Interference with sale
07/08/2019
The Residential (Land Lease) Communities Act 2013 (the Act) provides home owners with the right to sell their home on site. The Act also states the operator must not cause or permit any interference, or any attempt to interfere with a home owner’s right to sell the home. Similar provisions appeared in the (now repealed) Residential Parks Act 1998 yet arguably park owners and operators have always interfered in home sales. Will a recent decision of the NSW Civil and Administrative Tribunal (NCAT, the Tribunal) bring a change in operator behaviour?
The Tenants' Union and Central Coast Tenants Advice and Advocacy Service recently advised and represented in an important case on this issue.
Brian and Beverley Welch were home owners at Lake Munmorah Residential Resort from September 2006 until July 2018. In April 2018 the Welches advised the operator they were selling their home and had engaged a real estate agent. On 2 May the home owners accepted an offer from prospective purchasers and on 11 May those prospective purchasers paid a deposit.
Compliance with Local Government Regulations
On 8 May 2018 the manager of the community inspected the home and apparently discovered there was an unapproved awning. The operator alleged the home owners had not obtained permission for the awning and that a notice of completion had not been lodged with the local council. The home owners had in fact been given verbal approval for the awning and it was the operator who had failed to lodge the notice of completion. (We note that home owners require written approval to make changes to the home but it was the practice in this community, as it is in many others, for the operator to give verbal permission).
The operator advised the home owners via email that they would not enter into a site agreement with the prospective purchasers until compliance issues had been addressed. The specific compliance issues raised were removal of the awning, garden beds, items hanging on the fence and a concrete pad, pavers and pebbles from within a buffer zone. The buffer zone was to be replanted with native shrubs and mulched.
The operator had not raised these issues with the home owners prior to this email and section 107(2)(d) states that ‘interference includes taking any action to require the home owner to comply with any requirement made by or under the Local Government Act 1993 after becoming aware that the home owner is seeking to sell his or her home (unless the matter has been the subject of previous action).’
Conditional site agreement
The operator later agreed to enter into a site agreement with the prospective purchasers on condition the purchasers agreed to rectify the alleged non-compliance issues.
After meeting with the community managers the purchasers withdrew from the sale citing the attitude of the managers and their unbending position regarding the compliance issues.
On acceptance of the offer and payment of the deposit the Welches had made alternative living arrangements and they were bound by the contract they had signed. They moved out of the community in July 2018.
In October 2018 a second offer to purchase was made and accepted. However, as on the first occasion the purchasers withdrew after meeting with the community managers.
Tribunal application
After the second sale fell through the Welches applied to the Tribunal. They sought orders that the operator cease interfering with the sale of their home, orders for compensation because of interference that resulted in the loss of two sales, and the abatement of site fees until the home is sold.
The Tribunal determined that the operator had interfered in the sale of the home: by raising compliance issues only after being advised the home was to be sold; by threatening not to enter into a new site agreement until non-compliance issues were addressed; and by insisting that prospective purchasers address non-compliance issues as a condition of any new site agreement.
Having found the operator had interfered in the sale, the Tribunal then had to decide whether the interference caused the loss and damage claimed by the home owners. The Tribunal found that on the balance of probabilities, had the operator not interfered the first prospective purchases would have settled on or about 20 June 2018 and the home owners would have been free to move to their new home and invest the proceeds of the sale. The home owners were awarded compensation of $8,379.21 for interest lost on the investment.
The Tribunal also found the home owners should not be liable for site fees they had paid between 20 June 2018 and the hearing date on the basis the operator’s interference had caused the sale to be lost. Had it proceeded the home owners would not have been liable for site fees in that period. The operator was ordered to refund site fees of $6,671.71.
For the same reasons the Tribunal abated the site fees pending sale of the home thus relieving the burden on the Welches to continue paying site fees when they are not living in the home.
The home owners were also given the right to re-list the application at any time up to 30 June 2019 to quantify further compensation and losses that may accrue up to the point the home is sold.
This decision sends a very clear message to operators that if they interfere in the sale of a home and the home owners suffer a loss as a result of that interference the Tribunal is prepared to award compensation to the home owners.
Appeal
The operator has appealed the decision and at the time of writing the outcome of the appeal is unknown. However, we are hopeful the decision will be upheld by the Appeal Panel and that it will become the leading decision on this issue.