QLD Management Rights Are Under Threat
A major issue the new LNP government will have to face is the pressure to further change body corporate legislation. More than 180 unit owners, mostly in SEQ, hit with substantial increases in body corporate fees, have signed up to fight the existing legislation.
If the move to overturn or substantially alter the Body Corporate & Community Management Act 1997 and the Body Corporate and Community Management and Other Legislation Amendment Act 2010 is not successful, they plan to launch a class action against the state government through Gold Coast-based lawyer Anthony Delaney.
Mr Delaney, of Anthony Delaney Lawyers, confirmed he had sent the documents to Brisbane barrister Brian O’Donnell QC for his attention.
Mr Delaney said many lawyers considered the act breached principles of natural justice, a view shared by the Queensland Law Society. “If the barrister’s opinion supports that view, we expect the government to enter into discussions, obviating the need to launch a class action,” he said.
Premier Campbell Newman has already committed to investigate the issues. “The government understands the inequity in the current body corporate lot entitlement scheme and this is something the incoming minister will need to work very closely with stakeholders and unit owners to fix,” Mr Newman said. “Sorting out the mess left by Labor in the area of body corporate law is going to take some time but I expect my minister to sort it out.”
At present the BCCM Act is the responsibility of the new attorney-general Jarrod Bleijie.
A discussion paper was circulated by the previous attorney-general Paul Lucas with a submission deadline of 8 May. These submissions will greatly influence Mr Bleijie’s actions.
We have already been through this before. Through 2001-02 it was a struggle to shake resident unit managers out of their lethargy and apathy to fight powerful changes demanded by a vociferous minority of unit owners and it was the tenacity and drive of the likes of John Mahoney, Kim Cox and Dave Allen that a semblance of balance was brought to the resulting legislative amendments.
The alternative would have seriously damaged the viability of the whole management rights industry.
Accomnews‘ print sister Resort News played a major part in motivating managers to get involved in the fight to save their industry.
It was no different when the BCCM Act was originally conceived back in 1996-97. Resort News was also the messenger at that time.
Factions within the Unit Owners Association of Queensland have, as its main aim, the lobbying of government for a complete review of the management rights industry legislation. Paul Lucas’ discussion paper seems to point to exactly what UOAQ is looking for, namely a total reassessment of the principles that underlie the management rights industry as we know it. One of the most potentially damaging suggestions is that the length of current regulation modules (whether standard or accommodation) are unnecessarily long. It states that “some lot owners… feel ‘bound’ by typically long-term contracts” recommending limiting management rights contracts to three years.
What business could survive on a three-year term and what finance company would lend on that basis? What fool would buy a business on that basis?
Just as worrying is the call for extension or topping up of contracts to be prohibited.
Another area of concern is the possibility of limiting management rights to a single use. The Lucas document states, “The objectives of the BCCM Act recognise that the lots in a scheme will seldom be used for a single, uniform purpose. It is commonplace for schemes to serve the potentially conflicting needs and interests of investors, owner occupiers, holiday makers, short-term tenants, permanent tenants and resident managers.
“Clashing perceptions about scheme use and purpose may result from a lack of clear information provided to purchasers about the prevailing or intended use of a scheme. While a ‘purpose statement’ may not assist reduce conflict in current schemes, it might benefit future schemes.”
In other words, no management rights in “mixed use” complexes.
And under fire is changing from one module to another. “A body corporate may act to change the regulation module applying to its scheme. Concerns have been raised that inappropriate changes from Standard Module to Accommodation Module may be sought by resident managers, through lobbying investor owners in particular or relying on lot owner disinterest or an amenable committee.
“A change from, for example, the Standard Module to the Accommodation Module is potentially of great benefit to a resident manager, as it will generally increase the value of the business.”
Even the manager’s role may be under attack. “Investor owners and owner occupiers may differ in their concerns about the level and quality of service that should be provided by a resident manager. There are suggestions that owner occupiers expect a higher level of routine maintenance to common property. Investor owners are often removed from the scheme and their awareness of the day-to-day conduct of the resident manager may be minimal.”
Watch out for this curly one. It could result in some pretty difficult rules for managers.
More warning bells: “Researchers have looked at the relationship between resident managers and lot owners in tourism focused schemes. These investigations identify potential moral hazards and conflicts of interest that may arise from the nature of management rights arrangements. This research highlights how lot owners are a diverse group and the interests of resident owners and investor owners often do not align. It describes the substantial control over investor returns exercised by resident managers that potentially affects their relationship with investor owners. And it points to potential moral hazards, as developers have an incentive to create management rights arrangements favouring the resident manager, while owners have a disincentive to take actions that might impact on their relationship with the resident manager.”
If the above (and there is plenty more in Lucas’ document) does not motivate you as a manager or anyone else reliant on management rights into action then you are putting your very existence on the line. ARAMA and other bodies as well as many individuals (RUMs, solicitors, accountants, valuers, real estate agents, financiers and unit owners themselves) have put in submissions and, while the deadline for submissions may have passed, your support of ARAMA and other bodies is imperative. Now!
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