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Body Corporate

What Happens if a Body Corporate Caretaker Wishes to Sell its Management Rights to a New Caretaker and Wants the Committee to Agree to it?

What Happens if a Body Corporate Caretaker Wishes to Sell its Management Rights to a New Caretaker and Wants the Committee to Agree to it?

By | Body Corporate

In the context of body corporates, one commonly asked question is, what happens in the event that a body corporate caretaker wishes to sell its management rights to a new caretaker, and consequently wants the committee to agree to it? In this podcast, OMB Solicitors’ Tom Robinson answers the question.

TRANSCRIPT

Dan: Tom, what are management rights, and what does it mean to sell them?

Tom: It’s always a big topic these days, these assignments of management rights. We refer to them as an assignment of management rights, because we’re transferring the ownership of those rights between essentially more than two parties.

Tom: I guess a good starting point, is just with some of the basics. When we refer to management rights, we consider them as that package deal, consisting usually of a care-taking agreement, a letting agreement, and then your caretaker letting agent’s lot. As part of the ownership of those management rights, the caretaker is therefore entitled to sell those rights to another person, or entity, to perform that role of caretaker, or letting agent.

Tom: The legislation regulates these assignments, and to a lesser extent, there will be terms and conditions within the agreements themselves, and that’s governed by the regulation that is contained within that legislation. Essentially, it describes the body corporate’s role in a simple way, which is essentially to provide its consent to the transaction, and that’s it.

Tom: In other words, the body corporate just needs to determine whether, or not it will approve the proposed purchaser as the new caretaker. But, it’s not all that simple to give that consent, and certainly part of a condition of considering that decision, the body corporate must not unreasonably withhold its consent to that transaction. So, there’s quite a bit involved, when a body corporate does need to consider that process, when those management rights are being requested to be transferred.

Dan: Tom, I was gonna say, does it cause much of an upheaval?

Tom: Look, it does these days, because the committees in our bodies corporates, including our lot owners, are much more educated, and this process isn’t that standard rubber stamp type process anymore. Management rights have changed a lot since our current legislation came into effect in 1997. So, gone are the days with that rubber stamp process, and now, it’s a much more due diligence process, that’s required for a committee to be able to make that type of decision.

Tom: I guess the important part to remember is the committee can actually make this decision, on behalf of all of its lot owners. So, you could have a 200 lot scheme. You’ve got your committee of seven, who are making that decision, whether or not to give that consent to that transaction.

Tom: It’s not a must. The committee may discharge, I guess, that obligation to a general meeting if it desired to do so, but it’s interesting that the committee actually has that power to do it. So, those committees, especially these days, are very mindful of that task, and obligation that’s put on them, and want to make sure that they do a proper due diligence of this proposed purchaser.

Dan: So Tom, what is the usual process of selling management rights?

Tom: Good question. From the body corporate’s perspective, usually what occurs initially to start a process is, a notification or a letter is sent to the body corporate, from the current caretaker, or usually their solicitors. Normally, that comes after their current caretaker has secured, and entered into, what essentially is an unconditional contract of sale with a purchaser. The only condition that remains, is the body corporate giving its consent to that transaction.

Tom: So, when that notification comes across, it’s from the current caretaker, to the body corporate, requesting that the body corporate give its consent to the transaction.

Tom: With that notification, you’ll find a number of documents. Usually, the standard documents will be the deed of assignment, the motion for the body corporate to resolve, and any resume, and references of the purchaser.

Tom: When those documents come across, the body corporate will then be required to review those documents, and then determine obviously, if there is any further information that it needs, to make that decision. Certainly these days, and very commonly, more information is almost certainly required.

Tom: That can even lead to obviously carrying out an interview of the purchaser, and I guess one of the main points to focus on at this time, when that notification comes across, requesting the body corporate’s consent, that’s when the legislative 30 day timeframe can be considered to start, because that’s when the information has been received.

Tom: Now, there are conservative views with when that 30 days actually starts, and it can sometimes be said, not until an interview’s occurred, but at that point, when that notification comes across, it’s very important for a body corporate to consider getting that legal representation on their behalf.

