Living the High Life: A summary of recent changes to body corporate arrangements nationally

By the Real Estate Team
26 Nov 2020
Modernised Acts and regulations across three jurisdictions will affect body corporates.

Changes to legislation that impact on various aspects of body corporates (also known as owners corporations and strata companies) have recently been introduced in Queensland, Western Australia and the Australian Capital Territory.

These changes, which are summarised below, are important for developers, strata managers and property investors depending on the State or Territory in which you operate.

Queensland – Modernising regulations and protecting owners

The Queensland Government recently passed amendments to the Body Corporate and Community Management Regulation Modules to modernise body corporate regulations and improve protection for owners.

The new amendments come into effect on 1 March 2021 and are intended to reduce costs and formally accommodate common modern practices like online voting and electronic attendances at meetings.

The following is a brief summary of some notable changes to the Regulation Modules.

  • Schemes with 3 or more lots and no more than 3 owners may now elect a committee outside of an annual general meeting.
  • Committee elections may be by secret ballot or open ballot, and may be carried out by electronic voting.
  • Lot owners may submit motions for consideration at committee meetings.
  • Lot owners who want to attend committee meetings may appoint a representative to do so on their behalf.
  • If a voting committee member owes a body corporate debt, they will be ineligible to vote at the committee meeting (or voting outside committee meetings) in their own right or as a proxy for another voting member.
  • Committees have 21 days to vote on a motion submitted for an outside of committee meeting.
  • Lot owners may submit motions for the first annual general meeting.
  • Motions about the same issue must be noted as a group of motions on the voting paper. The motion that receives the most votes in favour will become the body corporate’s decision for the group of same-issue motions.
  • Developers are required to hand over documents such as the development approval, building warranties, and others at the first annual general meeting.
  • A body corporate can change the number of voters required to calculate a quorum for a general meeting (between 10% and 25% of the number of voters).
  • A person may not act as a representative of more than one owner of a lot. Members of the lot owner’s family or the powers of attorney held by the original owner are excluded from this restriction.
  • A body corporate must be given notices of significant changes about a lot within 1 month of the change. This applies to changes such as the lot being sold, a lease of more than 6 months is entered into, a letting agent is appointed or terminated, or a mortgagee enters into possession.

ACT – Managing Buildings Better

The ACT Government has recognised the growing mixed use developments sector, introducing the new “Managing Buildings Better” reforms.

The Unit Titles Legislation Amendment Act 2020 (ACT) commenced on 1 November 2020. The key changes are:

  • Disclosure statement: introduced a requirement for developers to issue a disclosure statement with the contract for off the plan development sales, including greater detail about the development, the proposed uses, levy contributions and the initial maintenance requirements. Updated statements must be issued for significant changes to the development, giving buyers certain rescission or termination rights.
  • Completion time frames: purchasers of units in off the plan developments have 21 days after provision of a copy of the registered units plan to settle
  • Voting: certain measures can now pass by special resolution (75% voting in favour) rather than unanimously, proxy votes are now limited and parties involved in the development are now prevented from voting on matters relating to building defects (unless permitted), thus preventing developers who have retained units in the development from blocking any owners corporation action on defects.
  • Levies: levy contributions can now be decided by special resolution and different budgets can be set for different parts of the development. The developer is no longer required to adopt the standard levies calculation method, but can propose a different method provided it is fair and equitable and that it is disclosed to purchasers in the disclosure statement.
  • Rules: new default rules have been introduced and a development's rules must be registered with the ACT Land Titles Office within 3 months of passing or they will not apply. Owners corporations are encouraged to adopt pet-friendly rules.
  • Mixed-use developments: mixed-use developments can create a building management committee and binding Building Management Statement (BMS), setting the rules for how common property and different uses (e.g. commercial v residential) will be managed. This is mandatory for new mixed-use developments from 1 July 2021, but is optional for those pre-existing.
  • Administration: improving administration by allowing for electronic meetings and voting, introducing standard meeting agenda, requiring maintenance schedules to be prepared, an independent audit for certain units plans and streamlining the insurance claim process.
  • ACAT powers: widening ACAT’s powers to include dealing with owners corporation rules and levy contribution methods disputes.

The transitional period ends on 1 July 2021, with stage two reforms expected in 2021/22.


Western Australia – Bringing the Strata Titles Act into the 21st century

The Strata Titles Amendment Act 2018 (WA) commenced on 1 May 2020 introducing the most significant updates to Western Australia's strata framework in over 20 years.

The amended Strata Titles Act 1985 has introduced several key changes aimed at modernising how strata is run in Western Australia and delivering a better strata framework for the future:

  • Better information for strata buyers: Sellers of strata lots are now required to give additional information to potential buyers before the sale contract is signed, including minutes of the strata company, statements of account, details of debts owed to the strata company, estimated contributions the buyer will need to pay, and notices relating to the termination of schemes.
  • More efficient dispute resolution: All strata disputes are now heard by the State Administrative Tribunal (SAT). SAT has been given broader powers to resolve strata scheme disputes and enforce by-laws.
  • A fairer process for scheme termination: The new process includes a more streamlined process for when all lot owners in a strata scheme agree about terminating the scheme. New safeguards, such as an independent review by SAT, have been introduced to protect lot owners in large strata schemes who dissent to a termination resolution.
  • Improvements to strata management: The Act now imposes statutory duties on strata managers requiring them, for example, act honestly and disclose various professional or commercial details about the manager to lot owners in a strata scheme.
  • Leasehold strata as a new form of land title: Plans for leasehold strata can now be lodged at Landgate. A leasehold strata tile is a built strata or survey-strata scheme with a fixed term of between 20 and 99 years.
  • More flexible staged subdivision: New provisions in the Act are aimed at striking a balance between giving developers greater flexibility to deliver strata schemes in stages, and protecting the rights of owner who bought into earlier stages of the development. Developers are required to disclose substantive details of the staging in new scheme by-laws call staged sub-division by-laws.

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Disclaimer
Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this communication. Persons listed may not be admitted in all States and Territories.