Airbnb has been the bane of many company title boards for a number of years. Proposed changes to various Local Environmental Plans are likely to make the problem more prevalent.
Company title boards wishing to prevent Airbnb need to get on the front foot quickly. There are a number of strategies that they can adopt to do this. For example:
House Rules updates
First, they can modify their House Rules to prevent short-term letting or licensing without the consent of the board. Directors generally have the power to issue and amend rules that relate to short term letting. Creating a consent requirement can be an efficient and effective way
Secondly, boards can limit the number of keys that are issued to shareholders and tenants. If each occupant receives only one restricted key, and is required to apply to the board for a new key if he or she loses it, it becomes much more difficult for them to let others use their unit.
Should you change the Constitution?
Generally, it is not a good idea to address short-term letting and licensing by inserting provisions into the Constitution. Constitutions are difficult to change.
Company title boards will better be able to adapt and respond to changing regulations and short-term letting practices by relying on House Rules. The House Rules can often be changed by a resolution of the board.
However, boards may wish to amend the Constitution to provide that the shareholders indemnify the company for any loss or damage that results from the conduct of tenants, sub-tenants and licensees who are allowed to stay in their units without approval.
If you need some guidance on the best way to tackle your Company Title building’s Airbnb issues, just give me a call and I can advise you on the next steps to take.
John Morrissey has been a practising Sydney solicitor for 30 years, and for the past 20 a sole practitioner and the principal at JFMLAW.
His main focus employment law, advising small to medium-sized firms and their employees of their rights and obligations.
For many years he was a lecturer at UTS to students obtaining Masters in Human Resources Management with a focus on performance management and creating a culture of delivery in workplaces. John has acted for a significant number of employers, not only in developing a performance based culture in the workplace but also solving particular problems that arise relating to unfair dismissal, contract disputes, improper use of intellectual property or other property as well as enforcements of restraints of trade.
John is very happy to speak to any employer who has an issue on a free of charge basis by a phone call. Please feel free to ring John at anytime up to 6pm most days.
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