Proposed strata scheme resumption process threatening independent decision making

Owning strata titles in Queensland is a dream many Queenslanders still have and with several initiatives by government and low interest rates we are glad to see this dream will come true for many in the near future.

However, when buying into a strata scheme, many owners still underestimate the responsibilities that the body corporate committee has to ensure its scheme is run properly and compliant with legislation. The rules governing strata schemes are indeed convoluted and encompass several acts, modules and by-laws. The day-to-day governance of bodies corporate is managed, for the most part, by committee members assisted by body corporate managers. Committee members are often laypersons that may find the prescriptive nature of the various pieces of legislation difficult to understand.

As the representative for body corporate managers we are actively helping to improve the conditions of living in a strata scheme and consequently the management of strata schemes so residents have more time to enjoy their community living. A big part of that commitment is that we scrutinise proposed legislative changes and try to take the owners’ and residents’ point of view.

The Queensland Legal Affairs and Safety Committee has recently asked for feedback on the proposed changes to the Acquisition of Land Act 1967 and the Body Corporate and Community Management Act 1997 relating to the ability of a constructing authority to formally acquire part of a strata scheme’s land. The changes are proposed as part of the Liquor and Gaming (Red Tape Reduction) and Other Legislation Amendments Bill 2013.

The resumption process is one of those areas where body corporate committees have set timeframes and processes that impose a big burden on body corporate committees where there isn’t a manager to assist. At present, when a constructing authority advises a body corporate that it intends to resume part of the scheme land, the body corporate is required, within four months, to obtain independent professional advice (at the constructing authority’s cost) about the effect of the resumption on lot entitlements and to decide at a general meeting whether an adjustment to the scheme’s entitlements is required prior to the recording of a new community management statement.

That process, for any number of reasons, regularly takes longer than the time frames provided in the BCCMA. It’s not surprising that bodies corporate are reluctant to move quickly when the purpose of the exercise is the compulsory acquisition of part of their land. Currently, there is no mechanism in the BCCMA compelling the body corporate to strictly comply with those time frames and there are no penalties if the body corporate takes longer than four months to complete the process.

The purpose of the Liquor and Gaming (Red Tape Reduction) and Other Legislation Amendments Bill 2013 is to speed up the resumption process by enabling the constructing authority to provide the “independent” professional advice to the body corporate and to simply lodge the new CMS at the Titles Office if the body corporate fails to carry out its obligations under the BCCMA within four months.

While the proposed amendments in the bill undoubtedly make the process quicker, they also disempower the body corporate by removing the body corporate’s entitlement to obtain its own professional advice (or a second opinion) and by limiting the ability of the body corporate to negotiate the terms of the resumption.

The four-month time frame is tight and will require a committee to run the process very efficiently. Of most concern is that the constructing authority could rely on the proposed provisions to completely avoid negotiation with a body corporate by letting the four-month time limit expire and by simply recording the new CMS without body corporate approval. Any impending issues would either have to be resolved at a later stage, incurring significant costs, or challenged at QCAT or a court of competent jurisdiction.

There will also be some retrospective transitional provisions to enable constructing authorities to enforce the new time limits in respect of resumptions that were notified prior to the amendments taking effect.

Many bodies corporate would be unaware of the bill (if enacted) and its implications and most laypersons would have difficulty comprehending the provisions relating to the formal acquisition of scheme land. Consequently, it is crucial that a body corporate is given sufficient notice of the constructing authority’s intention to lodge the new CMS and an opportunity to seek its own lot entitlement adjustment advice.

We have submitted these views to the Legal Affairs and Safety Committee and are hopeful that the bill will be amended accordingly.

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