HG Alert: Body corporate laws set to change - 19 Feb 2010

The current position on contribution lot entitlements under the Body Corporate and Community Management Act 1997 is about to change, according to a media release issued today by the Minister for Tourism and Fair Trading, the Honourable Peter Lawlor.

Currently, all body corporate contribution lot entitlements are set or adjusted equally, except in circumstances where it is “just and equitable” for them not to be equal. However, the Government has seen this as a "loophole" which allows, for example, penthouse owners to significantly reduce their body corporate fees but cause those costs to be passed on to other lot owners in the complex. Mr Lawlor noted that the result of this could be that "a ground floor studio owned by a retiree or pensioner would be left paying much more than they had budgeted for when buying the unit - in some cases, double, and this has forced many unit owners out of their homes". The amendments proposed aim to stop this from occurring.

The Government intends to introduce a fairer system as follows:

"We would like to see the basis for setting lot entitlements revert to the arrangements before the Act was introduced."

Mr Lawlor said under the new system, lot entitlements in a 'standard format plan' - such as some townhouse-type complexes - would be set in proportion to the unimproved value of the land.

"For a 'building format plan' - typically used for multi-storey developments - developers will have to set lot entitlements by some legislative guidelines but there could be scope for them to factor in market conditions and values of property.

"Essentially, what this would mean is that an owner of a small one-bedroom place on a lower floor at the back of a unit complex, for example, would not be required to contribute as much towards common expenses as someone with a more expensive place, such as a four-bedroom, top floor apartment with views.

"This type of system was once used in Queensland for many years and we believe it to be the fairest method for most unit residents and owners.”

The Queensland Government will allow those buildings and complexes which had lot entitlement adjustments made, to revert to their original method of dividing body corporate fees when the plan was registered.

Without seeing the proposed Amendment Bill, it is unclear precisely how the Government plans to deal with contribution lot entitlements that have already been adjusted under the current legislation, or proceedings currently before the Queensland Civil and Administrative Tribunal. We will publish further details of the amendments once they are to hand.

For more information on these amendments, please contact HopgoodGanim’s Commercial Property practice.