VIC: Q&A Airbnb neighbour flooded my apartment and damaged my goods

This article discusses the implications of short term rental insurance cover when apartments are let using sites like Airbnb.

Table of Contents:

• QUESTION: I manage a short-term accommodation rental in our building. Recently, my disruptive guests caused havoc. The owners corporation has issued me a breach notice, threats and bullying behaviour but refuses to assist me in managing the problem.


• QUESTION: A lot owner in our small scheme short term lets. Their renters are encouraged to bring pets. This has created mess around the exterior of the building. How do we stop this?


• QUESTION: I’ve been involved in a confusing situation where a sub let (Airbnb) neighbouring apartment caused flooding, which caused water damage to my goods. Should the landlord have short term rental insurance cover?

Question: I manage a short-term accommodation rental in our building. Recently, my disruptive guests caused havoc. The owners corporation has issued me a breach notice, threats and bullying behaviour but refuses to assist me in managing the problem.

A hotel manages the first few levels of the building. A few months ago, our building saw an increase in criminal activities. The committee increased security on the ground floor, where the hotel reception is located.

I manage a short-term accommodation rental in our building. A month ago, some people blacklisted by the hotel joined my guests in my lot, stole more than $1300 worth of belongings, and were very noisy. It was a nightmare! They returned, booking under a different name and misbehaved again three weeks later.

I’ve received threatening emails, a breach notice from our strata manager and a notice to comply from the council. I’ve asked the owners corporation and hotel to cooperate with me to solve the problem by notifying me if they identify the guests on CCTV or if I can install CCTV, but they refuse.

Can the owners corporation continue to threaten and bully me despite refusing to cooperate to solve this issue?

Answer: The onus is on lot owners to manage occupiers of their lot, not the owners corporation.

On 1 February 2019 the Owners Corporations Amendment (Short-stay Accommodation) Act 2018 (Vic) came into force, which aimed to regulate the increasing number of short-stay accommodation arrangements in residential apartment buildings in Victoria.

Under these rules, which are encapsulated in Division 1A, sections 159A – 159F of the Owners Corporations Act 2006 (Vic) (‘Act’), apartment owners are now liable for any damage, noise other disruption caused by their short-term guest, meaning a stay of 7 days or less. The rules allow other lot owners and occupiers to file complaints to their respective owners corporation about undesirable behaviour of short-stay occupants, including:

• Causing unreasonable noise or behaving badly.


• Creating a health, safety or security hazard.


• Obstructing the lawful use and enjoyment of the common property.


• Damaging either private or common property.

Once a complaint has been made, the owners corporation has the discretion to issue breach notices. If these notices are disregarded, the owners corporation may apply to VCAT to resolve the dispute.

VCAT, in turn, can:

• Ban the use of a lot for short-stay accommodation if a lot owner has received three notices from the owners corporation in the past two years.


• Fine guests up to $1,100 for disruptive behaviour.


• Award compensation of up to $2,000 to each affected neighbour.

The enforcement of breach notices and emails relating to short stay accommodation complaints may not constitute bullying. Rather, it is likely that VCAT would find this to be good building management by the committee and strata manager, particularly in circumstances where goods have been stolen and the council has issued a notice to comply with any local laws relating to short stay rental accommodation.

The onus is on lot owners to manage occupiers of their lot, not the owners corporation. In such circumstances, lot owners must be mindful of their potential liability under the Act to pay compensation or damages for loss of amenity caused by their short-stay guests.

Fabienne Loncar Moray & Agnew Lawyers E: floncar@moray.com.au P: +61 3 8687 7319

This post appears in Strata News #666.

Question: A lot owner in our small scheme short term lets. Their renters are encouraged to bring pets. This has created mess around the exterior of the building. How do we stop this?

One owner in our eight unit building has not declared they are short-term letting their lot via Airbnb. Short-term renters stay for around five days.

