QLD Lot Entitlements Amendment Bill 2012


Attorney-General Jarrod Bleijie announced on Friday the introduction of the Body Corporate and Community Management and Other Legislation Amendment Bill 2012. This amendment removes the controversial reversion process introduced by the former Labor Government.

The bill amends the Body Corporate and Community Management Act 1997 to do three things:

1.  It removes the requirement for bodies corporate to change their contribution schedule lot entitlements back to the original setting prior to any, and all, adjustment orders of a court, tribunal or specialist adjudicator following receipt of a motion from a single lot owner proposing the change. It also provides a process enabling any changes to lot entitlements made under this requirement to be reversed.

2.  It removes unnecessary disclosure requirements imposed on sellers of lots in community titles schemes.

3.  It provides jurisdictional clarity and consistency for disputes about contribution schedule lot entitlement adjustments.

In 2011, the former Labor government passed amendments to the Body Corporate and Community Management Act that gave one lot owner the right to move a motion at a body corporate meeting, effectively overturning any adjustment order without a single vote being taken. Despite the matter previously going through an independent tribunal, it was automatically overturned upon the moving of that motion.

When a body corporate scheme is established, lot entitlements are set by the developer. Previously, if lot owners were of the view that the lot entitlements should be adjusted, they were able to apply for an adjustment order to have the lot entitlements adjusted accordingly. The 2011 amendments did more than introduce a new contribution schedule lot entitlements system, which is the mechanism employed in community titles schemes to apportion most shared costs associated with the operation and maintenance of a scheme. It allowed a single lot owner aggrieved by an order of a court, tribunal or specialist adjudicator for the adjustment of the scheme’s contribution schedule lot entitlements to overturn that order simply via a motion to the body corporate or its committee. It further required the body corporate to lodge a new community management statement reflecting the pre-adjustment order contribution schedule lot entitlements for that scheme.

As contribution schedule lot entitlements determine the proportion a unit owner contributes towards shared body corporate expenses, any adjustment inevitably results in some owners contributing more, and others contributing less, to the body corporate expenses. While annual body corporate fees for many unit owners can be less than $500 a quarter, some are in the thousands of dollars and a few are in the tens of thousands of dollars. The quantum of annual body corporate fees can also have a marked effect on the capital value of any given unit. So the stakes are high, particularly for those on low and fixed incomes.

The 2011 legislation effectively threw out the system of lot entitlements in place since 1997 and reintroduced many of the abuses of the past. “The government has since given serious consideration to repealing each and every provision in the bill that was introduced in 2010. Regrettably, that would add unfairness to unfairness and complexity to complexity. As the first immediate step, the most odious provision in the 2011 amendments was sought to be stopped. The bill will ensure that provision no longer applies so that no more reversions can be undertaken. Reversions that are currently taking place will be stopped,” said Attorney General Bleijie.

The bill will also provide a process to enable reversions of contribution schedule lot entitlements which have taken place since the April 2011 amendments to be ‘undone’. That is, a lot owner can submit a request to ‘undo’ the reversion and the body corporate or committee for the body corporate must undertake a process to ‘undo’ the reversion, subject to considerations around boundary changes, subdivision of lots, amalgamations of lots or material changes which may have relevance in the period since the adjustment order was handed down. “In introducing the bill, I want to make particular emphasis that the provisions stopping the reversion process will take effect from today. If the administrative and legal steps associated with a reversion have not been completed before today, no further action will be able to be taken to give the reversion effect. Regrettably, that does introduce a degree of retrospectivity but, again, the public interest is best served by certainty from today,” said Attorney General Bleijie.

The 2011 amendments also required sellers of lots to provide a copy of the scheme’s community management statement with the disclosure statement. Many community management statements might be only six to eight pages long, but for large and progressively developed schemes the community management statements can be up to 100 pages or even longer. While they are important documents, they are also technical documents, and the government is not convinced that requiring them to be attached to the contracts of sale necessarily serves the interests of the buyer and clearly does add to the complexity and cost of the process. They are just as likely to confuse as to clarify in a sales environment. In any case, any prospective buyer can obtain a copy of the community management statement from the Registrar of Titles at any time in their normal due diligence processes. Therefore, the bill removes the disclosure requirements. To ensure certainty of contracts, this will take effect at a date to be set by proclamation after the enactment of this bill.

The bill also addresses a technical issue around the jurisdiction for complex disputes. It gives the Queensland Civil and Administrative Tribunal or a specialist adjudicator jurisdiction for disputes about adjustments of contribution schedule lot entitlements sought by unanimous agreement of all lot owners. This amendment, which will take effect upon enactment of the bill, is being made to address a current inconsistency in the jurisdiction for disputes about contribution schedule lot entitlement adjustments under the act.

*Excerpts taken from Hon. JP BLEIJIE (Kawana-LNP) Attorney-General and Minister for Justice.

Click here to view the amendment bill

Click here to view a short media release by the Ministerial office

What are your thoughts on the Body Corporate and Community Management and Other Legislation Amendment Bill 2012?

 



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Recent Comments

6 Comments

SteveZ On September 23, 2012 | Reply

This is horrific to revert back to the totally unfair, unreasonable, and illogical system where the owner of penthouse unit at three times the size of a one bedroom unit pays the exact same body corporate levies, as the owner of the one bedroom unit. Body corporate levies are used to fund the continuing maintenance of the building. If you own 3 times as much of the building then you should pay 3 times as much of the levies. A unit of three times the size will have proportionally 3 times as many people habiting there, and therefore will use the lifts 3 times as often, and use the pool three times as often, etc. as the occupants of a one bed unit. This decision is beyond belief.

Jesper On September 28, 2012 | Reply

I fully agree with SteveZ its horrific,the few rich have run to the lawyers not thinking about the 0ne bedroom appartment owners, one bedroom appartments are a small minority in these high rise buildings and rents would have to rise $65.00 a week just to absorb the extra cost. While the penthouse owners can still run there commercial partys using the lifts for their drunken guests!!!

investor On October 5, 2012 | Reply

I have invested in a complex where small unitholders such as myself have experienced a 40 percent increase in body corporate fees. The developer, Juniper, modified the lot entitlements recently to lower the body corporate fees on its commercial units. How can a developer get away with modifying lot entitlement schemes for their own economic benefit at the expense of small unit holders? Does this also mean the victory for small unit holders at Q1 on the gold coast can be unwound?

Patricia On October 9, 2012 | Reply

This newly introduced bill is an almost unintelligble tangle of double speak.
The Titles Registry alert issued on the 19th of September 2012 does not provide for an owner to change the reversion while at the same time provides for the lot entitlement to be reverted back to the pre 2011 entitlements.
Even the lawyers and BC Managers can’t seem to agree on what the Act means for strata owners.
Short Punch & Greatorix has one opinion and SSKB has another which are different views.
This is just another attack on owners of small units in strata schemes who have seen this see-saw effect on their finances due to penthouse and subpenthouse owners, who purchased their apartments knowing what the lot entitlements were at the time, using their influence to change developer lot entitlements and pay lower levies while utilising more of the common property.

Peter On November 15, 2012 | Reply

Well, who would have thought a Newman government’s priority would be to reverse Labor’s policy regarding these levies. Newman has been quick to act on pressure from the big end of town to once again require pensioners and low/fixed income earners to subsidise the levies of the well off occupying upper level units.

If any change was to be made to the current policy it should be to introduce levy equity rules from a current date so those who bought units in the past knowing they could afford the levies at the time of purchase are not disadvantaged.

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