Tom: The reason that so important is, not only because the caretaker and the purchaser will both be represented by their respective lawyers, and the documents will be drafted by the purchaser’s lawyers, but the body corporate is entitled to recover its reasonable legal, and administrative costs, in considering this, the transaction.

Tom: So really, there’s no reason why a body corporate wouldn’t want to protect itself, and engage in legal representation to assist them throughout this process.

Dan: It’s a no-brainer, isn’t really, in many respects?

Tom: Yes, it is, and it’s all done on a reasonable basis, so there’s no prejudice to the other parties. It’s just the body corporate is only placed in the position to consider this transaction because the caretaker wants to sell.

Dan: So Tom, what are the main steps for the committee in that case, to then undertake when considering that agreement, or giving its consent?

Tom: I guess the first thing to start with for a committee is, obviously like we say, that they can make that decision. So, the legislation outlines a number of factors that the body corporate, or the committee can have regard to, when they consider that transaction.

Tom: It is quite limited. Whilst it’s limited, it does give some structure for the committee to use as a bit of a guide, though some of those examples of what those factors are, is for instance, the character of the purchaser, their financial standing, the terms of the transfer, and also potentially to competence, and experience of the purchaser.

Tom: The importance of those is, that they will basically form any of the additional documents that the body corporate, the committee might then need, in addition to what they initially received.

Tom: Just to give you some examples of those additional documents for those limited factors, when we think about character, and the character of the purchaser are very subjective, so the most objective way to look at it is obviously police checks. That’s quite a common request, and sometimes, we have been seeing those police checks automatically coming across now.

Tom: Financial standing, usually assets, and liabilities, or even to a lesser extent, a letter from the purchaser’s financier will be enough. If a bank’s going to lend to them, then usually, they must have some sort of financial standing.

Tom: In addition to that, the body corporate could undertake bankruptcy, so just to ensure, but if they haven’t got any disclosable outcomes under their police check, or they’re not bankrupt, and things like that, in those instances, their character, and financial standing are generally going to be satisfied, so the most important factor for the body corporate to consider, is whether or not this purchaser has backed the competence, and the experience to perform that caretaker’s role.

Tom: In that instance, we would share the view that a resume is just not gonna be enough for that, nor are the references, and this is why. And we’re usually that interview process has been implemented, to get that final bit of information, to understand whether or not this purchaser might be able to competently perform that role.

Tom: Just on that, I guess one of the important factors to remember is, it’s a balancing act. What I mean by that is, just because a potential purchaser might have zero experience operating management rights, does not mean that the body corporate can automatically withhold that consent.

Tom: Rather, it’s seeing if the purchaser has obtained, or is going to obtain external training. A longer handover period, where they’re going to be trained by the outgoing caretaker.

Tom: Are they members of industry bodies, who can assist them in bringing them up to speed with what the role is entailing?

Tom: Things like that I guess, they’re factors that the committee consider when they’re looking at competence and the experience attached to that type of role.

Dan: So, can the body corporate engage someone that’s qualified to carry out an interview?

Tom: Yes, certainly, and it’s become certainly a common occurrence these days, because a lot of the purchasers we do see, sometimes are changing their careers, and don’t have any experience, so it’s reasonable to assume that the committee might … who don’t have that expertise, delegate that task to an industry body, to perform that interview.

Tom: Again, it is a bit of a balancing act. There’s a number of companies that perform these interviews at a reasonable cost, and those costs ought to form part of the assignment cost.

Tom: But, the reason we say it’s a balancing act is, because if you have a purchaser who has say, 10 years of management rights operation, and experience, it probably might not be necessarily to actually go through that formal interview process, whereas their competence, and their experience is proven.

Tom: Whereas, someone who has no experience, then in that instance, it might be worthwhile, having an independent party do that interview, who’s there, and capable of asking the right questions of the purchaser. So, when they produce that report from the interview, the committee can see where there might be areas that the purchaser needs to attend to, to mitigate any concerns of lack of experience, for the committee, and the body corporate.

