Leasing unit titles is more complex than other forms of leasing. The Unit Titles Act 2010 (UTA) and the body corporate operational rules will prevail over the lease. The landlord might only have a very small say in how that plays out. This depends on their individual voting power. There is another layer of rights and obligations to consider. These are beyond but interwoven with the usual landlord and tenant relationship.
Here are some examples, using the current ADLS Sixth Edition Deed of Lease:
- The definition of “property” means the land and buildings comprised in the unit title development. Wherever the lease refers to “property” it means the whole unit title development, which might include other units not owned by the landlord. For example:
- The landlord is contractually obliged to pay“all outgoings in respect of the property”.
- When considering a request for a change of use the landlord can consider whether the change would be “in substantial competition with the business of any other occupant of the property”.
- The lease will be subject to the body corporate operational rules. This applies whether they are in place as at the date of the lease or as subsequently amended and/or replaced. The rules might conflict with the lease. For example, the rules might dictate permitted uses of the individual units or restrict noise levels, contrary to Council rules and what a tenant might assume will be permitted.
- The lease is also subject to the UTA. In determining a unit’s fair proportion of outgoings a reassessment of the rate at which levies are charged to an individual unit under the UTA might bind the tenant also.
- The landlord needs to use “best endeavours” to ensure the body corporate complies with its rules and the provisions of the UTA. Best endeavours might impose an obligation on a landlord to incur some expense and do all that is reasonably required in the circumstances to achieve the desired outcome. It might include issuing Court proceedings if necessary. Consider this in the context of a body corporate’s obligations to repair and maintain common property where lack of repair is impacting a tenant.
- If the rules require it, consent will be needed from the body corporate, in addition to consent from the landlord. Alterations and additions to tenancies will be an area where further consent might be required under the UTA. Changes of use might be required, depending on the rules. Assignments and subleases less likely, but again this depends what the rules say.
- The lease is silent on whether the tenants have any rights when it comes to voting. Under the UTA the right to vote sits with the property owner, subject to the requirements of their mortgagee. There are some matters that a tenant might want to have a say in.