Queensland Body Corporate Guide | Community Living

Find Investment Property: (Source: http://www.justice.qld.gov.au) Date: July 2009

Introduction
With Queensland’s population growing at a rapid pace and land availability decreasing, many people are now turning to community living as a more affordable and convenient lifestyle choice. Investing in community living can be very rewarding. People can access services such as tennis courts and swimming pools that would normally be too costly to build or maintain on their own. It is of benefit to singles, or retirees looking to downsize yet continue independent living. People with common interests can meet socially or simply have a closer relationship with their neighbours. Along with the many benefits of community living, this type of lifestyle does involve a whole new set of commitments, which are in many cases different to owning the traditional house and land.

This publication is a general guide for those considering buying into a community titles scheme, and briefly outlines the role of the body corporate in community titles living. It is not intended as legal advice but aims to provide a broad overview of community living and the role of bodies corporate so consumers are better informed before signing a contract to buy.

What is a community titles scheme?

A community titles scheme may include any duplex, residential unit block, high rise accommodation complex, shopping complex or business park. Such schemes are comprised of individually owned lots or units and common property.

Community titles schemes allow for flexible living arrangements where a person can privately own an area of land or part of a building as well as share common property areas with other owners. If you are considering purchasing a unit or townhouse, you need to be aware you will be buying into a community titles scheme. You will not only have certain rights and responsibilities for your own property, but also the common property shared with other owners within your complex. Therefore, it is important for potential owners to understand what the common property is and what the costs will be for maintenance and general upkeep.

Examples of common property range from a shared driveway or letterbox area to communal lifts and stairways, swimming pools, tennis courts, roadways and golf courses.

What is a body corporate?

The body corporate for a community titles scheme is composed of all the owners in the scheme. Every new owner automatically becomes a member of the body corporate. The body corporate must comply with the Body Corporate and Community Management Act 1997 (the BCCM Act) and regulations.

The body corporate (owners or their representatives) makes decisions on matters with shared responsibility. These include:
• maintenance and management of common property, including equipment and services
• determining levies (financial contributions) which owners must pay to fund its operation
• public risk insurance
• any compulsory building insurance
• establishing and enforcing by-laws (rules) relating to the management and control of lots and the common property.

When considering purchasing a unit in a community titles scheme, you should find out if there are any fees and charges still owing – as the new owner, you will be obligated to honour the payments.

The committee

The body corporate must elect a committee at each annual general meeting. The committee consists of executive members (a chairperson, secretary and treasurer) and any ordinary members. Depending on the size of the scheme, committees vary in size from at least three to no more than seven people. If not enough body corporate members are interested in forming a committee or at least one of the executive positions is not filled, regulations allow a body corporate to employ a body corporate manager to carry out the functions of a committee.

Maintaining common property

It is the responsibility of the body corporate to maintain common property. As common property may include lawns, access roadways, swimming pools, common doors and windows, it is very important for the body corporate to know what type of plan the scheme is recorded as. A scheme recorded as a ‘building format plan’ will have a significantly different area of responsibility than one recorded as a ‘standard format plan’. Copies of plans may be obtained from the Department of Natural Resources and Water. The Titles Registration Service Centre can be contacted on 07 3227 6626. The body corporate can engage the services of professionals such as gardeners and pool cleaners to carry out maintenance. In some smaller schemes, body corporate members volunteer their own services. Naturally, professional services will involve some costs, and these and other financial matters must be considered by the body corporate at the annual general meeting.

The annual general meeting

By law, every body corporate must hold an annual general meeting (AGM) each year. At the AGM, owners consider the financial position and direction of the body corporate. There are two budgets that a body corporate must approve each year:
The administrative fund budget covers the day to day expenses such as:
• general maintenance of the common property
• insurance premiums paid by the body corporate
• other recurrent expenditure (for example, a weekly gardening service).
The sinking fund budget is based on future major/capital maintenance for the next 10 years for items such as:
• painting the building (if the body corporate is responsible)
• pool refurbishment
• the purchase or replacement of major assets (for example, ride-on mowers or pool furniture).
Other items most likely to be on the AGM agenda are:
• election of committee members for the next year
• fees and levies for the year (based on the two budgets mentioned above)
• renewal of insurance and any additional insurance
• any motions submitted by owners.