Dan: Now, what are the final steps?

Tom: Yes, the final steps, once all of that information’s considered, and like I said, it’s quite a hefty due diligence process, and usually, there is that 30 day timeframe that’s implemented, but once that part’s all done, and the interview’s occurred, and all that, the motion’s then basically determined. The deeds are signed, and we all get ready to go to settlement.

Tom: Usually at that time, the caretaker first, or the purchaser will generally act as the body corporate’s unpaid agent at settlement, just to collect those assignment dockets on behalf of the body corporate.

Tom: And basically in summary, that’s when the transaction will be finalised, and it’ll settle, just like any other type of transaction settlement. I guess like I said, the most important things are, to remember is just that balancing act of, what is the information that the committee needs, to reasonably consider giving its consent, from our perspective, and OMB, or we obviously act exclusively for bodies corporate, so we’re regular assisting the bodies corporate in these assignment process, so if there’s anyone out there who’d like to come down, and have a chat with OMB Solicitors, and the committees, we are happy to offer a no charge one hour consult, so we can have a discussion about these types of matters, and any other matters that might be affecting your body corporate.

Dan: Tom, thanks for joining me.

Tom: Thank you very much Dan.

how to change by laws

How Does a Body Corporate Change its By-Laws?

By | Body Corporate

With the sheer number of Body Corporates on the Gold Coast, it’s probably not surprising that the need to change a bylaw occurs quite regularly. But how is that change done?

In this podcast, Elisha Hodgson, a lawyer at OMB Solicitors, who specialises in both strata and dispute resolution discusses the topic.

Dan: Elisha, it’s probably an obvious question, but where are these bylaws located?

Elisha: Basically with the Body Corporate bylaws, they’re actually established when the first registered community management statement, which we called the CMS, is lodged with the department of human resources and mines. Now, this document is not only really important in that it records the bylaws of the Body Corporate, but it also records important details such as the legislation it’s governed under, the Body Corporate assets and the common property. And also the interest schedule lot entitlements. Now that probably sounds a little bit unfamiliar to most people but, if we use the analogy of I guess, say a company. A company is actually quite similar to the way a Body Corporate works, in that just like a company, it’s run by directors for the benefit of the shareholders. And similarly, a Body Corporate is run by its committee for the benefit of its lot owners. So when I start talking about interest schedule of lot entitlements, what I actually mean is, if we go back to that company analogy, it essentially means the shares which you own in the Body Corporate.

Elisha:  So the CMS is a really critical document, and given we’re talking about Body Corporate bylaws, I think it’s important to know where they come from, where you find them and why you need to know about them and how to change them.

Dan:  So Elisha, for those Body Corporates who are wanting to change the bylaws, is this a really quite problematic process? Is it difficult to do?

Elisha: Well look, it’s not too difficult to do. The first step really is that the Body Corporate has to first identify what do they wanna change, or what Body Corporate bylaw to they need to include into their scheme, into their Body Corporate. To do this, a Body Corporate has to pass a motion to record a new community management statement that includes those changes for the bylaws. Now usually a motion agreeing to change the bylaws is required to be made by a special resolution at a general meeting. But this can sometimes change, depending on the type of Body Corporate bylaw in which you are implementing or changing to the CMS. For example, some By-Laws require … Some By-Laws which are changing or amending an exclusive use will require a resolution. So really understanding what it is you’re changing and what motion is required to be presented at a general meeting is really a critical factor when changing those bylaws.

Dan:  Elisha, is there a typical example of why a By-Law would change?

Elisha:  Yeah definitely. So at the moment, if we look at this holistically. Technology is evolving and the way in which we live is really changing. And in that case, bylaws often need to be updated or amended to, put simply, get with the times. So perhaps a bylaw has been recently found by the commissioner to be invalid, perhaps the bylaw is considered to be discriminatory in nature or perhaps not consistent with the act. Or perhaps even a lot owner no longer wanting his exclusive use car parking space has decided to give it up. There’s a range of different ways in which a Body Corporate bylaw would need to be amended.

