A recent decision of the Victorian Civil and Administrative Tribunal has confirmed further restrictions on the ability of Owners Corporation rules to regulate the use of lots.
This decision follows an earlier ruling that Owners Corporations are unable to stop short term leasing of apartments.
In this case, the owners of one floor in a South Melbourne commercial building converted their holding into apartments. The Owners Corporation responded by passing a special resolution to ban the use of any lot for residential purposes.
On review, VCAT determined that a prohibition on a particular type of use is outside the range of rules an Owners Corporation is legally able to make. As the Owners Corporation did not have the power to make that rule, it had no effect.
There has been some speculation that this decision may cause a rush of office to apartment conversions. However, any party involved in or affected by such a conversion should also consider the applicable planning and building regulations.
Although residential conversions cannot be prohibited by Owners Corporation rules, such a use may require other approvals, such as a planning permit for the use of the space for residential purposes.
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