Fred, 62, and Teresa Monaghan, 63, have been fined $38,500 each and banned from running a similar organisation for five years.

But Justice John Griffiths was also critical of the legislative regime under which the organisation worked, saying it was clear none of the directors had the training, understanding or experience for the role.

Southside Housing was established 20 years ago as a not-for-profit corporation and owns seven properties in southern Canberra.

Its aim is to provide affordable housing for Indigenous people.

But it came to light when the organisation was placed into special administration that the directors weren't collecting enough rent from tenants and the properties had fallen into disrepair.

Some tenants weren't paying rent, weren't paying for damage and weren't paying for excess water consumption. One property had been damaged by fire and others appeared to be in "... a very poor state".

The Registrar of Indigenous Corporations, Anthony Beven, took Fred and Teresa Monaghan and a third director Kim Peters, 55, to court.

On Tuesday, Federal Court Justice Griffiths found the Monaghans, who lived at one of the properties, had used their position to gain an advantage for themselves and others.

Some of the tenants who weren't paying rent had "family connections" to the Monaghans, the court heard.

They had also failed in their duties as directors by not keeping adequate financial records, and accurate, signed minutes of meetings.

Along with bans for the Monaghans, Justice Griffiths banned Ms Peters for six months. The case against her related to record-keeping and reporting requirements.

Ms Peters told the court she had tried to collect rent, but had received abusive phone calls, and eventually resigned as director and left the Southside Housing property where she was living.

Directors are a voluntary role and not remunerated.

The case "vividly" showed the need for training, Justice Griffiths said.

"I respectfully suggest that consideration should be given to reviewing the relevant legislative regime to ensure that the Registrar has adequate powers and functions to provide appropriate training to persons such as the respondents and that adequate resources are available for this purpose.

"It may well be that it is considered that such training should be a condition of a person becoming a director or officer of such a corporation but that is a matter which is beyond the scope of these proceedings."

Justice Griffiths ordered the Monaghans to pay costs, and ordered Ms Peters to agree on costs with the registrar.

This article has been amended to clarify the judges comments.