Dan:  Now what about those occasions where the bylaw that’s going to be changed, is a little bit of a challenge to do so? Is there a time that would necessitate the Body Corporate members seeking the help of a law firm?

Elisha:  Yes certainly. So just by reviewing your bylaws and keeping up to date with the current legislation is really important. If you aren’t aware of what is enforceable or the recent decisions of the adjudicator in the commissioner’s office of whether pets are allowed, or what’s the ruling on towing, that sort of thing. It’s always good to seek advice from a legal advisor who can point you in the right direction in that regard. And certainly at OMB we have the experience and knowledge to be able to point you in that right direction. At the moment, if you are looking at your bylaws thinking, “Are they actually valid or should they be amended, or do we need to squeaky these up a little bit?” OMB are willing to provide a free of charge initial phone call and also a review of your bylaws, just to make sure that you are on the right track.

 

levies unpaid body corporate

What Happens When Body Corporate Levies Go Unpaid?

By | Body Corporate, Podcasts

If you own a lot within a community title scheme, then it’s likely that you may be aware that they are required to pay Body Corporate levies. However, it can be a conundrum for many of them, in particular, understanding what Body Corporate levies are, what they are used for, and what happens if you do not pay them, and how Body Corporates encourage the payment of these levies.

In this podcast, Body Corporate Law expert, Juliette Nairn discusses the matter.

TRANSCRIPT:

Dan:  Juliette, what are these Body Corporate levies?

Juliette: That’s actually a very good question, because we often come across it a lot within a Body Corporate. We have the commission members, who obviously know very well what Body Corporate levies are, but for those individual lot owners who live in a strata scheme, they might necessarily not know that they have Administration Fund levies, which is for daily repair and maintenance of the Body Corporate, a Sinking Fund levy, which is for capital work that a Body Corporate undertakes, and also insurance, which is very important to pay on behalf of a Body Corporate.

Juliette: What happens is, the Body Corporate, usually through a Body Corporate management company, will send out a notice and agenda for an annual general meeting, and it’s actually at that time that the lot owners need to read that documentation and look at what is the budget for the Body Corporate in terms of how much money does the Body Corporate need to raise to cover its day-to-day expenses.

Juliette:  We often talk about Body Corporates being a bit like a not-for-profit organisation because a Body Corporate has to get in exactly the amount of money that it needs to pay its expenses throughout a 12-month period. So it’s not a business that actually raises money, or has any revenue.

Dan: So Juliette, where is all this information enshrined? Is there a contract? Is there a document of some sort that somebody can go to and go, “Ah, that’s what my Body Corporate levies are,” or whatever the case might be?

Juliette: Unfortunately there’s not, because the only place it exists is in the legislation, which is called the Body Corporate Community Management Act, and an appropriate module that applies to each strata scheme.

Juliette: So, for example, that information about levies is not contained in your bylaws, it’s not contained in a community management statement. What happens is when I’m a purchaser and I might be looking into purchasing into a strata scheme, I would do what is called a Section 205 search, and that’s actually a letter that gets written to the Body Corporate management company on behalf of the Body Corporate, and the solicitors usually do that on behalf of an individual lot owner who might be buying into a Body Corporate.

Juliette:  What they get back is a little snapshot which says, “Oh, this is the budget for the Body Corporate, and this is what your contribution is, and this is how we pay it in quarterly instalments.” So, that’s the only information, really, that individual lot owners get. So often what happens is a Body Corporate management company might send out a welcome packet to its lot owners that actually explains in a little bit more detail what levies are. We also have a really good website which is the BCCM office website, being the commissioner for Body Corporate in Queensland, and they give a summary of what levies are and what is a Body Corporate debt.

Dan: Can there be a great divergence in what those levies are across Body Corporates?

Juliette: Yes. Definitely, Dan. It depends on the size of the building that you live in, actually, and even the type of plan that’s being recorded. A lot of the high-rise buildings are what we call building unit plans, and those building unit plans, you know, you’ve got one level stacked on top of the other. You’ve got charges for lifts and all sorts of other costs, and maybe even care taking costs or letting fees associated with that Body Corporate, as well as its normal admin.

