Directors of company title buildings know that they can enforce the company title constitution and its ‘house rules’ or ‘regulations’ against problem shareholders. A well drafted constitution or set of house rules provides a company with a range of strategies to ensure that shareholders pay their levies on time, carry out major renovations with sufficient care, and do not use their unit or common property in a dangerous or disruptive way.
Problem Tenants in Company Title Buildings
But what if the company needs to take action against a problem tenant? The company cannot enforce the constitution, because the tenant is not a shareholder. The company also cannot enforce the house rules, which usually derive their force from the constitution. The old practice of giving tenants a copy of the house rules in a screening interview, or asking them to sign them, will not always make them enforceable against a tenant.
A company which is unable to enforce its constitution or house rules against a tenant must look to the shareholder who has leased his or her home unit to a shareholder to protect the company’s interests. This can be difficult if the shareholder is an investor who is not engaged with the company on a regular basis.
Licences to Occupy
Many companies are ensuring that they have enforceable rights against tenants by ensuring that all tenants and the shareholder who are leasing their units to them enter into a licence to occupy with the company before the lease commences. A well drafted licence to occupy gives the company rights to:
- prevent tenants from subletting the unit;
- requiring tenants to comply with the house rules or regulations;
- restrict the number of visitors that tenants can bring to the unit;
- require the tenant to indemnify the company for loss caused by their negligence or misconduct;
- bring a tenancy to an end if the tenant breaches the licence to occupy.
These licenses to occupy can be enforced through court proceedings in the Local Court of New South Wales, which has a special jurisdiction for company title residential disputes.
Get in touch
Please get in touch on 02 9331 0266 or at firstname.lastname@example.org with our experienced company title lawyers to learn more about how your company title building can better regulate tenants or for a free copy of our Understanding Company Title handbook.