How many people does it take to change a light bulb in Victoria?
Just the one, but they must be a licensed electrician or risk a fine.
That’s not the only ridiculous property law API has heard about, but how many of them are actually true?
Okay, so the light bulb law in Victoria turned out to be an urban myth despite being peddled on several websites as being true, but there’s no shortage of legitimate bizarre rules that leave property owners scratching their heads.
So let’s explore eight of the more unusual ones.
Note, many of these laws are state-specific and may not apply in other parts of the country.
Janes Slack-Smith of Your Property Success came across a little-known regulation at a New South Wales renovation course.
“We were talking about converting a two-bedroom property into a three-bedroom property and someone said they’d been told that there has to be natural light coming into the bedroom, hence you can’t just close off a room in the middle of the house and say, ‘here’s a bedroom’,” she says.
True or False?
We asked the Australian Building Codes Board to shed some light on this (pun intended) and… it’s true!
“The National Construction Code requires a habitable room, which would include a bedroom, to be provided with natural light, either directly by a window or roof light in the room, or indirectly through an opening or glazed panel from an adjoining room which has a window or roof light of sufficient size to serve both rooms,” deputy general manager Trent Bourne says.
Investor Christy Jade discovered some quirks when she was trying to convert her property in Victoria to a rooming house.
One of them, she says, is “if you’re renting room by room in a shared house, you can only take bond to cover two weeks and not the usual month for standard houses.”
The Property Council of Australia has compiled a list of proposed cuts to red tape and is asking the Federal Government to put the identified “redundant, obscure, contradictory and productivity-sapping legislation” through the shredder.
One of the laws it wants abolished relates to borrowing restrictions and self-managed superannuation funds (SMSFs).
“Legally SMSFs must set up separate trusts for each asset they buy using borrowed funds,” international and capital markets division executive director Andrew Mihno explains.
“Unfortunately, the ATO (Australian Taxation Office) deems each legal title to be one asset that requires a separate trust. This leads to absurd situations where, for example, one building with one owner but three separate legal titles has to be artificially separated into three trusts.”
The Property Council is calling on government to allow whole buildings to be held in one trust if the same owner holds all of the titles.
Minho says this will cut compliance costs in half and encourage more investment.
In Queensland, landlords are required to give tenants two months’ notice to vacate a property while tenants only have to give landlords two weeks’ notice.
Successful property investor and author Jan Somers finds this law the “most frustrating” as a landlord, saying a fortnight is “never enough time to find a new tenant in such a short timeframe”.
In New South Wales, the minimum notice period you can give a tenant to vacate if the fixed lease has expired is 90 days, but if the tenant finds a property sooner they can move out at any time without giving any notice.
In Victoria, if a landlord has given a 60-day or 120-day notice to vacate, the tenant can leave in as little as 14 days.
Another Queensland law that strikes Somers as unusual is the requirement for buyers to insure the property they’re purchasing before it has settled.
Property Lawyer Rob Balanda explains that the master contracts in use in Queensland provide that a property ‘is at the buyer’s risk from 5pm on the first business day after the contract date’.
So, if the property is damaged while it’s under contract, for example by a storm, guess who’s responsible?
Believe it or not, it’s the buyer.
“The risk, therefore, of something like this happening falls on the buyer and is the reason that the buyer should always take out a cover note (interim insurance) no later than 5pm one business day after the contract date,” Balanda says.
“If there’s damage to the property after that and they have it covered by insurance then they will, of course, make a claim under the policy.”
What if the buyer doesn’t take out the insurance?
Do they have any protection under Queensland law about the condition of the property they receive on settlement?
“There’s an overriding provision in Queensland law that if a property, after contract date and before settlement date becomes ‘unfit for human habitation’, then the buyer may terminate the contract of sale and renege on the transaction,” Balanda says.
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However, the damage would have to be serious for the property to be considered unfit for habitation, according to Balanda.
“I recall one case where a client purchased a property and a week before settlement a truck mounted the curb and guttering and crashed into the middle of the lounge room. The lounge room was completely unusable, however after the exposed areas were bordered up, it was possible to use the rest of the house.
“The kitchen, bathrooms and bedrooms were all in the same condition. This is an example where a property would still be fit for human habitation despite the serious damage and the buyer would have no ability to withdraw from the contract.”
Property educator Peter Koulizos provides an example of bureaucracy gone mad in his home state of South Australia.
“You’ve got a rental property, the tenant gets behind in the rent, he skips owing you rent.
You go to the Residential Tenancies people because you want the bond back to help cover the lost rent. They say, ‘we’ll have to send a letter to the tenant’.
“They send a letter to where the tenant used to live and if the tenant doesn’t reply in 10 days you get all of your bond.”
Such a procedure is pointless, according to Koulizos.
“The tenant is obviously not there.”
An API subscriber uncovered a little-known by-law through the experience of a friend recently.
"I know of someone who didn’t realise when she bought the townhouse that it was only one pet (allowed) and she has three dogs,” she recalls.
“She approached the body corporate and they stood their ground, not even allowing her to move in until she had found a home for two of the dogs.”
But the woman may have a case, according to lawyer Michael Teys, as body corporate committees can’t restrict the number of pets a resident has.
The rules are different state to state but that’s certainly the case in Queensland.
Queensland strata communities are covered by The Body Corporate and Community Management Act 1997, which provides a by-law that says they’re entitled to pose conditions on the keeping of pets – within reason.
“They should not, however, have a blanket ‘no pets’ by-law as it’s deemed to be too restrictive,” the by-law says.
“Recent legal cases indicate that conditions restricting the number of animals or placing a restriction on the weight of animals are unreasonable.”
And there’s another twist.
While strata committees can’t enforce a blanket ban on pets, a private landlord can – even in a strata environment.
“The owner has the right to refuse a pet at the property regardless of the body corporate by-laws,” Position One Property principal Karen Herbert says.
“Pets may be allowed in the complex but one particular owner may not be ‘pet friendly’, have allergies and may wish to reside in the property again or not want any damage caused to their property.”
Real Wealth Australia managing director Helen Collier-Kogtevs always encourages investors to read their insurance policy notes carefully to ensure they’re covered for every conceivable scenario, but acknowledge that sometimes the unthinkable can happen.
“A few years back, I heard of a really tricky insurance scenario.
An investor actually had a tenant pass away in his property; she had a heart attack and it was three weeks before she was found,” Collier-Kogtevs says.
“The investor contacted his insurers who admitted, ‘we don’t really know how to treat this – we’ve never had this happen before’.
“While it was obviously a sensitive matter and the investor handled it well with the tenant’s family, it was also something he had to manage financially. At first the insurers denied his claim, saying it wasn’t a ‘covered event’, but after some negotiating he was able to get them to cover part of the clean-up and the lost rental income.”
Slack-Smith recounts a similar story: “I had a lady who turned up to one of my courses in Sydney who had a tenant commit suicide and she hadn’t had any landlord insurance – she didn’t even know what it was.
The investigation period was three months, so essentially they sealed the property for three months and there was a loss of rent while they had the coronial inquest.”
Landlord insurance may not have covered this loss of rent, which is why having a cash buffer in place is important.
Editors note: We are republishing this article to help out our newer readers. This article was written by Eynas Brodie, who was the editor of API was originally published in Australian Property Investor Magazine and has been republished with their permission.