What Is A Building Management Statement?

A Building Management Statement (BMS) is a document that governs how shared facilities are accessed, maintained and funded.

That’s a fairly simplistic definition of something that is very complex. A BMS must be registered over at least two lots, at least one of which must be a volumetric lot.

What is a volumetric lot?volumetric lot

Our land titles system gives us ownership of our land, being all the space on the surface of the earth, all the space underneath to the earth’s core and space above into … um, well, space.

You can actually sell the air space above or subspace below your lot. The new lot that’s created from your sub or air space is called a volumetric lot.

That may sound a little far-fetched but it happens all the time. A recent example is Brisbane City’s resumption of land to build the Northern Link Tunnel. They did of course resume whole lots, but also volumetric lots below existing lots. Click here to read their great explanation of volumetric lots.

How does this affect body corporates?

The most common volumetric lots that you see in everyday life are residential or hotel towers built above retail or office precincts.

In effect it’s a bit like building with blocks. On the bottom is the retail, then office, then residential, all neatly stacked. Underneath there may be a basement car park shared by all entities.

And that’s the key point: they are all separate entities.

A good example here on the Gold Coast is Southport Central.

Southport Central is three large towers and two subsidiary buildings built on the site of the old Southport school.

building management statement

The three towers of Southport Central

The precinct consists of three body corporates; Southport Central Residential, Southport Central Commercial and Southport Central Retail. There’s also Southport Central Building Management Group, but I’ll come back to that later.

Each of the three towers contains a portion of each of the three body corporates; retail has shops with offices above them and apartments on top, all stacked neatly above the shared basement.

Shared Facilities

Building Management Statements are used when there are shared facilities. Shared facilities would be things like shared access ways, stairs, elevators, water supplies, fire safety equipment and so on.

In the case of Southport Central there is a large open plan access way around and between the buildings. There are numerous stairwells, each building has shared elevators, all sorts of things.

Gary Bugden in his report All About Strata and Building Management Statements and Building Management Committees notes

Inevitably, these shared facilities are located within one of the component use areas. However, because they are used by two or more areas, there is a need to ensure that they are properly maintained and that the cost of that maintenance is shared fairly by those who use them.

Who pays for what?

The crux of a BMS, other than ensuring access, is to set out who is responsible for paying what toward the upkeep of the shared facilities.

Certain elements of any complex building will benefit one portion more readily than another. For instance grease traps would almost exclusively be a retail cost, since that is where restaurants and cafes would be situated. Conversely elevators would almost never be used by retail who have no need to access the building proper.

As you can imagine calculating who pays for what is complex and ripe for disagreements.

Developers circumvent the whole process by calculating all these items ahead of time and then registering the Building Management Statement before lots are settled.

Building management group

When a BMS is registered it immediately creates a building management group made up of all the lot owners, or an appointee in the case of a body corporate, who are tasked with maintaining and co-ordinating the shared facilities.

The building management group usually issue and pay levies, of a type, and have accounts where they accumulate funds similar to how a body corporate is managed.

It’s important to note however that a BMS operates under the Land Act. The building management group it creates is not associated with body corporates at all, notwithstanding a scheme may be a member of the group.

What impact does a BMS have on lot owners?

If a body corporate is subject to a BMS the projected costs are included in the yearly budgets and are recovered from lot owners via their regular levy payments the same as every other expense.

Otherwise most owners will never even know about the BMS.

I have seen some BMS costs, usually for grease traps or air conditioning, recovered directly from retail lot owners. Those costs are issued as a statement from the body corporate to the lot owner, the same as any monetary liability is recovered.

For the most part a BMS is something that operates in the background of a complex building and has little effect on lot owners.

Of course it’s a different story if you’re on the committee.

THE BASICS OF BODY CORPORATES

A little knowledge can go a long way


I see so many stressful and frustrating issues in body corporate records that result from simple misunderstandings it hurts my head. If I could do one thing to help it would be to teach everyone the basic rules, so they can avoid all these dramas.


With that in mind I've put together a short eBook that sets out the basics everyone owning in a body corporate really should know. It won't make those big issues go away, but it will give you a firm grounding from which to communicate.


It's completely free, so please, download it now!

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Comments

  1. Barbara Glatz says:

    Can you Please assist with information on how a BC member is elected to be the BC representative on the BMS? Our BC has 10 votes as residential owners and their are 10 other retail Lots forming the BMG. We have a committee member who is self appointed as the BC BMS representative. Is A general Meeting required to vote on an ordinary resolution to appoint a Bc Representaive on The BMS? I would appreciate any assistance regarding this matter.thank you.

    • Hi Barbara

      You need to refer to the BMS which should outline how the representative is elected. If it’s not noted then check your by-laws to see if its mentioned. If not then the default is usually Chairperson but the committee may resolve to elect someone else, subject to BMS and by-laws.

  2. Barbara Glatz says:

    Hello Lisa, thank you again for your valuable website.

    Our BMS represents 10 retail (Lots 1 to 10) and Lot 11 is the the Residential Lot
    I have cut and pasted directly from the BMS that controls our CTS and BMS the following:

    Page 4 of the BMS 4S 1.1 (aa) Representative means a natural person appointed
    by an Owner to represent the Owner on the Committee.

    Page 3 of the BMS S. 1,1 (t)(t) Owner means the Owner of each Lot.
    Where any Lot is scheme land for a community titles scheme

    Page 8 of the BMS S 2.1 (a&b)
    defines the scheme as being 10 retail lots and 129 residential units plus the common area

    Page 11 of the BMS 4.3 (a) Each Owner must appoint one (1)
    Representative to represent it at Committee meetings.

    Page 11 of the BMS 4.3 (d) Each Owner must ensure that its
    Representative or alternate Representative attends meetings of the Committee
    and acts in a manner that allows the Committee to discharge its functions.

    To me, as a lay person, I believe that a BC representative would be required to be elected
    at a general meeting of the CTS. Would appreciate your advise on this one.

    With regards and thank you again
    Please note my new email address below

  3. Hi Barbara

    I’m not sure about this question. Its not something that comes up a lot. Check your by-laws and the BMS. For principal bodies corporate legislation allows the committee to select a representative, or, if none is selected, its automatically the Chairperson.

    That can be amended by your scheme however. BMS stuff is more of contract law than body corporate because, as you’ve noted, many of the lots involved aren’t strata schemes.

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