Changes to Lot Entitlements in Queensland

This is edited from an email from Archers. This law, if passed, may impact the value of apartments in buildings where the lot entitlements were recently changed, and where there was a big difference in the initial sales prices of various apartments in the building.

"Now that you are all aware of the Body Corporate and Community Management Amendment Bill 2010 lets spend some time explaining, if passed, what it is going to mean for you.

Open for public consultation until 23rd September 2010 the Bill proposes to outline new concepts and principles for the setting of Contribution Schedule Lot Entitlements (CSLE), along with a provision for lot owners who were disadvantaged by adjustment orders to have the amended CSLE changed back to their original schedule prior to any change. We have provided a brief summary of the main areas of the Bill below but urge anyone who believes they will be affected to review a copy of the Bill at www.deedi.qld.gov.au and make a submission to bccm.policy@deedi.qld.gov.au.

1. Introduction of the following Principles for deciding CSLE:

• Equality Principle -The CSLE must be equal except to the extent which it is just and equitable in the circumstances for them not to be equal.
• Relativity Principle - The CSLE must take into account factors such as the nature, features and characteristics of the lots, the purposes for which the lots are used, how the scheme is structured, the impact the lots may have on the costs of maintaining the common property and the market value of the lots.
• Unimproved Value Principle - Where the CSLE must be proportionate to the unimproved value of the lots.
• Market Value Principle - Interest Schedule Lot Entitlements must reflect the respective market values of the lots, except to the extent which is is just and equitable for the lot entitlements not to reflect the respective market values.

2. Adjustment of CSLE

A Body Corporate is still entitled to change its CSLE by passing a Reolution Without Dissent. The notice of meeting must be accompanied by a written document outlining the changes and the reasons for the changes.

An owner is still able to apply to have the CSLE changed either through Specialist Adjudication or the Queensland Civil & Administrative Tribunal (QCAT), however there are restrictions. For an existing scheme, the scheme must have been affected by a material change since the last time the CSLE were decided. For schemes established after the commencement of the Bill, the owner making the application must believe the CSLE are not consistent with the deciding principle.

3. Previous Decisions

The proposed Bill will allow an owner (who must have been an owner at the time an order was made) to submit a motion to the Body Corporate to revert back to the CSLE before any order to change them was made. There will be a three (3) year time limit for an owner to submit such a motion. If the Body Corporate receives a motion from an owner, it must identify the CSLE pre-adjustment and call a general meeting to allow owners to vote, by Resolution Without Dissent, whether to change the CSLE back to what they were pre-adjustment. Special provisions will apply to Lots that have been subdivided or amalgamated.

4. Applications already made

If an application is being heard by a Specialist Adjudictoar or QCAT and a decision has not been made or has not been given effect at the commencement of the Bill, it will cease to have effect when the Bill commences.

Some other relevant changes proposed include:

• A buyer may terminate a contract if it is entered into but before settlement, a new Community Management Statement (CMS) is recorded and:
  • the seller does not give the buyer a copy of the new CMS within 14 days (or longer if agreed by both parties) after the new CMS is recorded; and
  • the buyer would be materially prejudiced given the extent to which the new CMS was different to the previous CMS; and
  • the buyer gives the seller 14 days notice (or longer if agreed) that they wish to terminate the contract.
• A buyer may terminate a contract if they are buying from the Original Owner for the Scheme if they reasonably believe that the CSLE are inconsistent with the principle on which they were decided and the buyer would be materially prejudiced if they completed the contract. There is a 90 day time limit to terminate after the buyer (or a person acting for the buyer) receives a copy of the contract."