The Queensland Government introduced the Body Corporate and Community Management and Other Legislation Amendment Bill 2023 (“Bill”) to the Queensland Parliament on 24 August 2023.
This legislation aims to reform Queensland’s body corporate regulations, primarily governed by the Body Corporate and Community Management Act 1997 (“Act”). The Bill is not yet law, but its adoption is not far away.
The Parliament Legal Affairs and Safety Committee recently released their report regarding the Bill and recommended the Bill be adopted.
Termination of Schemes
A significant change proposed by the Bill is the introduction of the termination threshold of 75% in cases where economic reasons justify the termination of a community title scheme (Scheme).
Economic reasons for termination, as defined by section 81A of the Bill, include situations where:
- a scheme is not economically viable (if all lots are used for commercial purposes).
- the scheme is projected to become economically unviable within five years, mainly due to necessary maintenance or repairs on the common property. This ground is not limited to Schemes which are purely commercial. It can apply to schemes which are for, or include, residential uses.
The Bill preserves the termination provisions that already exist in the Act, being when the body corporate resolves to terminate by way of resolution without dissent (section 78 of the Bill), and by order of the District Court (section 79 of the Bill), but gives greater detail on what the District Court must consider when deciding a termination order (s79(2) of the Bill).
The Bill proposes a new process for terminating uneconomic schemes. This process comprises the following key steps:
1. preparing a ‘pre-termination report’ to assist the body corporate in deciding whether there are economic reasons for termination (s81C of the Bill);
2. a general meeting is held by the body corporate, where an ‘economic reasons resolution’ is to be passed by a majority resolution. The ‘economic reasons resolution’ is not the actual resolution that determines if the scheme will be terminated – rather it is a resolution that decides that economic reasons for termination exist to support the termination of the Scheme (s81D of the Bill);
3. if the resolution is passed, the body corporate may also pass a termination plan resolution. This requires the body corporate to prepare a termination plan which sets out important information for lot owners regarding the potential process for undertaking a sale of the scheme and for terminating the scheme (s81E of the Bill);
4. the termination plan is provided to lot owners for consideration and a general meeting is held to consider a motion to implement the plan’s terms and terminate the Scheme. It is at this resolution where 75% or more of all lot owners need to vote in favour of the motion for the termination to proceed, as provided by section 81K(4) of the Bill;
5. if the motion for a termination resolution is passed, the body corporate must notify certain parties with an interest in the Ssheme of the resolution and must appoint a person as a facilitator to assist the body corporate in implementing the termination plan (ss81L and 81M of the Bill);
Balancing Property Rights
The reforms within the Bill aim for a balance between the advantages of scheme termination and the preservation of individual lot owners’ property rights.
These reforms are primarily driven by the need to facilitate the renewal and redevelopment of aging or economically unviable schemes, thereby expanding housing opportunities.
The Bill incorporates several safeguards to protect property owners. These include requirements for professional reports, prescribed meetings, notice periods, minimum compensation standards, and dispute resolution pathways. These safeguards aim to mitigate the risk of unwarranted scheme terminations.
In cases where economic reasons for termination are absent and any owners within the scheme oppose termination, the District Court may intervene provided that one of the legitimate parties provided by section 79(1)(a) of the Bill applies for a court order.
Other Significant Reforms
Beyond scheme terminations, the Bill allows bodies corporate to implement by-laws prohibiting smoking in outdoor and communal areas within the scheme, protecting residents from second-hand smoke exposure (section 169A of the Bill).
It also regulates pet ownership within schemes, allowing reasonable conditions to be imposed on pet approvals (section 169B of the Bill).
Additionally, bodies corporate gain the authority to tow vehicles obstructing access or posing hazards within common property areas without formal by-law contravention procedures (section 163A of the Bill).
We will look at each of those reforms in future articles.
Upon enactment, these amendments are expected to take effect promptly. These reforms aim to enhance housing opportunities, revitalize aging schemes, and safeguard property owners’ rights and interests.
It is possible to overstate the significance of the proposed new termination provisions in the Bill.
Under the Act at present, there is an ability to apply to the Court for an order for the termination of a scheme, and that power has previously been used in Queensland for schemes requiring renewal.
It remains to be seen whether, in a practical sense, given the complexity of the proposed new termination process, many or any schemes can bring about a termination under the new provisions.