On their Airbnb listing, the unit is advertised as ‘pet friendly’ and guests are encouraged to bring their furry friends with them for their stay. Guests have been taking their pets out the front of the building to ‘do their business’. This has resulted in a very unpleasant smell and mess at the entrance to our building.

How do we address these problems?

Answer: Model rules are applicable to short stay residents.

Short stay accommodation platforms such as Airbnb and Stayz have been a contentious issue for owners corporations.

When the Owners Corporation Act was amended Part 10 Division 1A – Complaints and procedures—short-stay accommodation arrangements was added.

In summary, this section deals with complaints and procedures regarding short stay accommodation.

It should also be noted, the model rules are applicable to short stay residents.

In this case, Model Rule 4.1 applies:

4. If the owners corporation has resolved that an animal is a danger or is causing a nuisance to the common property, it must give reasonable notice of this resolution to the owner or occupier who is keeping the animal.


5. An owner or occupier of a lot who is keeping an animal that is the subject of a notice under subrule (4) must remove that animal.


6. Subrules (4) and (5) do not apply to an animal that assists a person with an impairment or disability.

Ingrid Goldenfein OccamStrata E: ingrid.goldenfein@occamStrata.com P: 03 7042 5659

This post appears in Strata News #648.

Question: I’ve been involved in a confusing situation where a sub let (Airbnb) neighbouring apartment caused flooding, which caused water damage to my goods. Should the landlord have short term rental insurance cover?

I’ve recently bought an apartment in a 12 storey building in Melbourne, Victoria. I only received the keys two weeks ago and had no furniture in the apartment other than a mattress as I hadn’t fully moved in yet. I didn’t have contents insurance at the time, as I was planning on getting this when I had furnished the apartment.

A flood originated at the property next door to mine due to a negligent act (tampering with fire sprinkler), which flooded several levels of the property. Water damage has occurred to both my walls and carpets. Wall damage is being addressed under the Owners Corporation insurance, however, the cost to replace my carpets and mattress are on me.

I have subsequently discovered that the next door apartment is being leased to a person (person A), and person A is subletting the apartment on Airbnb. Person B was renting the Airbnb and caused the flooding damage. Person B also happens to have just purchased a property in the same building (confusing I know).

I don’t think I should have to pay for my damaged contents (i.e. carpet and mattress) as I was at no fault. Who would be the liable party – the apartment owner, the leaser who is subletting on Airbnb (person A) or the actual culprit who was renting the Airbnb (person B)? Should there be some type of short term rental insurance cover to pay for the damage?

Answer: We believe the crux of this question is: Who is liable for the damage? There is no clear outcome from an insurance perspective.

We believe the crux of this question is: Who is liable for the damage?

Unfortunately, it is not a straight-forward answer, and there is no clear outcome from an insurance perspective.

From our point of view, however, in this situation, the most logical first port-of-call when seeking damages would be the party who caused the damage in the first instance i.e. the short-stay tenant.

If unsuccessful here, it may then be worth considering the short-stay letting firm, or the property owner who was responsible for leasing the property. These parties may have insurance policies in place that cover their third party liability.

General recommendation when purchasing property

As a side note, we always recommend purchasing appropriate property insurance policy as soon as any property settlement takes place. Once the new owner takes possession of the property, they also take on responsibility for:

1. The legal liability within the lot e.g. if a third party suffers an injury the property owner could be held liable,


2. Any contents in the lot e.g. furniture, carpets, blinds, possessions etc.

Without the appropriate insurance, a new owner could be left without protection should something happen.

Whitbread Insurance Brokers E: info@whitbread.com.au P: 1300 424 627

This article is not intended to be personal advice and you should not rely on it as a substitute for any form of personal advice. Please contact Whitbread Associates Pty Ltd ABN 69 005 490 228 License Number: 229092 trading as Whitbread Insurance Brokers for further information or refer to our website: www.whitbread.com.au.

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• VIC: Q&A – Is There A Maximum Number of Tenants Allowed in Apartments?
• Strata & Airbnb: How to stop airbnb in your building

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