Question 1

What is a body corporate?

Accepted Answer

A corporation is a legal entity which is controlled by people. A common corporation is one made under the Corporations Act 2001 (Cth) which is commonly called a company. In Queensland, before the 1960s, there was the concept of ‘corporate title’. A company would own property, and a person might buy shares to have a lease to live in part of the property and a licence to use common areas. The trouble with this concept is that a shareholder never actually owned the land.   In the 1960s, special legislation was set up to allow actual ownership of land, and not merely shares in a company. This is still a type of corporation, but it is not a company: it is a ‘body corporate’. A body corporate is established under what is now known in Queensland as the Body Corporate and Community Management Act 1997 (Qld). A body corporate has similarities to companies and corporate title, but they are specially made to deal with land ownership for community living.   Put simply, lot owners can buy lots in a scheme, but the body corporate owns the common property. Lot owners contribute funds to the body corporate, which the body corporate then uses to administer the common property for the benefit of everyone. This allows people to buy into higher-density community living with a purpose-built system to manage the common property that all lot owners use.

Question 2

What is the role of a body corporate?

Accepted Answer

The purpose of a body corporate is to establish a separate legal entity to own and manage common property on behalf of all lot owners. Lot owners contribute funds to the body corporate and lot owners control the body corporate, but it is the body corporate as its own distinct legal entity which deals with common property and other contractors.   However, the role of the body corporate is very limited. Its conduct is limited by the Body Corporate and Community Management Act 1997 (Qld) and the regulation module it is established under. It can only make decisions about the management and administration of common property and body corporate assets, and every decision it makes must also be reasonable. This is to help ensure that the common property is managed for everyone’s benefit.

Question 3

How is a body corporate governed?

Accepted Answer

A body corporate is established under one of five regulation modules. These are the Standard, Accommodation, Commercial, Small Schemes, and Specified Two-Lot modules. The relevant module sets out how a body corporate conducts its affairs.   Generally, for Standard, Accommodation and Commercial modules, a body corporate is governed by all lot owners at a general meeting. Many decisions require an ordinary resolution to pass (being more than 50% voting in favour), but some decisions require special resolutions and resolutions without dissent. Some matters may also be dealt with by decisions of a committee. Committee members are elected by lot owners at an annual general meeting.   Small Schemes are very similar, but the governance of a body corporate is less rigid, as there can only be two committee members. Anything a committee member can’t do is then dealt with at a general meeting.   Specified Two-Lot schemes are rare but are reserved for particular two-lot schemes. For these schemes there isn’t a committee, and body corporate meetings don’t need to be held. Instead, everything, including financial management, is dealt with on a case-by-case basis by agreement between the two lot owners.

Question 4

What does a body corporate manager do?

Accepted Answer

The body corporate must carry out certain functions, such as keeping its records in order, and issuing levies. A committee also must carry out functions including calling meetings and receiving correspondence. A body corporate might wish to engage a body corporate manager to help deal with these administrative functions.   The actual functions of the body corporate manager depend entirely on the terms of their engagement. Often, a body corporate manager will manage the records and finances of the body corporate. On some occasions, they might also be engaged to carry out functions of the committee, such as secretarial and chair functions, but many only assist, without having the power to actually do so.   The body corporate manager is the agent of the body corporate. The body corporate retains its decision-making power, and the body corporate manager can only ever act upon the lawful instructions of the body corporate (or the committee, if the engagement allows it). A body corporate manager is only an agent: they can never make decisions for the body corporate. It is always up to lot owners and committee members to make the required decisions for a body corporate.

Question 5

How does the body corporate enforce its by-laws?

Accepted Answer

The by-laws of a body corporate are binding on all lot owners and occupiers. To enforce its by-laws, the body corporate must issue one of two different types of contravention notice. These are either a continuing contravention notice, or a future contravention notice.   A continuing contravention notice is used if there is a current contravention, and it is likely it will continue. An example of this might be a person who has a car parked on common property when the by-law prevents it.   A future contravention notice is used if there was a contravention and it has stopped, but it is likely that it will happen again.   There are very specific requirements which must be set out in the notice which include what by-law was breached, the details to identify the contravention, and otherwise including details as set out in the Body Corporate and Community Management Act 1997 (Qld). It must then be given to the person contravening the by-law. If the contravention is not remedied, then the body corporate can take action either in the Magistrates Court or with the Commissioner’s Office.

