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Who’s liable for body corporate bulk supplied electricity to your rental unit?

16 February 2012

 

Introduction

While it’s never easy recovering money, what happens when the tenant in your unit fails to pay electricity supplied to it by the body corporate under a bulk supply arrangement?

Recently an adjudication of the Queensland Body Corporate Commissioner gave some insight to an answer to this question.

Facts

The tenant of the unit had a lease agreement with the landlord requiring the tenant to pay electricity.  The tenant arranged for the connection with the body corporate’s contract supplier for electricity.

In short, the tenant failed to pay the electricity.  The contract supplier sought recovery of the amount owing from the owner of the unit.  As a consequence of the alleged money owing by the owner, the owner was refused a position on the committee for the body corporate on the basis that the owner had a debt owing to the body corporate.

The refusal of the owner for a position on the body corporate committee was also discussed in the decision.

The adjudicator held that the contract supplier for the body corporate had no grounds for recovery of the money owed to it for the supply of electricity.  The money owing was a third party debt for which the owner was not responsible on the facts of this decision. 

Further, the owner was not disentitled from holding a position on the committee on the basis of the alleged debt.

What do I need to be careful about?

Where a body corporate bulk supplies electricity to units which are tenanted, it might be worthwhile considering the supply agreement to the lot and whether a guarantee could be given by the owner for the payment of electricity charges.

For owners, the residential tenancy agreements must make clear with whom the responsibility for payment for electricity bulk supplied falls, ideally with the tenant.  This decision may have future impact on the way the supply contractor will agree to supply electricity, eg. a strict credit terms or deposits, or risk disconnection.

Download the decision HERE.