Juliette: But if you live out, say Ribena or Matriba you might live in a duplex-style complex, or where there are actually individual homes under what we call a standard format plan, and those levies are very different, because they can be much lower from a Body Corporate perspective.

Dan:  So, what happens if people don’t pay these levies?

Juliette: Usually what happens is that the Body Corporate then can’t afford to pay its bills. We often have Body Corporates approach us, or committee members or individual lot owners within a Body Corporate, where they may have run out of money and can’t afford to pay the insurance for their building.

Juliette:  If a Body Corporate gets to that situation where it can’t pay its bills, it then looks very carefully at which individual lot owners haven’t been paying their levies on a regular basis, and will look at implementing processes or steps to recover those levies, which usually include receiving reminder letters. So the people, the lot owners, might receive a reminder letter from the Body Corporate management company, and then maybe a second reminder letter, then a final letter of demand, and also often the Body Corporate manager might make a phone call as well to try and get an understanding as to why that individual lot owner is not paying its levies.

Dan:  So, in contrast, if the lot owner doesn’t pay their levy, what are the penalties? Is there any sort of ramifications on them?

Juliette:   Yes. So in terms of the penalty which will apply to the individual lot owner, because the lot owner and the levies that they pay are basically the lifeblood to the Body Corporate, because there’s no way the Body Corporate receives other money, the penalties are actually very high. So one, not only are your levies outstanding, but the legislation specifically allows the Body Corporate to charge a 30% simple interest per anum charge to each and every levy that’s outstanding.

Juliette:   Now 30% simple interest adds up very quickly when you have outstanding levies, and it’s applied on a monthly basis. It’s actually far higher than what you would pay on a VISA card. It’s far higher than what you might pay, definitely, on your mortgage, and it’s certainly far higher than what you might pay on a loan if you got a personal loan if you’re in some hardship to pay your levies.

Juliette: The reason why the legislators made the 30% simple interest a general rule that applies across the board to all Body Corporates in Queensland is because they wanted lot owners to be penalised, because there’s no other way in which a Body Corporate can raise revenue. It can only come from those individual lot owners.

Juliette:  In addition to that, Dan, if you actually have, and the Body Corporate engages legal representation, being a Body Corporate solicitor to institute legal proceedings against that lot owner, that individual lot owner will become responsible for all the costs. So, the Body Corporate manager’s cost being expenses and outlays, and any expenses and outlays of the Body Corporate, including any legal fees that it incurs as well.

Dan: Is there Body Corporates out there that don’t pay their levies. Does that typically happen?

Juliette:   Unfortunately there are a lot of lot owners out there who don’t pay their levies. Because of the amount of information that we’re seeing these days, particularly through our Queensland Commissioner’s Office, we find that individual lot owners are better educated, particularly if they live in Australia.

Juliette: Fortunately we do have a lot of overseas investment, but some of those individuals who live in Bodies Corporate may not have Australian agents, and so, for example, if Chinese is their first language, or they’re in a country like Japan where the levy notices are being posted to them, one, it’s very difficult for them to understand the reason behind paying levies to the Body Corporate. They’re just aware that they’ve purchased the lot and paid that purchase price, but didn’t realise that there were individual, ongoing costs associated with the Body Corporate. So we do see much more foreign investment in that form.

Dan:  So what can they do to become more aware and make sure that they pay their levy?

Juliette: The best thing to do is that most of these buildings do have a Body Corporate manager appointed, and just contacting that Body Corporate management company and having a good conversation or an email conversation with the Body Corporate manager will enable you to get all of your information. They keep their roll up to date, and the best way is to have a role address by way of not only a postal address, but also an email address, so that they receive newsletters on behalf of the Body Corporate as well as any relevant information from the Body Corporate regarding their levies and their notices of contribution by receiving that information and understanding what levies are for, the Body Corporate manager, through their welcoming packets that they send to individual lot owners, that’s how people are encouraged to pay their levies.

