Published: 20 July 2010.

Contributed by Gavin Barnes of Redchip Lawyers

In February 2010, redchip lawyers in this blog flagged proposed changes to body corporate contribution lot entitlements by Gold Coast MP, Mr Peter Lawlor.
 
 The two views…
 
The ministerial release of February 24, 2010[1] stated,

“… what this would mean is that an owner of a small one-bedroom place on a lower floor at the back of a unit complex, for example, would not be required to contribute as much towards common expenses as someone with a more expensive place, such as a four-bedroom, top floor apartment with views…Once passed in parliament, the new rules could be effective later on in 2010”.

It remains our view that the price an owner initially pays for their lot accounts for such differences. Once an owner is in possession of the residence or investment, the actual day to day body corporate running costs are identical between lots with only some slight differences. For example, if a lot has an additional balcony or balustrade length that requires painting. As a result the contributions should be equal unless specific circumstances exist for them not to be.

The proposal is ignoring this fact and instead focusing on merely seeking to regulate speculative purchasers, named as ‘astute buyers’ who purchase with an intention to seek a change to the entitlements to increase the market value of a lot brought by lower levies.

[1] “Bligh Government to make body corporate fees fairer”
 Stop Press Update -
In a speech on June 10, 2010 Mr Lawlor MP still states the government’s intention to make the system more fair by having it unequal.

“The government doesn’t think the balance is right so we intend to make changes in the BCCM Act later this year.  Changes we believe will make the system more fair. For community titles schemes which have been subject to contribution schedule lot entitlement adjustment orders, the Government will legislate for those schemes to be able to revert to their original method of dividing body corporate fees before the adjustments were made.”[1]

The Minister’s office advises that Cabinet and the Qld Law Society are requesting a wide and lengthy public consultation process to a draft bill later this year… the problem being that there are not that many sitting days of parliament remaining.

[1]http://www.peterlawlor.com.au
 
  What this means for you...

At present if you don't like the current unequal distribution in your scheme, you can make an application to change the contribution lot entitlements, but you will have to prove a case. This is usually by way of obtaining a supporting experts report that shows that the prevailing scheme is not equal. It will be open to others to oppose your application.

When the legislation will change, or if, is uncertain. What has not been released is the detail of any reversal process. Presumably this will be decided from the consultation process. It may be that any one lot owner in a scheme which has had contribution lot entitlement orders made, may have an as-of-right basis for having the original contribution scheme reinstated.
 
  What you need to do…
  
Whether you should seek an adjustment now, or wait upon the proposed changes depends upon your individual circumstances and we urge you to seek expert legal advice. What we do agree with and advise, is the statement by Mr Lawlor that intending purchasers of apartments and units conduct a proper and thorough due diligence prior to purchase.

For more information…

Contact Stuart Harrigan at redchip lawyers on 07 3852 5055

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