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LOT ENTITLEMENTS - EVERYTHING OLD IS NEW AGAIN!

24 October 2012

The new State Government has taken steps to reverse the controversial 2011 Amendments regarding lot entitlements adjustments, by the introduction of the Body Corporate and Community Management and Other Legislation Amendment Bill 2012 ("the Bill").   It is anticipated that the Bill will become law by the end of November 2012.

Background

The costs of managing the common property and body corporate assets for a  community titles scheme are shared between lot owners in proportion with the contribution lot entitlements for the scheme.  A process was included in the Body Corporate and Community Management Act 1997 to permit adjustment of the lot entitlements, having regard to certain principles, by a lot owner obtaining an order of a court, tribunal or specialist adjudicator.

The 2011 Amendments, however, allowed a body corporate to revert their lot entitlements to the position prior to an order of a court, tribunal or specialist adjudicator adjusting the contribution lot entitlements. This was made in response to some unhappy lot owners whose contributions had increased as a result of those orders.

The 2011 Amendments were strongly opposed at the time by the then LNP Opposition and other peak bodies such as the Queensland Law  Society.  One major objection was that the 2011 Amendments resulted in lawful orders of a court, tribunal or adjudicator, made following due legal process, being effectively overturned.

 

How the Bill works

The Bill seeks to achieve the following:

  • Immediately upon the introduction of the Bill, any process which is underway to re-adjust the contribution lot entitlement schedule to reflect the "pre-order" position must cease and no further action may be taken to change the lot entitlements as per the 2011 Amendment.
  • A process is introduced so that a lot owner can submit a request to the committee to propose that the contribution lot entitlement schedule be adjusted back to reflect the entitlements as they applied before any "reversion" process under the 2011 Amendments. The Bill makes provision for any changes which may be necessary, for example, as a result of amalgamations or subdivisions of lots in the scheme.
  • The committee must undertake the process set out in the Bill to notify lot owners and to proceed to change the contribution lot entitlement schedule to reinstate it as it was prior to any reversion under the 2011 Amendments. There is also a process for a lot owner to make an application for an order of a specialist adjudicator or QCAT, if a lot owner believes that the changed lot entitlements do not accurately reflect the previous entitlements.
  • The body corporate must record the new community management statement reverting to the contribution schedule lot entitlements at the body corporate's cost.

 

Other changes to seller's disclosure on sale

In addition, the Bill removes the extra disclosure requirements introduced in the 2011 amendments upon the sale of a lot in a community titles scheme.  This includes the requirement to make statements to the buyer as to the extent to which the body corporate levies are determined by reference to the contribution lot entitlement schedule or the interest  lot entitlement schedule.  It also removes the requirement to provide a copy of the community management statement to a prospective buyer. This is in an effort to reduce red tape and costs to sellers.

The Bill will certainly be welcomed by many aggrieved lot owners who were adversely affected by the 2011 Amendments, particularly where those lot owners may have incurred significant costs and effort in making an adjustment application prior to the 2011 Amendments.

Hopefully, upon the passage of the Bill, the amended legislation will be clear and stable for the foreseeable future, to at last give bodies corporate and lot owners some certainty on this issue.

For further information, please contact:

Rebecca Castley | Partner
Mullins Lawyers
t +61 7 3224 0211
f +61 7 3224 0333
rcastley@mullinslaw.com.au

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