The Queensland Government has announced a review into the state’s property laws including the Body Corporate Community and Management Act 1997 and other community titles legislation including body corporate governance issues.
The review period ends on the 22nd of February.
This follows on the heels of the Owners Corporation changes enacted by the New South Wales parliament at the end of 2015.
SSKB – Strata Managers directors Tim Sheehan and Paul Wood, recognised industry experts have reviewed the discussion paper and make a number of observations which will be featured here on the SSKB blog.
There are times where, for a variety of reasons, a body corporate cannot garner enough interest to form a full committee required under the legislation.
Under such circumstances the lot owners may delegate all of its duties to the Body Corporate Manager. This is known as a Part 5 Agreement.
Unfortunately it is not a straight forward process and as part of the Property Law Review Issues Paper, we have recommended a revision to the current act to make the process easier.
Currently the Part 5 Agreement is can be entered into if, following the Annual General Meeting (AGM), the total number of voting members is lower than three or the executive positions are not filled. Under the Standard Module and the Accommodation Module, the body corporate may appoint an eligible person (including a co-owner, if necessary to bring the total number of voting members on the committee to three) to a vacant committee position. If this does not fill the executive positions or bring the number of members to three, then the body corporate may pass a motion to make a Part 5 Agreement.
If these requirements are not achievable at the AGM, and the Body Corporate fails to elect a committee, then an Extraordinary General Meeting (EGM) must be held within two months of the AGM. The agenda for the EGM must include a motion to appoint the Body Corporate Manager under a Part 5 Agreement and this must be the last motion on the agenda for the EGM.
To engage a Body Corporate Manager on a Part 5 Agreement, the Body Corporate must be given material that includes the terms of the engagement and an explanatory note in the approved form explaining the nature of the engagement. Under the Standard Module and the Accommodation Module, the motion appointing the Body Corporate Manager must be approved by a secret ballot passed by a special resolution where no vote is exercised by proxy. The Small Schemes Module does not require a secret ballot or that no vote is exercised by proxy.
It stands to reason that if a body corporate cannot garner enough interest to form even an executive committee, going to the trouble of holding an EGM and a secret ballot is a waste of lot owners’ time and money.
SSKB has recommended the process be changed to simply allow a motion at the end of the AGM to engage a Body Corporate Manager on a Part 5 Agreement. This is a common sense decision which we hope will be reflected in the legislation.