Question 6

Can a body corporate evict a tenant?

Accepted Answer

No. The purpose of a body corporate is to manage the common property and enforce the by-laws. If a tenant of a Lot owner is contravening the by-laws, then the body corporate can take action against the tenant to enforce its by-laws. But a body corporate has no power over what the Lot owner chooses to do with their property, and that includes anything relating to their tenant.

Question 7

Why do I need to pay fees/levies?

Accepted Answer

The purpose of a body corporate is to manage the common property. Every owner of a lot in a body corporate is entitled to the benefit of common property, and every lot owner must contribute to the body corporate so that the common property can be maintained for the benefit of everyone.   The payment of levies is non-negotiable. A Lot owner, by virtue of being a Lot owner in a body corporate, is under a legal obligation to pay levies proportionate to their contribution schedule lot entitlement.   Now, are the levies reasonable? That is a different question. A special levy might need to be raised for legitimate purposes – or it may be unreasonable and could be challenged. It really depends.   As for fees? It depends on what the ‘fee’ is. If it’s just a levy, then yes, you must pay it. Is there a ‘debt recovery’ fee? Then that might not be lawful. For example, a notice of contribution cannot include a debt recovery fee on it. Whilst a body corporate might be able to claim those fees and enforce it in court, a ‘fee’ is not payable just because it is on a notice of contribution.   But there are other fees which are chargeable. For example, an exclusive use by-law might allow it to be charged to a Lot owner who has the benefit of exclusive use, or a fee for body corporate services might be on-charged to a Lot owner, but only if the lot owner agrees to use that service

Question 8

Can a body corporate charge interest on the late payment of levies?

Accepted Answer

Only if the body corporate, by ordinary resolution at a general meeting, resolves to do so. The maximum penalty interest a body corporate can agree to is 2.5% simple interest on an instalment for each month the instalment is outstanding.   Sometimes you will hear people refer to this as interest of 30% per annum, or otherwise charging penalty interest pro rata for part of a month. This is not lawful. The legislation explicitly says that penalty interest may only be 2.5% simple interest for each month an instalment remains outstanding.   This means that if an instalment is due on 1 July, then 2.5% can only accrue on 1 August. If it remains outstanding, another 2.5% can accrue on 1 September.   So, if you fail to pay an instalment by the due date, but pay before the month is up, you will not have to pay penalty interest on that instalment as it hasn’t been owing for a month.

Question 9

What are the sinking fund and administrative fund?

Accepted Answer

A body corporate must have two funds: a sinking fund and an administrative fund. Contributions are levied on lot owners so that each fund has sufficient monies to cover expenses.   A sinking fund needs to have enough money to cover project expenditure on capital works for up to 10 years. The sinking fund can only be used to pay for capital or non-recurrent work, periodic   replacement of major items of capital expenditure (eg air conditioning plant), and other similar things.   The administrative fund is used to pay for anything that otherwise cannot be paid out of the sinking fund. This includes things like service contractors, body corporate managers, utility services, and other recurrent expenses that aren’t capital in nature.

Question 10

What is a Community Management Statement?

Accepted Answer

The community management statement (CMS) is what defines a body corporate. A body corporate is created by a developer when a survey plan of the land, and a CMS, is registered with the Titles Office. The CMS sets out what regulation module applies; what land forms part of the scheme; what proportion each lot has for the levies and land; the by-laws that bind every lot owner and occupier; and the exclusive use (of any) for each lot.   Without the CMS, you can’t know anything about the body corporate or how it should operate. Your body corporate manager should have a copy – otherwise, it can be purchased from the Titles Office.   Do executive committee members have extra powers, or do they get more than one vote if they hold more than one position, such as chairperson and treasurer?   No. One committee member has one vote only. The executive positions of chairperson, secretary and treasurer are positions of responsibility – the executive position must carry out their respective duties, and they do not give extra powers. All committee members, whether or not they are executive members, are equal when it comes to voting. Executive committee members cannot decide anything by themselves. A committee decision may only be made by the whole committee.

