On 1 November 2015 the laws governing the relationship between park owners and park residents changed. In fact, parks are not even called parks any more - the Residential (Land Lease) Communities Act 2013 renames them “residential communities”. So, what does this mean for residents of these communities?
The first big change, as we have already highlighted, is the terminology. Park owners are now operators; people who own their dwellings are home owners; rent is now site fees; and electricity and water are generically known as utilities.
People who rent in residential communities are still called residents, but their rights and responsibilities are now largely covered by the Residential Tenancies Act 2010, plus one or two sections of the Residential (Land Lease) Communities Act 2013. This is a big change for renters and it means that their rights are significantly different in some areas, for example, water charges – residents cannot be charged for water unless the home they rent has been fitted with water-saving devices.
Home owners’ rights and responsibilities are all contained within the Residential (Land Lease) Communities Act 2013 and Residential (Land Lease) Communities Regulation 2015 and this brings huge changes for both home owners and operators.
Site fee increases
The Act sets out two different methods for site fee increases: fixed method and increase by notice. Fixed method is written into the agreement and cannot be challenged as excessive.
Increases by notice can only be done once a year and must be for the whole community (excluding those on fixed method increases) at the same time. To challenge an increase as excessive, 25% of those facing the increase are required to sign up and there is now a compulsory mediation process. If mediation fails the NSW Civil and Administrative Tribunal (NCAT) can make a determination. The factors that the Tribunal must consider have also changed.
Community rules no longer form part of the agreement but everyone in the community, including the operator and their employees as well as guests in the community, are required to abide by the rules.
For the first time residents (home owners and renters) can take enforcement action against the operator if someone in the park is breaking the rules and the operator is not doing anything about it.
Voluntary sharing arrangements
The Residential (Land Lease) Communities Act 2013 introduces new opportunities for operators to seek a share in any capital gain a home owner makes when selling their home on site, or to receive a percentage of the sale price. Entry and exit fees can also be charged for the first time.
This is another new provision whereby home owners can vote to pay for improvements or new facilities within the community. If the vote is passed by 75% of home owners and agreed to by the operator then every home owner must pay the levy.
The legislation now recognises that the needs of home owners and their families change over time and new provisions make it easier for additional occupants to move in. Spouses, partners and carers have an automatic right to live with a home owner and the operator cannot unreasonably refuse consent for other people to move in.
The sale of homes
The Act is much stronger in relation to interference by operators in the sale process and there is a specific provision for compensation to be paid where there is interference.
There is a new 14-day cooling-off period for prospective home owners signing new site agreements.
Continuation of agreements
The principal place of residence test has been removed and once a site agreement is signed it continues until it is terminated under the Act. This means that home owners can leave the park for a period of up to three years without having their agreement terminated due to not occupying the premises.
Home owners can now also be assured that their heirs and executors will be able to sell the home on-site in the case of deceased estates.
There is a new sewerage usage charge for home owners (renters cannot be charged) and operators can now charge late fees for overdue utility accounts. However, these new charges apply only to home owners who enter into new site agreements after the commencement of the Act.
Operators can no longer apply money paid as site fees towards payment of utility accounts.
There are a number of new provisions requiring operators to behave in a professional, honest, fair and reasonable manner, including new rules of conduct.
This is a brief overview of some of the most significant changes that the Residential (Land Lease) Communities Act 2013 brings.
For a more in-depth explanation of how some of the new provisions will work please download the full Outasite newsletter here.