Owners’ groups fight new strata legislation

The Unit Owners Association of Queensland is urging the Queensland government and it’s attorney-general to review body corporate legislation that permits developers selling 25 year management rights agreements.

Comparable provisions have been “considered unenforceable” by a NSW court and considered “unconscionable” in the USA, according to the owners’ lobby group.

The Queensland government recently passed the Property Occupation Act, 2013 “under the guise that it will cut red tape” which adds further reasons [why] investors should be wary of the ‘Queensland disease’ (management rights system), according to the UOAQ website. When the act becomes law there are changes that will come into effect that will “make owner/investors lives even more difficult at the mercy of the Queensland MR system”.

The UOAQ website cites:
1. Section 153 notices. The notice to be given to buyers of management rights businesses about the need to get a licence and obtain strata title scheme body corporate approval will be abolished.

2. Disclosure of rental commission. The requirement to disclose the actual commission the real-estate agent (including ‘on-site’ resident agents) is charging on the residential unit will be removed.

3. Commission amounts. Commission is being deregulated. The current caps of maximum 7.5 per cent of gross rent received for permanent and 12 per cent of gross rent received for short term will be removed. If your real-estate agent wanted, they could charge a flat fee across the entire transaction – rather than splitting it into the Real Estate Institute of Queensland (REIQ) commission on the unit and the balance on the business.

4. Purchasing a property or business you have listed. Agents will be able to be a purchaser of an interest in a business and charge a commission provided the prescribed form of disclosure is made to the seller. The form itself has not been prescribed yet. The act requires that the agent must act fairly and honestly in relation to the sale and the client must be in as good a position as the client would have been if the property were sold at fair market value. Needless to say, the honest Queensland agents will not need regulatory restrictions and act in the best interest of their client.

5. Listing timeframes. Exclusive listings go back to 90-day maximums for residential real estate but the act also clears up a grey area when it comes to management rights. The essence of a management rights transaction is usually the sale of the business. The act makes it clear that when a lot is sold with a business that the 90-day maximum does not apply. So, your agent could have a lawful six-month exclusive listing. Owner/investor clients or agent agreements can be revoked by either party on 30 days notice after the first 30 days. Any exclusive agency will last at least 60 days.

6. Employment registers. The obligation to maintain a register will be removed.

7. Display of licence. The requirement to have a real estate licence on display will be abolished.

8. Waiving a cooling off period. There will no longer be a requirement for lawyers to sign a certificate to waive a cooling off period on a residential contract. Buyers will be able to do it themselves.

9. Need to live ‘on-site’. There will no longer be a requirement for a strata-title scheme caretaker/letting agent to live ‘on-site’.

10. Multiple management rights letting businesses. As a strata title scheme caretaker/letting agent will not have to live ‘on-site’ they can manage multiple sites.

11. Misuse of class two buildings. If you are a short term renting owner in a class two building that does not comply with access for persons with a disability, you could be charged with non-compliance under the Disability Discrimination Act.

12. Foreign investor restrictions. If you are a foreign unit buyer in a Foreign Investment Review Board approved project, be aware that when you resell, you will not have the world market the FIRB approval provides the developer but be restricted to sell only to an Australian, in the local market.

Queensland’s lack of owner/investor consumer protection and already inadequate regulation will become even more unrestricted with further avenues to exploitation.

Meanwhile, in NSW Owners Corporation Network chairman and strata lawyer Stephen Goddard is urging fair trading minister Matthew Mason-Cox to change the Home Building Amendment Act before what the association calls the potentially “catastrophic” legislation takes effect on December 1.

The criticism comes as the state government announced new design standards that, among other changes, remove parking requirements in some areas – a measure it said would make apartments more affordable. But the OCN maintains other changes to home building legislation fail to deal with poor-quality workmanship and erode the ability of owners to make claims about defects.

The OCN said as the new act stands, a building would need to be uninhabitable or under threat of collapse for a problem to fall under the maximum six-year statutory warranty period after December 1. This potentially omits serious structural problems like fire safety or waterproofing issues that would otherwise only be covered for two years.

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