These replies to questions from QLD investment owners about the rental pool managers have been supplied by Frank Higginson and Chris Irons, Hynes Legal.
Table of Contents:
- QUESTION: Is it fair for letting pool managers to own units in the scheme and include them in the rental pool?
- QUESTION: Can the letting agent enter into an agreement with owners to sub-let their units? Is this a fair arrangement, or could there be a conflict of interest?
- QUESTION: Our letting agreement says they “will act fairly and lawfully and not discriminate between owners”. What is deemed unfair or discriminatory?
- QUESTION: We engaged the on-site rental pool manager many years ago. We were recently advised that we should give notice of this engagement to the Body Corporate for inclusion on the owners roll.
- QUESTION: A Committee member made a surprise visit to his lot which is in the letting pool and found the rental pool manager’s cleaners washing linen and using the dryer! Could this be treated as theft of electricity?
- QUESTION: I believe our rental pool manager is using and letting out lot owner’s units in the letting pool without their consent. Surely this against the law?
Question: Is it fair for letting pool managers to own units in the scheme and include them in the rental pool?
In June 2023, Frank Higginson responded to an audience member’s question concerning a letting pool manager who rents units from owners and then sub-lets them. What about letting pool managers who own units in the scheme and include them in the rental pool? Is this a fair arrangement? In particular, is this an arrangement the Office of Fair Trading would be interested in?
Answer: The legislation references disclosure of an ‘interest’ in the letting pool.
The legislation references disclosure of an ‘interest’ in the letting pool, so the obligation to disclose applies equally to ownership of units as well as the leasing back of them. I wouldn’t say the OFT is expressly interested in anything more than ensuring that the interest is disclosed.
Frank Higginson Hynes Legal E: frank.higginson@hyneslegal.com.au P: 07 3193 0500
This post appears in the March 2024 edition of The QLD Strata Magazine.
Question: Can the letting agent enter into an agreement with owners to sub-let their units? Is this a fair arrangement, or could there be a conflict of interest?
Our building is under the accommodation module. The caretaker is also the letting manager. Can the letting agent enter into an agreement with one or more owners to lease their units and then sub-let them?
Is the caretaker required to have a written agreement with the owner setting out this arrangement? We are concerned about preferential letting arrangements where the letting manager seeks to maximise their return from the sub-lets. Our letting agreement states explicitly that the letting agent will “act fairly and lawfully and not discriminate between owners”.
If a committee member has this letting arrangement with the letting manager, should they declare a conflict of interest?
Answer: This style of arrangement may lead to the management of bookings to benefit the manager.
A manager can sublet / provide guaranteed returns to owners and then sublet the unit for profit. Yes, there is a risk that this style of arrangement may lead to the management of bookings to benefit the manager. My experience has been that the Office of Fair Trading is usually pretty interested in letting pools where this sort of arrangement is in place because they are also aware of the potential for conflicts of interest to arise. Inevitably it will happen at times because that is human nature. This is the same reason that lawyers get struck off for trust account fraud. Some people just cannot help themselves, and then everyone gets tainted with the same poor behaviour.
Managers have to balance a fine line between sharing bookings equally and acting on guests’ instructions. This is a never ending battle coloured by views and the quality of the unit itself. One of the bigger issues in short stay management rights can be the disparity of the quality of the individual properties.
The other observations I would make are:
- This is not a body corporate issue – it is really an owner issue for those who have units in the letting pool;
- The manager has an obligation to disclose the existence of the arrangement to other owners in the letting pool managed by the manager;
- I don’t think a conflict arises at committee level purely by virtue of there being an arrangement in place for letting between the manager and the committee member. No matter the arrangement, if that were the case, we wouldn’t have a committee member who was an investor via the manager on a committee in Queensland!
Frank Higginson Hynes Legal E: frank.higginson@hyneslegal.com.au P: 07 3193 0500
This post appears in the June 2023 edition of The QLD Strata Magazine.
