ensure everyone understands how to be a good neighbour, an OC may find it desirable to inform members and residents how the discretionary powers given it by the Act and the Rules will be interpreted and applied, and how breaches of the Rules will be dealt with.  There are two ways of doing this. The first is by amending the Rules themselves through a special resolution as provided for in S108 of the Act.  The changes have to be registered within 3 months of being made, which requires payment of a fee and the process must be repeated if and when the OC adopts a new policy for handling any part of its business.

Some corporations prefer a less formal approach, under which amendments to the Rules can be kept to the essential minimum, and guidelines can be developed covering things that are liable to change or may need to be interpreted to suit the application of a Rule to a particular circumstance. These “Guidelines” or “House Rules” as they are usually called, should be adopted by an ordinary resolution of a general meeting, and each should be so framed that the House Rule becomes an instruction to the executive committee as to how it is to exercise the one or more of the corporation's functions. (See s 35 (3) (a) of the Act).

Note however that House Rules should only explain how the Rules work, and that neither Rule nor House Rule has any effect if it contravenes the Act or any other applicable law of the Territory.

Because House Rules are only advisory guidelines and not enforceable, many OCs have incorporated the House Rules into their registered Rules.  This has resulted in Rules that are as many as 60 pages in length. Obviously, the Rules then are more than likely to be internally contradictory or outside the powers of the OC and largely invalid.

Given the changes that came into effect on 1 November 2020 it would be advisable for OCs to review their Rules.