 

 

 

airnbnb body corporate

I Want to List My Unit on Airbnb. Do I Need Permission from the Body Corporate?

By | Body Corporate, Podcasts

Have you heard of Airbnb? You probably have and heard also about owners of properties who are making significant money letting their place out on the Airbnb platform. But if you’re an owner of such a property in a strata complex, are you allowed to do it? It’s a commonly asked question, and in this podcast, Body Corporate expert, Tom Robinson, a lawyer at OMB Solicitors, explains more.

TRANSCRIPT:

Dan: Tom, for those unaware of what Airbnb is, what is it?

Tom: It is that short-term, do-it-yourself type letting, which essentially means as an owner, you can let out part or all of your lot to someone else via that online marketplace. Which is interesting because we have been seeing real estate agents are taking control of people’s Airbnb accounts and operating it like another type of rental units for their portfolios.

Dan: It’s been a game-changer hasn’t it? I mean, for many people that once would struggle to try to let out their property, now they’ve got this incredible platform that reaches the masses.

Tom: It does, and even on that, as a bit of an interesting fact. More than 50 million people in more than 34,000 cities around the world are using Airbnb. So it’s big, and it’s understandable that it’s here to stay, and there’s a reason why our body’s corporates are wanting to know when owners are using and listing their lots and units on Airbnb.

Dan: At a practical level, if I’m on the Gold Coast and I own a unit within one of these body corporate complexes, do I need to actually ask permission?

Tom: Look, it’s a very good question, and I’m going to answer it in a typical lawyer way, and I’m going to say maybe. It’s all dependent on the type of body corporate, being that we will have bodies corporates that will be affected by the use of Airbnb, and there will be bodies corporates that are not so affected by Airbnb. And it comes down to not only the type of body corporate, but the regulations, so those bylaws that are in place and apply to all owners and occupiers.

Dan: Is there examples of Airbnb and how it might impact upon the body corporate? By positively and negatively?

Tom: Yeah, definitely. From a good perspective to start with is looking at bodies corporates that are probably negatively affected. They’re the ones that are more or less are going to want to know when lot owner’s listing their unit on Airbnb. Those types of effects that we have seen come across, mostly relate to the type of disruption that is occurring, and that’s by way of your increased noise, your increased foot traffic, the increase in use of common property facilities that the body corporate, the actual physical body corporate itself is not used to.

Tom: Which leads into other issues like insurance. Those bodies corporates that are not designed for short-term accommodation poses a risk to the body corporate in terms of their insurance policy, and whether or not an owner using a lot for a short-term accommodation basis where the building or the body corporate was never designed that way. Is that going to increase premiums, and some insurers are saying “Yes.” Is there appropriate fire safety services systems in place in those types of bodies corporates that aren’t designed for that short-term accommodation like a hotel-style body corporate? You know, if they don’t have those types of fire safety systems or evacuation plans in those buildings, and is that a risk if something does go wrong. Those are the effects that one mostly is seeing by Airbnb and most bodies corporates that are not designed, and never were designed for that short-term type accommodation.

Dan: For these body corporates that are interested n in moving down this path, what do they do? I mean this sounds like an awful amount of work to get ready for this.

Tom: Look, there’s a lot involved, and I think from a body corporate’s perspective they’re generally quite limited. If we look at a couple of quick examples, taking an example of a high-rise building in Surfers Paradise, which has very few permanent residences, it’s designed as that holiday-maker’s hotel-type building. Is the whole concept of that body corporate has been designed for short-term accommodations?

Tom: When we look at those smaller bodies corporates, those little three-story walk-ups that might be down at Burleigh Heads where a majority of residents are permanent, they’re either owner-occupiers or permanent letting. They don’t have an on-site management or any letting staff.

