Body Corporate regulation modules in Queensland—key changes for developers
Changes to the regulation modules of the Queensland Body Corporate and Community Management Act (BCCM) came into effect on 1 March 2021 and are aimed at enhancing protection for unit owners, reducing body corporate costs, and modernising body corporate procedures. This update from special counsel Brooke Bostock provides a brief overview of key changes developers should be aware of.
Documents to be given to the body corporate at the first AGM
Developers have always been required to provide certain material to the body corporate. Failing to do so means the developer is at risk of proceedings being bought against them and significant fines. The list of documents to be handed over to the body corporate has now been expanded to include—
- the development approval (if one was required for development on the scheme land)
- the community management statement (CMS)
- copies of documents relating to any insurance claims against policies taken by the original owner for the body corporate
- any fire and evacuation plans
- contracts or agreements for the supply of utility services
- copies of documents relating to warranties from suppliers for buildings and improvements, common property plant and equipment, and other body corporate assets
- copies of all developer powers of attorney/proxy documents.
Presently, disclosure obligations to proposed buyers have not been expanded to include these additional documents but this will likely be considered when the BCCM Act (as opposed to the regulation modules) is next reviewed.
To assist with the ongoing operation of the body corporate and management of the scheme, documents must now be handed over to the body corporate in hard copy and electronic copy to ensure they can be easily accessed and archived. There is also a new requirement that the electronic form of any CMS given to the body corporate is in a form readily capable of being edited. This will reduce costs and assist the body corporate if, and when, a new statement needs to be prepared.
To help with this handover, it would be best practice to have a checklist setting out the documents to be handed over at the first AGM and to create both physical and electronic files to store documents on when they become available to the developer. Any proforma body corporate meeting agenda templates will also need to be updated.
What is the practical impact of these changes?
Practically, the impact of these changes will likely be minimal to most developers as these documents are likely to be in their possession. It is a timely reminder though that the developer does have obligations to provide documentation after building works are complete, titles have issued, and the initial establishment of the body corporate has occurred. Failing to provide documents can in fact result in legal proceedings against the developer to compel delivery and significant financial penalties under the BCCM.
Provision of documents by the developer also assists the body corporate to take any necessary action pursuant to a construction contract for building work. This ties into another key change relating to building defects.
Building defect reports
As highlighted by high profile examples like Opal Tower in Sydney, building defects are an issue and a concern for lot owners and body corporates. To encourage the early discovery of defects, the regulation module changes now mean a motion proposing the engagement of an appropriately qualified person to prepare a defect assessment report on the buildings the body corporate is responsible for insuring must be included on the agenda for the second AGM. For progressively developed schemes, this motion must also be on the agenda of the next AGM called after each new CMS is lodged.
A defect assessment report is defined as a report that—
- identifies any building work, within the meaning of schedule 2 of the Queensland Building and Construction Commission Act that is defective, and
- identifies the cause of the defective building work and the building work required to rectify the defective building work.
The intention of these changes appears to be enhancing lot owner protections. Practically, depending on the sales program for the development, developers may be voting on these motions as a lot owner.
Owner rights to submit motions for the first AGM
Traditionally, agendas for first AGMs have been fairly static - set by developers (in conjunction with the manager) and simply providing the statutory motions required. The changes now mean that, if settlements in your development have started taking place before the first AGM is held, new lot owners can submit motions for inclusion on the agent if the motion is submitted with sufficient time for it to be included.
Again, the intention of the changes is increased lot owner protections and increased owner involvement in the operation of the scheme.
A body corporate will now be able to decide by ordinary resolution to allow electronic voting at general meetings. Voters will need to follow the secretary's instructions for electronic voting and vote before the general meeting or, if the voting system allows it, at the general meeting. A voter can withdraw their electronic vote before a result is declared. However, a proxy will not be able to withdraw an electronic vote made by the lot owner themselves.
Some changes will depend on the regulation module regulating the scheme. If you are unsure which changes apply to your development, or if you would like more information, please contact one of our Real Estate lawyers to discuss.
The latest edition of Fundamental is available now. Download your copy.
The latest edition of Financial Services Thinking is available now. Click here for all the latest news.
With fund managers asking 'Where to now?', the latest edition of our Toolkit for Fund Managers focuses on what actions you can take to help you reset for the road ahead. Download your copy.