We have had matters in the past, particularly in smaller complexes, where a lot owner has assumed control of the running of the body corporate. Sometimes, because these buildings are often let out for short- or long-term renting, these people think of the body corporate as a “business”, and they think of it as “their” business.
Unfortunately for them, the BCCM Act is clear: s 96(1) explicitly says, in very plain terms, “A body corporate must not carry on a business.” The only business-like activity that a body corporate can engage in is anything necessary to properly carry out its functions, and to invest money it holds that is not immediately required.
A person can of course let out their lot. A body corporate can even engage a letting agent for the building to make the process easier to people who want to let out their lot. However, the body corporate itself can never do any business activities. The body corporate’s functions relate solely to the management and administration of its common property and assets for the benefit of all lot owners. Its funds can never be used for anything except that.
We have seen instances where a lot owner has tried to use body corporate funds to “sponsor” businesses and clubs to attract people to stay in the rental units in the building along the coast. However, this is not related to the body corporate’s functions and is absolutely not allowed, even if a majority of owners let out their unit.
Why is this? Apart from the fact that the body corporate cannot run a business, the simple issue is that not everyone benefits from it. If even one person lives in the body corporate, then their money is being spent to allow others to profit. That person is then subsidising profits of others while getting nothing in return, which is not what the body corporate is for. If the body corporate wants to appoint a letting agent, then they are fine to do so, and it is up to individual lot owners to decide whether they want to participate. But a body corporate can never do any business-like activity.
This article is intended as general information only and should not be relied upon as legal advice. For specific legal advice please contact us here.
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