20 September 2023
The Body Corporate and Community Management and Other Legislation Amendment Bill 2023 (the Bill) introduced into the Queensland Parliament last month proposes a number of significant reforms to the Body Corporate and Community Management Act 1997 (Qld) (the Act).
One of the main policy objectives of the Bill is to deliver a key action of the Palaszczuk Government’s 2022 Queensland Housing Summit, by reforming body corporate legislation to allow for the termination of an uneconomic community titles scheme (Scheme) to facilitate renewal and redevelopment.
We discuss the new process for bodies corporate to terminate an uneconomic Scheme and the potential impacts on the property rights of lot owners.
Under the current Act, a Scheme can only be terminated with the support of all lot owners and lessees under registrable or short leases (i.e. a resolution without dissent) or by order of the District Court.
The Bill generally preserves these grounds for termination but provides greater detail on what the District Court must consider when deciding a termination order. However, a new mechanism is being proposed for termination involving ‘economic reasons’. Under the new mechanism, a termination motion can proceed with the support of only 75 per cent of all lot owners voting in favour of the motion.
The Bill defines ‘economic reasons’ to be the following reasons:
These reforms seek to bring Queensland in line with the approach in New South Wales for terminating a Scheme, after the 2016 reforms were introduced to Part 10 of the Strata Schemes Development Act 2015 (NSW).
The Bill proposes a new process for terminating uneconomic Schemes which considers the property rights of lot owners. This process comprises the following key steps:
Where economic reasons do not apply, a Scheme would still require support from all lot owners, or by order of the court, to be terminated.
The reforms aim to provide a new approach that balances the termination benefits whilst appropriately respecting individual lot owners’ property rights.
The main driver behind the reforms is to better facilitate the renewal and redevelopment of ageing or uneconomic Schemes in a way that provides increased housing opportunities.
In such cases, selling the scheme land for termination and redevelopment may be more economical than requiring lot owners to pay large contributions to enable the body corporate to meet its statutory obligations to maintain key elements of the Scheme in a good and structurally sound condition.
However, the reforms may have significant implications, particularly where a lot owner is unwillingly required to sell their lot, and financial impacts on service providers and contractors engaged by the body corporate.
It is proposed the Act will incorporate a number of protections and safeguards in this regard:
The Bill proposes further reforms to the Act, specifically:
The Bill has been referred to the Legal Affairs and Safety Committee to conduct an inquiry to consider whether the Bill is further considered to become law.
If you have any questions about the proposed reforms or the applicability of the changes to your circumstances, please get in touch with a member of our team below.
The information in this article is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, we do not guarantee that the information in this article is accurate at the date it is received or that it will continue to be accurate in the future.