Question 11

What makes a decision of the committee or body corporate reasonable?

Accepted Answer

The body corporate and the committee must always act reasonably when making decisions. What is ‘reasonable’ is not subjective – the High Court of Australia has held that it is an objective test.   To make a reasonable decision, you must take into account all facts and circumstances that may be relevant to the decision. Once you have those facts and circumstances, you must then reason your way to a decision based on those facts and circumstances.   An example is an application to keep a pet. It is not reasonable to say ‘no pets’, because there is no reason for that decision. Some relevant facts and circumstances might be the pet in question and what the RSPCA says; how the owner or pet has acted in the past; whether there are any particular things unique to the body corporate that may impact (eg a lot of allergic lot owners); whether any concerns can be alleviated (eg no pet access to common areas where allergic lot owners frequent); and council requirements.   The above is not an exhaustive list. It may not be reasonable to keep a cattle dog in an apartment tower, but it may be reasonable to keep a greyhound. To act reasonably always requires careful consideration.

Question 12

Can a committee member be removed from the committee?

Accepted Answer

Yes, but a process must be followed, and they can only be removed for an actual breach of the code of conduct. The exact process is set out in the relevant regulation module.   In general, a motion must be put forward to a general meeting of the body corporate to decide by ordinary resolution whether to give a breach notice to the committee member. There are specific requirements that must be included in the notice which must be met – it is best to seek legal advice for this.   The committee member can then give a response within a certain period of no less than 21 days. At the next general meeting, the body corporate must then put forward a motion calling for the removal of the committee member from office. This may be done by ordinary resolution.

Question 13

Can a body corporate say ‘no’ to a transfer of management rights?

Accepted Answer

Yes. Remember that a caretaker must always act in the best interests of the body corporate. It is not the body corporate’s responsibility to give a caretaker a windfall when selling management rights.   However, a body corporate must always act reasonably when making the decision about whether to transfer management rights. The relevant regulation module sets out what factors to consider, such as the proposed new caretaker, the terms of the transfer, and other such matters.   If the body corporate is fine with the current arrangement, then it is entitled to rely on the contract. If a caretaker wishes to enter into a lengthy agreement, then the body corporate can reasonably insist on it for as long as the agreement lasts.

Question 14

How should a committee decide an application to keep a pet?

Accepted Answer

A decision of the committee must be reasonable. This is an objective decision, not subjective – there is usually a ‘correct’ answer. For a decision to be reasonable, the committee must take into account all facts and circumstances that are relevant to the decision to keep the pet. For example, relevant factors might include the type of pet; the suitability for the pet on scheme land; how the pet will be kept; what will the impact be on lot owners and common property; is the pet allowed by the local council?   There is no real limit to what can be considered, but they must be relevant to the ultimate decision about whether or not to keep a pet onsite. For example, although a greyhound is a large animal, the RSPCA says that their nature is suited for apartment living. Meanwhile, certain birds may not be suited to some buildings because of potential noise.   Whatever the decision, it must always be reasonable and based on the application and the facts and circumstances that surround it. Blanket bans or policies are not reasonable, because they fail to consider individual circumstances. The ability of a committee to regulate what goes on inside a person’s own home is also limited. Further, there is no such thing as ‘precedent’ in allowing pets. If you allow one pet, that does not automatically mean others must be accepted. For example, a greyhound may be accepted, but that doesn’t mean a cattle dog must be approved for a studio apartment.

Question 15

What is common property? Who is responsible for maintaining common property?

Accepted Answer

‘Scheme land’ for a body corporate includes all lots in the scheme and the common property. Individual owners own each lot, but the body corporate owns the common property. Every lot owner has an interest in common property, which is why everyone contributes money to the body corporate so that the common property can be maintained for the benefit of all lot owners.   Generally speaking, maintenance of common property is the responsibility of the body corporate. This might change if a person has exclusive use over a certain area. For example, a person may be responsible for keeping their exclusive car park or courtyard area clean. This often depends on what the by-laws say. However, simply having exclusive use doesn’t mean you’re responsible for everything. You are certainly not responsible for structural elements of common property. When it comes to these issues, determining maintenance obligations is tricky and requires proper advice.