Question: Our letting agreement says they “will act fairly and lawfully and not discriminate between owners”. What is deemed unfair or discriminatory?
Our body corporate operates under the Accommodation Module. Our letting agreement imposes a rather vague obligation on the caretaker/letting manager that he/she “will act fairly and lawfully and not discriminate between owners”. Can you give any simple examples of what might be deemed unfair or discriminatory?
Answer: Once inside the ‘letting pool’ the manager must not discriminate amongst letting owners. The manager must share occupancies around as equally as possible given the qualities of the apartments and the desires of customers.
Chris Irons, Hynes Legal:
To be frank, your guess is as good as mine and I suppose this query highlights the problems which arise when terms are not well defined. Firstly, if I wanted to be really technical about it, I’d say that “between owners” suggests just 2 owners (“amongst” is the correct term to use here, I think) and so, which 2 owners? Putting that grammar pedantry aside, I don’t actually know what “discriminate” refers to here. There’s a literal meaning of the word and then there’s a meaning given by legislation. A common example of that might be anti-discrimination legislation which specifies different categories. Is that what is meant? I suspect not but then again, who knows?
In body corporate legislation, “discrimination” is referred to in relation to owners and occupiers, i.e., a by-law must not discriminate between them.
So as you’ve correctly identified, it’s a vague obligation and I daresay the fact you’re asking the question means it is vague to others as well. You could all guess as the meaning of this term and muddle along that way. Alternatively, legal advice could be sought to tighten up this and any other vague or ambiguous terms in the agreement. This might be to everyone’s benefit to do so.
Frank Higginson, Hynes Legal:
I think this needs to be looked at in the context of it being in the letting agreement. This agreement authorises the manager (as agent) to act as letting agent for owners. Owners have a choice as to whether they engage the manager for that service. If so, they enter into a letting appointment with them (on a Form 6).
Once inside the ‘letting pool’ the manager must not discriminate amongst letting owners and to me (in its simplest form) that means the manager must share occupancies around as equally as possible given the qualities of the apartments and the desires of customers. That sharing needs to take into account a range of things and it doesn’t mean that occupancy must be equal. Take two competing 1 bedroom apartments. One is old, shabby and faces west with no views. The other is refurbished and has north east ocean views. The latter apartment would inevitably have more occupancy because that is what customers would want to stay in, and probably request.
I don’t think this clause has any application outside that letting context. It doesn’t mean the manager must be friendly with people not in their letting pool, or assist outside agents (for example).
Frank Higginson Hynes Legal E: frank.higginson@hyneslegal.com.au P: 07 3193 0500
Chris Irons Hynes Legal E: chris.irons@hyneslegal.com.au P: 07 3193 0500
This post appears in Strata News #446.
Question: We engaged the on-site rental pool manager many years ago. We were recently advised that we should give notice of this engagement to the Body Corporate for inclusion on the owners roll.
My wife and I own an investment unit regulated under the Accommodation Module. We engaged the on-site rental pool manager many years ago per PAMD 20a, for short-term holiday rentals.
We were recently advised that we should give notice of this engagement to the Body Corporate. There apparently is a maximum penalty of 20 penalty points for failure to give notice. Further, the Body Corporate is then required to include this notice in the owners’ roll. Is this advice correct?
Answer: Yes owners are required to notify the body corporate of their property manager.
Yes owners are required to notify the body corporate of their property manager – if they appoint one.
BODY CORPORATE AND COMMUNITY MANAGEMENT (ACCOMMODATION MODULE) REGULATION 2008 – REG 191 191 Notices for roll [SM, s 193]I have never, ever seen penalties imposed for the failure to do this though!
Frank Higginson Hynes Legal E: frank.higginson@hyneslegal.com.au P: 07 3193 0500
Question: A Committee member made a surprise visit to his lot which is in the letting pool and found the rental pool manager’s cleaners washing linen and using the dryer! Could this be treated as theft of electricity?
