BOLA08 enacts amendments to the Fire and Rescue Service Act 1999 and the Building Act 1975 in relation to Certificates of Classification for buildings that are occupied and fall within commercial classes 1b to 9 (therefore excluding class 1a residential single dwellings) (Relevant Certificates). These amendments have a far reaching effect on the ownership and day to day management of commercial properties.

The Changes to the Building Act

The changes that owners of commercial buildings need to be aware of are:

Where a Relevant Certificate has issued after 1 July 1997 it must be conspicuously displayed as near as practicable to the building's main entrance. For those Certificates issued between 1 July 1997 and 22 April 2008, owners are granted a one year grace period to 23 April 2009 to comply with the requirement. All Relevant Certificates issued on or after 23 April 2008 must be displayed immediately. The Act prescribes a maximum penalty of $12,375 for non-compliance.

Authorised Officers, being fire service officers and local Council officers, have the power under the Building Act to enter and inspect premises for compliance with the above requirement. If the Relevant Certificate is not displayed then the authorised officer can require the owner to produce the Certificate (or a copy) for inspection at the building. Where the owner cannot produce the Certificate (and the grace period has expired, if applicable) the authorised officer may issue a fine, to a maximum of $12,375. Note that this is in addition to the previously mentioned fine for not displaying the Certificate. Early indications in commentary from local and state government departments are that Authorised Officers may, where the owner is unaware of its obligations or is waiting for a copy of the Certificate, grant a reasonable time for compliance with these obligations.

We acknowledge the opinion of the Department of Infrastructure and Planning in its Building Newsflash 312, issued 18 April 2008, that only one Certificate need be displayed in each building. We think it is arguable however, on reading of the Act, that an owner of a building where numerous Relevant Certificates have issued, eg. For "tenants works" etc must comply for each of those Certificates (ie display each Relevant Certificate). This interpretation makes sense in light of the purpose for the amendments to the Building Act - to ensure that Authorised Officers can effectively monitor compliance with Certificate and fire safety requirements.

Where a Relevant Certificate restricts the use or occupation of a building or part thereof or contains performance requirements, the owner must take all reasonable steps to comply with the restrictions and requirements and ensure that the building's occupiers are complying. A new section to the Building Act allows Authorised Officers to enforce these provisions.

The Explanatory Notes to the BOLA08 Bill state, "Reasonable steps by the owner to comply with the Certificates obligations would include ensuring occupancy and lease arrangements accurately reflect any requirement or restriction and a reasonable level of monitoring of the occupier's activities in relation to any requirement or restriction". This is the minimum standard that owners of relevant buildings must meet to demonstrate compliance.

Other amendments that may affect owners, occupiers and building certifiers of relevant buildings include:

The definition of "budget accommodation building" in the Building Act has been amended to include share houses with six or more unrelated occupants and boarding houses. The new provisions tighten up the definition of "budget accommodation building" so that owners of such buildings must ensure compliance with the Fire and Rescue Service Act 1999.

Effective 23 April 2008, new Relevant Certificates must state the materials, systems, methods of building, procedures, specifications and other things required under the alternative solutions, if applicable.

Local government building surveying technicians may now perform limited certifying functions. This amendment has been made with a view to addressing the current skills shortage for building certifiers in Queensland.

Relevant to the Fire and Rescue Service Act 1999, the definition "fire safety installation" has been amended to include any thing required to comply with an alternative solution for the building - capturing new products such as extraction fans. Under the Building Act the owner's obligation is to ensure fire safety installations are safe and reliable.

Buying and Selling Commercial Property

Owners should be aware that in the REIQ Contract for Commercial Land and Buildings, the vendor is required to deliver the original Certificate of Classification to the purchaser at settlement. The inevitable effect is that the original Certificate of Classification is an important title document without which purchasers may not settle. For that reason, we suggest that the original Certificate be kept in a safe location and only a copy displayed at the main entrance to the building.

In buying commercial buildings, purchasers should be querying the content of Relevant Certificates and insisting on appropriate special conditions, eg a condition of settlement is that evidence be supplied by the vendor of its compliance with the restrictions and requirements in the Relevant Certificates. It will be the purchaser's responsibility to comply with the Building Act on and from settlement of the acquisition. In our view, the REIQ Contract for Commercial Land and Buildings does not sufficiently address these issues from a purchaser's perspective.

In selling commercial buildings, vendors in most cases can expect queries and requests for copies of the Certificates before execution of a contract as well as requests for warranties regarding compliance with the Certificates. Having the answers to these questions and copies of the Certificates at hand now may give your purchasers some assurance that you prudently manage your property and may help to fast track the negotiation process.

For those owners looking to refinance in the future, compliance with the Building Act and provision of copies of Certificates of Classification will, no doubt, be critical to financiers in advancing funds.

The Next Steps

From a practical perspective, owners of relevant buildings should now be actively tracking down the Relevant Certificates issued (or that should have been issued) for the buildings and taking the necessary steps to comply with the Building Act, including a review of lease arrangements to ensure they accurately reflect the restrictions under the Certificate. In negotiating new leases, it may be worthwhile including a provision that requires tenants to comply with the restrictions and requirements set out in the Relevant Certificate/s.

For a fee your local Council can send out a copy of Certificate of Classification for a particular building.

HopgoodGanim advises many property owners with regard to property development, sales and acquisitions and commercial leasing.

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