Paper 5 - Rules and House Rules

An owners corporation is a body corporate that can sue and be sued in its corporate name. The Unit Titles (Management) Act 2011 (the Act), defines the legal functions and responsibilities of owners corporations. It sets out the things which corporations may or must do and the responsibilities of the executive committees which are elected at each AGM to exercise the functions of the corporation until the next following AGM. The Act supersedes both the 1970 and 2001 versions of the Unit Titles Act (UTA).

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. The Act, accordingly, provides (at S107) for owners corporations 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 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 ($550).

The Act, as have each of its predecessors, includes a set of what it calls “Default Rules”, which in the first instance must be used by owners corporations. But recognising that unit plans come in all shapes and sizes, owners corporations are given (S 108) the power, by special resolution (two thirds majority of a quorum), to amend or add to the default rules to suit their circumstances. Note that while a corporation can adopt, amend, or add to its rules, it cannot give itself powers or functions beyond those given it by the Act, and it must also comply any other laws that are applicable to it.

When each new version of the Unit Titles Act replaces its predecessor, provision is made for the Rules (or articles as they used to be called) of existing corporations to be deemed to be valid rules under the updated Act, provided they had been validly framed under the newly superseded Act.

If your owners corporation was originally registered under the UTA 1970 and was still operating on 5 April 2001, its articles as at that time were deemed to be rules for the purpose of the Unit Titles Act 2001, the then new Act, and could have been amended as provided for in that Act. Action Required: None, but make sure any future amendments are consistent with s108 of the Unit Titles (Management) Act 2011.

Similarly, if your corporation was registered after 5 April 2001, its Rules (articles) as at 30 March 2012 are the default articles stipulated in the Unit Titles Regulations 2001, as may have been modified by your corporation under the UTA. However, any of these rules that prove to be inconsistent with the 2011 Act will have no legal effect. Action Required : None, but you would be well advised to identify which if any of your articles are now rendered ineffective, and consider which if any should be amended or replaced as provided for in s108 of the 2011 Act.

If your corporation is one first registered since 30 March 2012, its Rules are the Default Rules in Schedule 4 of the THE ACT as possibly modified since registration under section 108 of the Act . Please see UnitTitles (Management) Act Schedule 4 Default Rules.

To ensure everyone understands how to be a good neighbour, an owners corporation 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, which requires payment of a fee (of more than $100), and the process must be repeated if and when the corporation 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 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 a 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).

To give its House Rules more authority, a corporation might consider adding a new Rule to the effect that House Rules adopted by special resolution are to be interpreted and applied with the same force as the Rules, so giving the executive committee the power to implement the policies adopted by the corporation without the need for too frequent general meetings. 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.

Example 1

Rule 3 requires that unit owners must ensure that the units are in a state of good repair. The corporation might agree in advance on a House Rule specifying the periods between repainting and the range of colours permitted.

Example 2

Rule 4 provides that no structure may be erected in or on a unit other than in accordance with an unopposed resolution of the corporation. A corporation might decide that given the design of the units, approval for certain specified styles of blinds, awnings or pergolas could be assumed, provided the executive committee is satisfied that the envisaged works are of kinds defined in the House Rule.

Example 3

Rule 5 provides that an owner must not use the common property to interfere unreasonably with its use by another owner. A corporation might adopt House Rules limiting the speed at which vehicles can be driven, the number and types of vehicles (Not trucks or caravans for example) that can be brought into or parked in the common property and where allowed vehicles can be parked. Similarly, House Rules might address the disposal of garbage, and noisy behaviour of children (except during such hours as might be agreed to be reasonable).

Example 4

Rule 7 states that an owner must not use the unit so as to cause a nuisance or annoyance to another owner unless the executive committee has given written approval to that use. Given that such permission can only be withdrawn by special resolution of the whole corporation, the corporation might choose to lay down strict guidelines for the grant of approval.

Example 5

Rule 8 prohibits the making of noise in a unit sufficient to cause substantial annoyance to an owner of another unit, unless with the written approval of the executive committee. Given that such approval can only be withdrawn by a special resolution of the whole corporation a corporation might choose to lay down strict guidelines as to how much noise might be allowed and the hours during which it could be permitted.

Other Examples

The range of circumstances that owners corporations will encounter is so wide that each corporation will need to consider the subjects on which it will need to give guidance to its executive committee and members and the terms in which that guidance should be expressed. House Rules might, as required, address things like:

  • Rules apply alike to owners, tenants, visitors, tradesmen etc.

  • Acceptable behaviour in common property (noise, nuisance, dress, offensive language, littering, damage and defacement)

  • Respect for privacy

  • Fire access and egress

  • Garbage disposal arrangements

  • Laundry and clothes drying

  • How to deal with an electrical, plumbing or other problem

  • Use of and restrictions on storage facilities

  • Keeping of pets (keeping pets is a substantive entitlement spelled out in Section 32 of the Act but a house rule might spell out the kind of conditions which the corporation would impose)

  • Erection of signs

  • Use of lifts (Class A only)

  • Use of recreational facilities (e.g. pool, gym, common room, workshop, tennis courts).

  • Procedure for processing Insurance claims.

  • Process for dealing with overdue levies.

  • Functions of and dealing with the Executive Committee.

  • Functions and duties of a manager and the responsibility for overview of those functions.

  • Maintenance of units in good repair (particularly exteriors of Class B units)

  • Process for dealing with resolutions made at meetings lacking a quorum.

Revised: May 2015