Special general meetings (known as extraordinary general meetings) can be held during the year when there are items to be discussed or decided upon as a matter of urgency. Items to be considered could include repairs, disputes or changes to by-laws.

What costs are involved as a body corporate member?

Based on the budgets, the body corporate must determine the contributions (levies) each owner will have to make and when they will be due. The levies are calculated in accordance with the lot entitlement schedules (see below). There are two lot entitlements schedules (the contribution schedule and the interest schedule), and expenses for maintenance of common property are divided amongst the owners in the same proportion as the contribution schedule lot entitlements. While expenses for common property maintenance are calculated using the contribution schedule lot entitlements, insurance is an expense that is treated differently and will depend on the type of plan of subdivision applying to the scheme (that is, ‘building format plan’ or ‘standard format plan’). For more information, you can access the ‘Insurance’ factsheet from the Office of the Commissioner for Body Corporate and Community Management (BCCM Office) or via the website at www.justice.qld.gov.au/bccm.

Lot entitlements are determined by the original owner (the developer) when preparing the first community management statement (CMS) for the scheme. Copies of the CMS for each community titles scheme can be accessed from the Department of Natural Resources and Water Service Centre on 07 3227 6626.

Lot entitlements may be adjusted if they do not comply with the BCCM Act. Contact the BCCM office on 1800 060 119 or visit the BCCM office website on www.justice.qld.gov.au/bccm for further information.

What by-laws apply?

The by-laws are a set of rules for a community titles scheme that regulate various matters including the keeping of animals, noise and parking on common property. The BCCM Act allows a body corporate to adopt standard by-laws set out in the BCCM Act, or to make by-laws that best suit its individual circumstances. Owners are encouraged to obtain copies of the by-laws to ensure they are familiar with their rights and responsibilities.

By-laws are contained in the CMS for a community titles scheme. The statement is a document held by Titles Registration in the Department of Natural Resources and Water. If you are unclear which bylaws apply to your scheme, contact the body corporate secretary or the Titles Registration Service Centre on 07 3227 6626.

Buying to invest

As an investor, your rights and responsibilities are exactly the same as if you were an owner/occupier. Your individual property must be maintained in good condition and levies and additional costs will still be calculated as if you were living there.

All owners must provide an Australian residential or business address to the body corporate. If you are letting a unit, you are obligated under the Residential Tenancies Act 1994 to provide your tenant with a copy of the body corporate by-laws, as well as new by-laws as they are made. When letting your unit for more than six months, you must advise the body corporate of the name and residential or business address of your tenant. For more information on letting or renting a unit, contact the Residential Tenancies Authority on 1300 366 311 or visit www.rta.qld.gov.au.

Get the foundations right

As well as conveyancing searches, potential buyers should try and fi nd out information about the body corporate.
Searches are available through the following areas:
1. Department of Natural Resources and Water: obtain a copy of the CMS. The CMS provides important details about the particular community titles scheme, including details of any proposed future development of the scheme, the lot entitlements, by-laws and the regulation module applying to the scheme. Further information is available from the Titles Registration service centre by phoning 07 3227 6626 or visiting www.nrw.qld.gov.au.

2. Department of Justice and Attorney- General, Office of the Commissioner for Body Corporate and Community Management (BCCM Office): conduct a search for any adjudicator’s orders made concerning the scheme. General information is also provided about body corporate legislation. For more information, phone 1800 060 119 or visit www.justice.qld.gov.au/bccm.

3. Body Corporate Secretary: a search of the body corporate records can provide other important information, including whether any improvements to the lot you are purchasing (balcony enclosure, air conditioning) were approved, whether any conditions apply, and who is responsible for their maintenance and insurance. Also, check for any agreements the body corporate may have entered into, for example, caretaking, letting, body corporate management or lift maintenance.

Buyer’s checklist

• By purchasing this property, do you know you will be part of a body corporate?
• Are you aware of any contracts the body corporate is a party to?
• Have you read and understood the body corporate by-laws and understand how they apply to you?
• Do you understand your likely financial contributions to the body corporate?
• Do you understand your maintenance responsibilities?
• Do you understand the role of the body corporate manager and on-site manager (if applicable)?
• Have you confirmed there are no unpaid body corporate fees, outstanding adjudicator’s orders or defects in either the common property or the lot?

Please refer to the website (http://www.justice.qld.gov.au) should you wish to find out more about this topic in Queensland or if you wish to find out if this information has been updated.

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