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Body Corporate Committee Members May be Liable for Invalid Rules
It is important to get the rules right to avoid liability to proprietors.
The Rules
The Unit Titles Act 1972 provides for sets of default rules for Bodies Corporate. These rules regulate the control, management, administration, use and enjoyment, of units and common property, and the activities of the body corporate. The rules fall into two main categories.
Constitutional Rules
These rules include the rights of proprietors to have meetings and to make decisions. Such rules set out mechanics of how the development must be run.
Operational Rules
These relate to life within the development and impact more on proprietors on an day-to-day basis. For example, rules determining noise levels and whether pets may live in the development.
Adding and Changing Rules
The default rules will apply unless they are changed by the Body Corporate. In practice, this is often initially done by a developer. Different methods apply for changing the different types of rules. Rules which concern life within the development can be changed by an ordinary resolution of the members of the Body Corporate. However, the rules relating to constitutional matters can only be changed by a unanimous resolution.
Unit Titles Act Rights
In addition to making sure that the process is correct when adding and changing rules, another pitfall to avoid is that the new or changed rule doesn’t change any right expressly or impliedly protected under the Unit Titles Act. If it does, the new or changed rule is likely to be invalid.
Your Body Corporate committee therefore needs to be aware of what rights are protected by the legislation. For example, under the Act proprietors have the right to have their Body Corporate committee comprised of proprietors only. Therefore, a new or amended rule enabling a Body Corporate committee to include parties who are not proprietors will be invalid.
The Bottom Line …
Body Corporate committees acting in reliance on invalid rules may leave themselves, and potentially their individual members, vulnerable to legal action by disgruntled proprietors. Committee members need to be fully aware of how the rules work and how to make changes correctly.
[Note: The Unit Titles Act 197 will be replaced with the Unit Titles Act 2010 once the new regulations to go alongside that Act are drafted.]