Many issues have arisen with the Unit Titles Act and Regulations since the Act came into force in 2010.

Some further changes may be in the pipeline, in the form of the Unit Titles (Strengthening Body Corporate Governance and Other Matters) Amendment Bill.  This was introduced into Parliament in July 2020, but has not yet reached the First Reading stage.  Although there may be further changes to this as it makes its way through the Parliamentary processes, we detail below some of the changes that have been put forward, as they will be of interest to many agents.

The general purposes of the Bill are:

  • Improve the disclosure regime for prospective purchasers of units;
  • Strengthen governance arrangements;
  • Increase professionalism and standards for body corporate managers; and
  • Ensure planning and funding for long-term maintenance of unit titled properties.

We summarise the changes as follows:

The Disclosure Regime

All disclosure statements would, under the proposed changes, have to be “endorsed by” the body corporate (or developer) as being correct.  This is different from the current position, where Vendors are required to sign the Pre-Contract Disclosure Statement solely, without any certification from the Body Corporate.  Currently a certificate must be provided by the Body Corporate confirming the Pre-Settlement Disclosure Statement is correct, but not for any other types of disclosure.  In practice, the signing and certification procedure is often not done correctly.

Additional information must now be provided in the Pre-Contract Disclosure Statement.  This is the statement signed before an Agreement is signed:

  • Whether any part of the unit title development has weathertightness issues the subject of a claim or remediated without a claim, or earthquake-prone issues;
  • Whether the body corporate is involved in legal proceedings;
  • Financial statements or audit reports for the last seven years;
  • Notices and minutes of meetings for the last three years including all supporting documentation;
  • The name and contact details of the body corporate manager;
  • Body corporate levies for the unit for the current financial year;
  • Details of any outstanding amounts;
  • Details of any amounts held in credit for the unit;
  • Proposed works under the long-term maintenance plan for the next three years and estimated costs;
  • The next review date for the long-term maintenance plan; and
  • A summary of insurance held by the body corporate including the insurer’s contact details, the type of cover, premium, excess, specific exclusions, and statement as to where or how to view the policy.

Specific other information is also required as part of disclosure in off-the-plans sales.

The suggested change to the wording around weathertightness issues (where currently this only refers to situation where there has been a case through a court or tribunal) will widen the amount of disclosure needed in this area. 

Additionally, disclosure about any earthquake-prone issues, along with financial statements and past copies of general body corporate minutes will be helpful for buyers to make informed decisions before buying.

Many of these items under the current regime are requested as part of Additional Disclosure or are gathered as part of due diligence by a buyer before they buy.  The suggested changes would ensure consistency for all those buying unit titled properties, so all have the same information at the outset.

Meetings

Under the proposed changes, the quorum at a general meeting would be calculated based on those who are both entitled and eligible to vote. This means those owners who have not paid their levies up to date cannot be counted towards the quorum (but those owners are still entitled to be present and speak at the meeting, as is the case under the current regime).

Meetings would be able to be held by audio or audio-visual link (or a combination of different methods) if the method of meeting is approved in advance by special resolution.

Committees

The Bill proposes that the body corporate chairperson be an automatic member of the committee, as well as being the committee chairperson.  Currently they do not have to be the same person, and the chairperson of the Body Corporate doesn’t have to be part of the committee (although they almost always are in reality).  The Body Corporate would otherwise be able to decide that the committee chairperson should be elected by the committee.

Another proposed change is that committee members would be subject to a code of conduct, which would be prescribed in the regulations.  Additionally they would need to maintain a conflict of interest register, recording for example if they are conflicted due to benefitting financially from a decision.

The Bill also provides for consequences of a conflict of interest and provides for failing to disclose a conflict of interest.   There are no conflict of interest provisions in the current legislation.

Body Corporate Managers

The current legislation does not include reference to Body Corporate Managers at all, the reference to ‘secretary’ in the previous legislation also having been removed.  The Bill defines the role of a body corporate manager and sets out their functions and duties. These include acting in the best interests of the body corporate and disclosing any conflicts of interest. Body corporate managers would also be required to be members of an industry body.

Large and Medium Residential Developments

The Bill introduces special rules for large and medium residential developments. A large residential development is defined as one that has 30 or more principal units used as apartments. A medium residential development has 10 to 29 principal units used as apartments.  The current legislation only provides the same rules for Bodies Corporate of all sizes (with the only difference being in relation to requirements to have a committee or not for those with 9 units or less).

Under the proposed changes, large and medium residential developments must:

  • Have a body corporate manager (noting that medium residential developments can opt out);
  • Have the committee report back on delegations at every general meeting (noting again that medium residential developments can opt out);
  • Have a long-term maintenance plan for a 30-year period that is reviewed every three years, or reviewed earlier if the body corporate becomes aware of something that affects the long-term maintenance plan.  There is no opt out of this aspect;
  • Have their long-term maintenance plan peer reviewed by a suitably qualified and experienced professional (noting that medium residential developments can opt out);
  • Have a long-term maintenance fund.  There is no opt out of this, unlike the current legislation; and
  • Audit their long-term maintenance fund.  There is no opt out of this.

Unit Title Disputes

The fees for unit title disputes in the Tenancy Tribunal would be reduced to:

  • Matters referred to mediation ($600 or $300 shared between the parties); and
  • Matters referred to hearing ($1,000 or $600 shared between the parties unless a party has refused mediation, in which case that party is responsible for the fee).

This would alter the current ‘Category 1’ and ‘Category 2’ proceedings regime.

The next step is for the Bill to have its first reading in Parliament.  Once progress is made, we will provide further updates.

Leading law firms committed to helping clients cost-effectively will have a range of fixed-price Initial Consultations to suit most people’s needs in quickly learning what their options are.  At Rainey Collins we have an experienced team who can answer your questions and put you on the right track.


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