Recently, after an informal Committee meeting, a Committee member made a surprise visit to his apartment which is in the rental pool of the complex. While the apartment was not rented at the time he found his washing machine operating and almost full of linen. He discovered that it was the cleaners for the rental pool Manager who were washing linen and then one could only imagine using the dryer (which they would then presumably charge to the rental owner).
We also had an instance before Christmas where a resident owner was away for an extended time and came back to what was considered to be an excessive electricity bill.
Are you able to offer advice on how this could be handled? Could it be considered theft (of electricity)? We are also currently in dispute with the Caretaker / rental pool manager regarding failure to carry out the duties in the Caretaking Agreement.
Answer: This is not so much a body corporate issue as a lot owner one.
This is not so much a body corporate issue as a lot owner one. If the manager is abusing their privileges as a letting agent for the owners (by using the lots without their consent / approval or otherwise in accordance with the terms of the letting authorities) then it is an issue for the Office of Fair Trading.
The OFT officers have the ability to investigate things of this nature. I doubt the Police would be interested without some form of concrete evidence. I think the excessive electricity bill for the resident owner would be very hard to prove – but the risk of that occurring again could be cured by an additional locking mechanism only held by that owner.
Frank Higginson Hynes Legal E: frank.higginson@hyneslegal.com.au P: 07 3193 0500
Question: I believe our rental pool manager is using and letting out lot owner’s units in the letting pool without their consent. Surely this against the law?
We own a unit in a complex of 48 in Queensland. We use it to visit our grandchildren and it is a holiday let while we are not there. About 6 months ago I removed it from the letting pool in the complex and we have a local real estate agent look after the booking now. We had ongoing issues with the rental pool manager and it was financially a better option for us.
Last weekend we arrived at our unit and there were signs that someone had been staying there.
There were items in the fridge including a half a bottle of wine, garbage in all of the bins, men’s toiletries in the bathroom and visible signs that someone had slept in the beds and so on.
The real estate advised that the last time they had had a booking was about 2 weeks ago and it was cleaned as usual on their departure. They came straight over to inspect and we went to see the rental pool manager who said he didn’t know anything about it.
I had previously been advised from other owners that the another of the rental pool manager’s tenants had been staying in my unit. I wasn’t notified nor did I receive any payment for it. I have now been advised that another tenant in the complex had a similar thing happen to him. While he worked fly in fly out he had cleaners come in to clean prior to his arrival from being away for 2 weeks and they found the unit in a state of disarray very similar to what I have found.
I’ve since heard other reports that one Christmas the residents of the complex got washed out during a get-together and the rental pool manager let them into a vacant unit in the letting pool to continue the party without the owner’s consent.
I’ve now had the locks changed. The locksmith advised that the locks he was removing identified that they were part of the letting pool and had a master key.
What else can I do? Do I go to the police? I have approached the rental pool manager with my concerns. He denies any wrongdoing but I believe he is using owners units without their consent. Surely this against the law?
Answer: Without evidence there is going to be little you can do.
This is one of those ones that we all know what may have happened but we do not know for sure. The assumption might be that the resident manager allowed the access, but the agent currently managing the property also had access, and agency staff have been known not to do the right thing 100% of the time.
To me it is something that would be capable of being reported to the Police, but without evidence there is going to be little they can do.
I think the best thing that can be done is what has been done – secure it personally so you are the only one who can get access.
Frank Higginson Hynes Legal E: frank.higginson@hyneslegal.com.au P: 07 3193 0500
This post appears in Strata News #285.
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EmbedRead more:
- QLD: Will Airbnb Kill the Caretaking Business Model?
- QLD: The Implications of Airbnb on Subletting and Community Title by-laws
- QLD: Q&A Can I Be Stopped From Offering my Unit as a Short Term Rental?
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