Question 16

I want to renovate my lot. Do I need approval of the body corporate?

Accepted Answer

It depends on what you want to do, and also what the by-laws say. If you want to renovate the interior, then it depends on the boundaries of your lot, and if you are making any structural alterations. Generally, structural alterations such as removing walls are a no-go. If your lot only extends to the ceiling, and if the roof is common property, then that is absolutely not allowed, as you would be affecting common property.   For the exterior of your lot, such as repainting or adding exterior blinds, then most by-laws require you to obtain permission to change the external appearance. If you renovate the exterior without permission, then the body corporate could require you to undo all your changes and restore it to its original condition. It is best to seek advice, as every lot is unique.

Question 17

What does body corporate insurance cover?

Accepted Answer

Generally, a body corporate must insure the common property and body corporate assets for full replacement value to cover damage and costs of reinstatement or replacement to as-new condition.   If a lot is included in a building format plan or a volumetric format plan, then the buildings must be insured as well. If a lot is included in a standard format plan and there are common walls, then those buildings must also be insured.   If there are no common walls, then insurance is not required for the buildings, but the body corporate may establish a voluntary insurance scheme for stand-alone buildings. However, this is optional, and only persons who voluntarily take part must contribute to the insurance costs.

Question 18

Can a body corporate enter my lot?

Accepted Answer

Yes, but only to inspect a lot or common property to determine if work is necessary to be carried out, and to carry out that work. Unless there is an emergency, then written notice must be given. An emergency means an emergency: there must be an emergency that requires immediate attention. It does not mean ‘because it would be convenient’. A person’s lot is their land, and entry without notice without an emergency is trespass.   The required notice must be in writing, must be given to the owner or occupier, must be for entry at a reasonable time, and must be at least 7 days after the notice has been given. It is not possible to shorten the notice period, unless the lot owner voluntarily allows it. Again, this is because a person’s lot is their land: unauthorised access is trespass. Living in a body corporate does not mean that people can trespass or use another person’s property just because they feel like it.

Question 19

Can the body corporate restrict tenants from using certain parts of the common property?

Accepted Answer

No. Unless an exclusive use area has been given to a lot, common property is property common to all, whether you’re an owner or an occupier. A body corporate is prohibited from discriminating against types of residential uses of a lot, and likewise any such restriction for tenants will be unlawful.

Question 20

A telco wants to run wiring through the building. What are our rights?

Accepted Answer

The short answer is, if a telco really wants to install their infrastructure in your building, there is very little that can stop them, as they have the power under the Telecommunications Act 1997 (Cth) to do so. However, they do need to pay reasonable compensation. Many telcos have the decency to negotiate an arrangement first, and that might involve a contract between the body corporate and the telco, or there might be a need to enter into a registered lease. This may affect common property, so it is important to hold a meeting to reach an appropriate resolution on the matter. If a body corporate does not agree, then usually the telco, if they want to still go ahead, will seek an order of the court.

Question 21

What is a building format plan? What is a standard format plan?

Accepted Answer

The boundaries of any land in Queensland is defined by a survey plan. The survey plan for a body corporate shows the boundaries of all lots and common property. Modern plans will usually have on the first page in the bottom right, a small box that states whether it is a ‘building’ or ‘standard’ format. Older plans may not show that at all.   A building format plan defines land by reference to the structural elements of the building itself, such as walls and ceilings. These are usually used for multi-storey buildings. Older building unit plans (BUP) are building format plans.   A standard format plan defines land horizontally by reference to survey pegs and exteriors of buildings. These are usually for schemes with separate buildings and some townhouses. Older group title plans (GTP) are standard format plans.   Identifying which plan you have is important because it affects the maintenance obligations of your body corporate.

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CONTACT BCLQ

BRISBANE

Level 22 / 69 Ann Street Brisbane QLD 4000

(07) 3059 6001

admin@bclq.com.au

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Brisbane QLD 4000

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