A body corporate within a body corporate. It is possible for a body corporate to contain its own body corporate, which itself contains yet another body corporate. These are known as ‘layered arrangements’ where there is a principal body corporate and subsidiary bodies corporate.
Most residential complexes will be a basic scheme without any layering. But sometimes a scheme with more complex lots and usage might benefit from a layered scheme.
Take for example a large plot of land. A developer builds three towers on it and they’re each used for residential, hotel, and office use exclusively. It would be difficult to organise all three different schemes into one single scheme, but likewise it wouldn’t make sense to keep them separated when they share the same grounds and facilities on the one block of land. This development might be set up so each tower is managed by its own body corporate. Each body corporate then manages its own tower.
But above them all sits a principal body corporate. Although each subsidiary body corporate looks after its own tower, the principal body corporate might instead manage the overall ground area of the block of land and run common property facilities such as car parking and grounds maintenance. This arrangement means that each body corporate only has to look after its own separate tower: for example, it would be unfair for a residential tower to have to share in the costs of maintaining two other towers that residents never use. But overall, each tower then contributes to the maintenance and parking that every tower benefits from.
Another use of a layered scheme is for a staged development, such as a large resort that will take many years to develop. First, a principal body corporate will be set up with three parcels of land. One parcel of land, once it’s finished, will be set up to manage hotel facilities, which becomes a subsidiary body corporate. Later, a second parcel of land might be developed for commercial use, and when that’s finished, it becomes a subsidiary body corporate. The final piece of land when it’s fully developed will become residential units, so when that’s done, the final parcel of land will be set up as a subsidiary body corporate.
In that scenario, a principal body corporate owns three large parcels of land. When one development is finished, that parcel becomes its own body corporate. When the second is done, that becomes a body corporate, and likewise when the third is finished. This means that, when the body corporate for the hotel is created, it will only need to manage its own grounds, leaving the principal body corporate to finish developing the other land.
This article is intended as general information only and should not be relied upon as legal advice. For specific legal advice please contact us here.