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Owners corporation law

12 Feb 2015

Australian employers are starting to offer their employees flexible working solutions to enhance productivity and sustain employee engagement by allowing them to work from a home office.

At the same time, due to technical innovations and a rapidly-changing marketplace, more and more tech-savvy entrepreneurs are starting businesses using no more than a mobile phone and a laptop and working out of their bedrooms.

Owners’ corporations need to be aware that owners and residents will frequently engage in commerce from their residential units, and may conduct a full-time business activity from their homes.

From a legal perspective, the starting point is that any resident or owner who wishes to run a stand-alone business from their residential unit should check with their local council to see if the building’s planning permit and zoning allows for commercial activity.

Consideration also needs to be given to the issue of insurance – a public liability policy ought to be taken out in the name of the company, trading name or entity – to cover any damage caused to the building or to other owners or residents that may result from the business (for example - fire, flood and electrical shocks).

Most importantly, owners or residents need to carefully review the rules of the owners’ corporation to check whether the owners’ corporation has any specific requirements or criteria to satisfy before starting the business activity.

Most owners’ corporations will already have a registered rule that permits a home office activity to be carried on, so long as there is only one full-time employee working out of the lot.

Some types of businesses (such as beauty salons, remedial massage clinics, hairdressers and childcare centres) will have specific and additional council-imposed criteria to satisfy before they can operate.

As the world continues to change around us, owners’ corporations need to be aware that rules should be flexible and sometimes need to change if they are out of date.

For instance, a rule that prohibits a non-residential use of a lot is open to challenge at VCAT and could be struck down for being unreasonable.

A regular review and audit of the registered rules of the owners’ corporation should be completed every five years to take account of changes in the legislation and the common law decisions that come out of the tribunals and courts around Australia.

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