Cautious Steps

“The new Body Corporate and Community Management and Other Legislation Amendment Bill 2023, introduced in recent weeks by Queensland Attorney-General Yvette D’Ath, has got plenty of prospective property developers more than a little excited.”

The new Body Corporate and Community Management and Other Legislation Amendment Bill 2023, introduced in recent weeks by Queensland Attorney-General Yvette D’Ath, has got plenty of prospective property developers more than a little excited. The Bill proposes amendments to the Body Corporate and Community Management Act 1997 which would allow developers to force the sale of a home unit block for redevelopment, provided a prospective purchaser can get 75% of the lot owners to agree to the price on offer.

According to the AG, the proposed changes, which are a response to industry calls arising from the Queensland Housing Summit last October, are intended to address “the concerns of unit owners who are facing excessive and exorbitant costs for maintaining, repairing, and rectifying buildings in their schemes.”  But potentially, opponents contend, they could leave up to 25% of unit dwellers, who are perfectly content with their ever-so-humble home, out in the cold.

Maybe. But the exercise is likely to be a lot less carefree and cavalier than some swashbuckling property entrepreneurs may hope. The Bill provides an imposing list of protections and strict safeguards for the lot owners in the event of an attempt to terminate the existing unit scheme. The starting point would be to show that currently it is not economically viable, or will not be economically viable within 5 years, for the existing body corporate to carry out necessary repairs and maintenance to parts of the property, and that question would have two be informed by detailed professional reports and advice.

As outlined in the Bill’s Explanatory Notes, the new process for a body corporate considering terminating the unit scheme with a view to development is summarised as follows:

1. prepare a pre-termination report on economic viability with all relevant expert reports;

2. hold a general meeting to pass a motion on whether there are economic reasons for termination;

3. if the motion passes, prepare a termination plan for the lot owners to consider;

4. hold a general meeting to secure a motion for a termination resolution (which will only be passed if 75% or more of all lot owners vote in favour of the motion);

5. if the motion is passed, notify the various interested parties and appoint a facilitator to implement the termination plan; and

6. following implementation of the termination plan, including transfer of the ownership of all lots and scheme land to the purchaser, terminate the community titles scheme by lodging all relevant documents under the Land Title Act, and then dissolve the body corporate.

In recognition of the potential adverse effect of the termination on lot owners who do not wish to sell their lot, and tenants and other parties with contractual arrangements with the body corporate, the Bill also sets out further protections, including but not limited to minimum compensation for lot owners, dispute resolution pathways to mitigate lot owners’ exposure to costs associated with proceedings relating to the proposed scheme termination, the requirement for termination plans to set out interests of lessees and third-parties with contractual arrangements to be compensated, and avenues for interested persons to seek compensatory and remedial orders from the District Court.

In introducing the Bill, Ms D’Ath stressed the importance of balancing the needs for redevelopment with respect for people’s property rights. “It is critical,” the AG warned, “to strike the right balance between the legitimate, but sometimes competing, interests of everyone within a body corporate. Our new laws recognise that it might not make economic sense for lot owners to have to pay large body corporate levies to repair and maintain their buildings, when a significant majority of the lot owners would rather the scheme be sold for redevelopment.”

With important safeguards put in place for lot owners, the government hopes the changes will be an important step in paving the way for redevelopment of unviable buildings into new, fit-for-purpose accommodation in high-amenity areas, at the same time striking a balance between the interest of developers and those of owners who just want things to go on as they are. In a tight real estate market – which the Gold Coast is – where undersupplied potential homebuyers are screaming out for much-needed entry-level accommodation, it could make all the difference.

Nicola Ellis

Gold Coast Lawyer

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