I am often asked by owners of lots in a body corporate or community titles scheme, firstly, whether there really is a body corporate and secondly, if there is one, whether they can get rid of it. This question generally comes from owners of lots in small body corporates, which comprise only a few lots, who find managing the body corporate difficult.
To answer these questions, we have to go right back to the start and explain how body corporates, also known as community titles schemes, are created.
A body corporate is established when a survey plan subdividing a certain parcel of land is registered and creates two or more lots and common property. Common property is shared land that belongs to all the owners of lots in the scheme, not just one of the lot owners. Common property is the key feature of a body corporate and a body corporate cannot exist without it. The common property may be a shared driveway/access, carpark or gardens and perhaps, in larger schemes, a pool or other shared facilities. Generally it comprises land that, for some reason, may need to be used by more than one lot owner, although areas of common property can be set aside as “exclusive use areas” for the use of the owner of a particular lot.
In some cases, the developer is required to establish a body corporate as a condition imposed by Council in the Development Approval.
The plan creating the scheme will be registered with a Community Management Statement, which sets out details relating to the management of the body corporate, including (among other things):
- Lot entitlements for each of the lots in the scheme, which determine each owners liability to pay body corporate levies and their share in the common property;
- The By-laws for the Scheme; and
- Exclusive Use Areas.
A body corporate only needs to contain a minimum of 2 lots and common property. Duplexes can comprise a community titles scheme, but do not necessarily have to. The advantage of a community titles scheme is that separate lots, or units, can be owned by different people. However, once the community titles scheme is established, there are administrative requirements under legislation that need to be met.
Once a body corporate has been established, it is probably sufficient to say that it is a complex process to terminate the scheme, particularly due to the existence of common property. The Justice Department has commented on this process recently, noting that we may start to see the original community titles schemes in old apartment buildings terminating so that the buildings can be demolished and redeveloped, having reached the end of their effective life. As all lot owners need to agree to terminate the scheme, this may not be easy to achieve.
Otherwise, once a plan and Community Management Statement are registered, a body corporate is created and it will continue to exist until the scheme is terminated, regardless of how the lot owners might practically manage the administrative affairs of the body corporate.
The body corporate should be complying with the legal and administrative requirements set out in the Body Corporate and Community Management Act and the relevant “Regulation Module” which applies to the specific scheme. Some of these requirements relate to the operation of body corporate bank accounts, insurances (the body corporate should effect public liability and building insurances, at least), determination of body corporate budgets and levies and also holding body corporate meetings.
If you own a lot in a scheme comprising only two (2) lots, there is some good news, however.
Last year, the Queensland Government passed new legislation in the
two (2) lots in the scheme. It allows for body corporate decisions to be made by the lot owners entering into a written agreement, called a “Lot Owner Agreement” and eliminates the requirement for general meetings. It also allows for body corporate expenses to be funded in a way agreed by the lot owners.
This module does not apply automatically to two-lot schemes. The Regulation Module which applies to a scheme is identified on the current registered Community Management Statement. As such, schemes established before the legislation was passed last year need to register a new Community Management Statement if they wish to take advantage of the benefits of this new Regulation Module.
If you would like further advice in relation to body corporate matters or the possibility of amending your CMS so that the Specified Two-Lot Schemes Regulation Module applies, please do not hesitate to contact one of our Solicitors.