Tom: When we look at those impacts that are on that body corporate, how does the body corporate then try to regulate that Airbnb? And that is by way of its bylaws. The biggest issue with regulating through our bylaws is we don’t have a lot of guidance to go by in terms of what our legislation says, except that our bylaws cannot be oppressive or unreasonable. And with respect to that, we can’t restrict or prohibit someone from using their lot in a lawful way. You’re allowed, as an owner, and your individual property rights, you are allowed the usual lot and let your lot out in any way that is lawful.

Tom: Where we have seen a bit of a win for not so much bodies corporates, but a win for regulating this short-term accommodation and protecting the bodies corporates who haven’t got it in there, is by your local council laws. So Gold Coast City Council, as of 2016, require an application for material change of use if someone wants to use their lot for short-term accommodation. That application carries a application fee of over $8,000, which is quite hefty-

Dan: Yeah.

Tom: … Potentially off-putting for people who are using their lots in short-term letting.

Dan: Tom, the starting point for a body corporate that might be listening to this podcast, what do they do on a case that they’ve got an increasing number of people within their complex that are wanting to play in the Airbnb patch? What do they do now?

Tom: The first thing and the best thing to start with, is review of your bylaws. You want to review your bylaws which you can update, basically at any time throughout a year, and that is having that review to identify what areas need to be regulated more. So the bylaws, as we say, can’t be oppressive or unreasonable, which means they can’t be prohibitory or restrict the use of a person’s lot. But what they are designed to do is regulate, not only the use of common property, but to a smaller extent the use of someone’s lot and their lot property, to a point where the use of the common property and lot doesn’t cause a nuisance. Doesn’t disturb the peaceful use and enjoyment of other people, owners and occupiers, within that body corporate.

Tom: A review of your bylaws is a starting point, because in there you can look at regulating and putting in requirements that an owner must notify the body corporate of their lot being listed in Airbnb. They must ensure that the owner of the lot provides bylaws to every person who comes and stays in their lot under the Airbnb platform. The only difficulty with this, and this is where we will be looking to our legislative writers, is the enforcement of that. Our current enforcement process under our body corporate legislation, is the Commissioner’s Office for Body Corporate and Community Management, the issue that we face is trying to reach someone who is in breach of the bylaws when they’re gone within four days. We don’t have a process, a dispute resolution centre, that can deal with that type of complaint in such a short turnaround. Which means the breach happens, and then is remedied, because they’re no longer there. So that’s where we’re probably falling short.

But at least the bylaws are an informative way to regulate as best we can, as a starting point to Airbnb, and then to supplement that, is looking to our local governments and making sure that those laws are in place. Like Gold Coast City Council putting in the material change of use application requirement. And if lot owners aren’t complying with those local laws, it’s up to our local governments to enforce that, and that is via a notification basis. So yeah.

Dan: There’s a lot to it, isn’t there?

Tom: There is. There is a lot to it, and there’s a lot that we’re hoping to see come about, and we are starting to see that change, and we’re starting to see that there will be an ability under the bylaws, hopefully in the coming years, for a property law reform that we’re going for at the moment, where we might be able to have some more ability to not over-regulate, but have a more of an ability to deal with these types of matters through our bylaws. Which is realistically the best ability and tool for a body corporate.

Dan: Tom, thanks for joining me.

Tom: Thank you very much, Dan.

 

 

Know Where to Stand

By | Body Corporate

Are you ready for your Body Corporate Levies to change again?

The calculation of who pays what levies in a body corporate has been contentious for some time. The major reason for this is that the Legislation has changed a number of times.

It all started in 2003 when the then Labor Queensland Government introduced changes to the Legislation to make it clear that levies should be equal except where it was just and equitable for them not to be equal. This was interpreted by the Court of Appeal in 2004 to mean that everyone should pay the same amount of levies; unless it can be demonstrated that one unit in a body corporate has the effect of increasing the costs of running the body corporate.

An example of this may be where a penthouse apartment has its own lift and the body corporate is responsible for monitoring the lift.

After the Court of Appeal decision the legal system was flooded with bodies corporate responding to applications. The old Commercial and Consumer Tribunal saw the majority of these cases and for a period towards the end of 2009 it appeared that the body corporate section of the Tribunal did nothing else other than consider applications to make the calculation of levies equal.

