Operating a business from a residential unit

oystercove – a quick response before your post slips off the bottom of the list.

The first hurdle faced by Owners Corporations (O/C), and mores the pity, is that they’re not “persons” under the terms of the NSW Residential Tenancies Act (RTA) , and consequently unless tenants are in breach of a By-Law, O/C’s can’t take any action against them in the Tenancy Division of the NSW Civil and Administrative Tribunal (NCAT) – incorporating the former CTTT.

So with regard to the possible use of the Unit for commercial purposes, again, in the absence of a Special By-Law of your Strata Plan prohibiting that, your Owners Corporation (O/C) needs to rely on the conditions of Council’s original approval for the development, which I’m sure you’ll find is for residential use. However, I wouldn’t recommend heading down that path in too much detail, as Councils sometimes delve too far into that detail and discover a range of other non-compliances that end up just costing your O/C money to rectify; so gently gently with a general what-if type inquiry on that one!

Concurrently, have your O/C Secretary remind its Strata Manager that they are employed by it (i.e. all Owners), and to instruct them not to deal with tenants concerning phone lines or anything else, but to instead direct them to contact their Landlord or their Managing Agent with regard to any queries / problems that they may have. In that way expenditure by the O/C will be avoided, at least until (and maybe even after) the Owner / Landlord of the Unit makes contact, at which time your O/C and Strata Manager can raise the matter of the suspected commercial use.

Then while they’re at it, have your O/C or Strata Manager write to the Owner / Landlord of the Unit with regard to them providing a Tenancy Notification under S119 of the NSW Strata Schemes Management (1996), which by the way can by application to the NCAT attract a penalty to that Owner / Landlord of $550 if it’s not provided within 14 days of a Lease commencing.

Your O/C and Strata Manager will then know the names and numbers of legal tenant/s and when the Lease ends, will be able to conclude whether any non-tenants are in “occupancy”, and will be in a better informed position to discuss possible breaches of Council’s Consent, of the Lease itself and of the RTA with the Owner / Landlord, which by the way states that premises covered under their provisions are those “used or intended to be used as a residence”.

Also look for any breaches of your Plan’s By-Laws, such as those relating to parking in circumstances where there are so many “occupants”, because your O/C is a “person” who can initiate action in the Strata Division of the NCAT against any residents (i.e. Owners and tenants) who breach By-Laws.

Hope that info. helps, but if nothing else it will avoid your O/C spending money on investigating phone lines or indeed anything else in the absence of a formal request from the Owner / Landlord of the Unit concerned, at which time the O/C can tackle them about the suspected commercial use of their property and its implications, and advise what if anything it may or may not do about any maintenance request/s involving common property.

@kiwipaul said:
Whale I don’t know what the problem is but some of the entries don’t show up in the list down the left hand side and this is one of those initially as this is the first time I’ve seen it and I log on most days.

It’s not a problem … far from it.  The new topics and responses to older ones come in so quickly these days that a topic only a couple of days old can drop off the bottom of the “recent posts” column.

That’s why it’s best to post in the right  topic from the start so that people can find their posts and responses more easily after they have been shunted off the page.

I do try to shepherd those that end up in the “How to post” bin but it’s hard to keep up. 

Whale & Oystercove,

the phone line issue is a fantastic opportunity for the EC and or strata manager to invoke the OC’s rights under s65 of the Strata Schemes Management Act 1996, being the right to access a lot to inspect common property to work out if it needs to be maintained. In doing so, this provides the chance to inspect the space and talk directly with the tenants about what exactly they are using the apartment for.

To be able to take any action against the owner or occupants for conducting a business (if they are), the EC needs evidence that they are in fact running a business. This is not dissimilar to residents using the apartment as a brothel, unfortunately you need to have proof that this is the case (find the details of the company, copies of adds or any material that reflects business is operating in the apartment, go undercover etc). You will need this to be able to pass on to correct authority to take action (worst case scenario), but also to communicate with the apartment owner about the issues.  Also remember there is a fine line between home office and a business.

The next issue is to establish what actual works are required regarding the phone line. Get a detailed quote, meet with the owner and occupier, establish what needs to be done.  It’s pretty easy to establish where the original phone line to an apartment ran and any new lines that have been installed.  The OC is only really responsible for the original phone line between the MDF and the Apartment. It is very unlikely that there will be a problem with these cables.

If the owner promised the tenants something that wasn’t already there, the OC has no responsibility to provide this, but could if the right offer we’re made to the OC, permit passing a exclusive use by-law to the owner, to permit the installation at the owner’s cost and ongoing responsibility to maintain.