New body corporate and community management regulations took effect from 1 March 2021. The new regulations represent the most significant changes for many years in the way body corporates are administered and aim to modernise body corporate procedures, reduce body corporate costs and enhance lot owner protection.
The changes are largely uniform across the body corporate regulatory framework, applying to the standard module, specified two-lot schemes, small scheme, commercial modules, and accommodation modules. The new regulations include changes that:
- facilitate electronic voting and attendance at meetings, including the use of ‘live’ electronic voting and remote personal attendance by teleconference or videoconference; and
- facilitate use of email and other forms of electronic communication for the exchange of information and documents within bodies corporate.
Some further notable changes are outlined below, along with a note on the potential impacts for developers.
Documents to be given to the body corporate
Additional documents and materials that must be given to the body corporate at the first annual general meeting (both in hard copy and electronic form), include:
- all plans and drawings;
- the development approval;
- the scheme’s community management statement;
- all policies of insurance;
- documents relating to any claim made against a policy of insurance taken out by the original owner for the body corporate;
- any fire and evacuation plan required under the Fire and Emergency Services Act 1990;
- an independent valuation for each building the body corporate must insure;
- any contracts or agreements for the supply of utility services to the body corporate;
- any documents relating to warranties for buildings or improvements forming part of scheme land, common property plant and equipment, and any other body corporate asset;
- any proxy form under which the original owner is the proxy for an owner of a lot; and
- any document under which the original owner derives representative capacity for an owner of a lot (such as a power of attorney under a contract of sale).
What this means for developers
Developers should consider preparing a power of attorney statement (from which developers typically derive representative capacity for an owner of a lot) that sits outside of the sale contract and disclosure statement. This will avoid the need to submit the full contract and/or disclosure statement to the body corporate, which may contain confidential information that will be held as a body corporate record (and potentially searchable by the general public).
The community management statement must also be supplied in a format that is readily editable, for example a Word document.
Defect assessment report
The body corporate is required to consider a motion proposing the preparation of a defect assessment report at the second annual general meeting (the motion does not have to be passed). If a scheme is to be developed progressively, the motion must also be on the agenda for the annual general meeting immediately after a request to record a new community management statement is lodged.
The general intent of this regulation is to encourage the early discovery of building defects in community titles schemes.
What this means for developers
The body corporate may seek that the developer rectify any defects in the building under warranties contained in the building contract.
Developers may consider requesting that building contracts allow the body corporate to make claims directly to the builder, eliminating the need for claims to flow through the developer. Further consideration should be made to a formal assignment of warranties under the building contract relating to the common property at the first general meeting.
The changes to the relevant body corporate and community management legislation are largely practical and aim to bring the regulations into the post-COVID era of operating electronically, as well as enhancing protections for unit owners.
If you have any questions about the changes or wish to update your documentation to ensure compliance, please contact our Property Team.