Obviously, when some unit owners have their levies reduced some must have theirs increased and this caused some concern and ultimately forced the then Labor Government in 2011 to amend the Legislation again to reverse the previous charges. On 14 September 2012 the new LNP Queensland Government introduced a Bill into Parliament that will effectively require that the calculation of levies be equal once again. That Bill has now been sent to the Legal Affairs and Community Safety Committee which is required to report back to Parliament by 22 November 2012.

Given the level of control that the LNP has over the Queensland Parliament it would seem a foregone conclusion that once the Committee reports back to Parliament the Bill will become law sometime towards the end of this year or early 2013.

At OMB Solicitors we have anexpert Body Corporate Team that has been involved with the calculation of levies right from the start.

If you are currently faced with an Application to amend the way your levies are calculated, or your body corporate has previously had the calculation of its levies adjusted, we would be pleased to meet with you to discuss the effect of the proposed Bill and how we may assist you when it becomes Law.

Body Corporate Feuds

By | Body Corporate

Body corporate disputes are nothing new but Juliette Nairn from OMB Solicitors has the ability to steer you through what can be a minefield of litigation.

Are you frustrated by your Body Corporate neighbour’s failing to pay their contributions, leaving you to pick up the difference? The good news is you can take steps to recover your money. The Court of Appeal of Queensland recently made a landmark decision in the area of Body Corporate Law regarding the ability of bodies corporate to recover contributions, penalty interest and all reasonable recovery costs from a lot owner who fails to pay their contributions on time.

The decision was made with respect to a Body Corporate feud which began in 2011 relating to a prestigious unit in Surfers Paradise worth over $1m. The unpaid amount in question was around $5,500 and the owners of the lot claimed they had no capacity to pay their debts, despite owning several other units in Surfers Paradise of similar value. This resulted in the remaining lot owners having to cover the shortfall in contributions to cover the daily expenditure of the body corporate.

When this matter was brought before the Queensland Court of Appeal, OMB Solicitors as legal representatives for the body corporate, successfully argued that if a single lot owner fails to pay their body corporate levies, this places an unfair burden on the other lot owners who have always abided by their responsibilities. As the saying goes, it only takes one bad apple to spoil the barrel.

In the lead up to this matter being brought before the Court of Appeal, over $400,000 in recovery costs were incurred due to the unreasonable pursuit of litigation through five different Courts over a number of years. The Body Corporate for The Wave has been forced to expend these costs as part of the lengthy proceedings, which resulted in each lot owner being forced to make further contributions to the body corporate administration fund. These costs were incurred as a result of the non-contributing lot owners continually pursuing the matter to a higher Court, despite them being unsuccessful at all five levels of the Court proceedings.

This ever-ballooning debt owed to the Body Corporate, and essentially the remaining contributing owners, resulted in the bank repossessing the property in mid-2013. It should be noted that the bank, Westpac, failed to take steps to protect its interest throughout
the court proceedings. The Court agreed that ultimately it is the contributing lot owners who are meeting their share of the expenditures and who are disadvantaged by the non-payment of one lot owner. This cannot be, and was not, the intention of the legislation protecting everyday owners within a body corporate. The body corporate’s success in this matter ultimately resulted in a Court order that Westpac pay the body corporate debt including all contributions, interest and recovery costs.

The Court of Appeal is sending a very clear message to lot owners and mortgagees through this judgment to ensure they look carefully at non-payment of body corporate contributions. OMB Solicitors has handled over 2,000 body corporate levy recovery proceedings in the past five years, and the average costs incurred in recovering contributions from defaulting lot owners is less than $5,000. These types of matters also usually resolve with full payment being made to the body corporate within a period of about 3 months. However, this case highlights a rare example of just how expensive and time consuming body corporate matters can become if expert legal advice is not sought in the early stages of such matters to resolve them quickly.

If your body corporate requires expert legal advice on this type of matter, or any other Body Corporate matters, consider contacting the Body Corporate team at OMB Solicitors on 07 5555 0000.

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