How Different is Queensland Body Corporate Legislation?

queensland body corporate legislationI write about Queensland body corporate legislation, which is not too hard to figure out since that’s where I live. Plus I rather give it away with the great big banner on my website saying “I write about QLD legislation”.

That said, people from a lot more places than Queensland read this website. When you consider the nifty Geo stats from Google Analytics after Australia the next widest readership is USA followed by New Zealand, South Africa and India.

People from all over Australia and the world buy real estate here in sunny Queensland. And then they have the same problems and look for the same solutions.

But how different is it really? If you own a unit in Melbourne and another in Brisbane how different is the body corporate legislation going to be?

My personal expertise is in Queensland legislation, however, I live on the border with NSW and I’ve been privileged to search many “foreign” schemes in my career.

This article is a simple comparison of NSW and Qld body corporate legislation to highlight the differences owners can expect to see between the two states.

Overall Intents of Different Body Corporate Legislation

Queensland body corporate legislation is aimed at transparency and fairness.

It’s aimed at making sure all the lot owners rights are adequately protected whilst giving owners a framework for dealing with and reporting on their joint asset.

New South Wales legislation is aimed at transparency and fairness as well.

And most likely legislation in Victorian, South Australian and the rest of Australia. The overriding principles of strata or body corporate legislation are not going to change.

The focus will still be on making sure that costs are shared fairly, that management happens smoothly and with the minimum of interference and that every lot owner and resident is getting a fair squeeze of the sauce bottle.

There are some specific differences in how that’s achieved, which I’ll get into, but first let’s talk terminology.

Different Terms, Different Body Corporate Legislation

The biggest issue out-of-towners will face is the different terminology utilised by different states. Some examples:

Strata Plan vs Community Title Scheme

This one is particularly confusing because of the processes of strata titling and community titling.

Simply put … strata titling is the process of subdividing upwards and community titling is the process of subdividing outwards.

An apartment building is strata titled.

A gated community is community titled.

There you go, a nice, simple definition. It’s a shame it’s so misleading.

You see in Queensland all body corporates are referred to as Community Title Schemes, whatever their actual configuration.

It’s right there in the name.

The CTS in any scheme name, for instance, Body Corporate for Chevron Renaissance CTS 30946, is actually Community Title Scheme.

NSW by contrast refers to all schemes, whether they’re strata or community titled, as Strata Plans. That’s because in NSW strata schemes are registered under a Strata Plan.

Effectively – strata plan or community title scheme – they’re the same thing.

Body Corporate vs Owners Corporation

A body corporate or owner’s corporation is also essentially the same thing.

As discussed above Queensland schemes are called “Body Corporate <name> CTS <number>” or naturally shortened to body corporate.

In New South Wales the schemes are referred to as Owners Corporations. I’m not altogether sure why (let me know if you do!) but possibly in reference to the corporation system that used to dominate prior to strata titling.

So whether you use the term body corporate or owner’s corporation you’re referring to the jointly owned entity that holds the common property on behalf of its owners.

The key differences in Queensland Body Corporate Legislation

Body corporate legislation has the same intent from state to state, and the terminology, though different, is also referring to the same things. So what are the differences?

There are a few key areas that might confuse those from NSW, or vice versa and they broadly relate to:

  • Management rights
  • Community Management Statements

Management Rights

Management rights refers to the holder of the Caretaking and Letting Agreements. NSW also has management rights and in similar fashion to QLD but with one key difference; length of term.

In Queensland it’s possible to enter into a Caretaking and Letting Agreement for an accommodation module building for 25 years.

In NSW management rights terms across all schemes are limited to 10 years.

The difference is a quite staggering amount of money and that has allowed the Queensland Management Rights industry, holders and traders of these contracts, to flourish and become significant stakeholders in the QLD body corporate industry.

Community Management Statements

The most significant difference between NSW and QLD body corporate legislation is the Community Management Statement (CMS).

In NSW a strata plan is registered and that generates a Certificate of Title. The title holds all the information about the scheme including unit entitlements and by-laws.

Changes to anything registered in the Certificate of Title will generate a revision to the title. Getting a complete snapshot of the building requires the title and all revisions be reviewed.

Community Management Statements have all the same information as a Certificate of Title, with some added extras. When changes are made the previous CMS becomes obsolete. To get a snapshot of a QLD scheme get a copy of the current CMS.

Other than the way they’re registered the other differences in Community Management statements are significant. They relate to:

  • Regulation modules
  • Schedule of lot entitlements

Regulation modules

A regulation module is … well exactly what it says, different regulations that apply to different types of buildings to address their differing levels of needs.

For instance a commercial precinct has different needs than a residential scheme. And a residential scheme with predominantly owner occupiers has different needs than one with mostly investors.

Each regulation module tries to reflect those needs with different rules, sometimes even successfully.

I don’t know of any comparison to the regulation module system in NSW.

Schedule of Lot Entitlements vs Unit Entitlements

In NSW an owner’s corporation is registered with unit entitlements. Each lot is allocated a “share” of the assets and costs of the scheme via the unit entitlements.

For instance if your entitlements was 1 out of an aggregate of 5 then you own 1/5 of the common property and are liable for 1/5 of the costs of upkeep.

Queensland schedule of lot entitlements differs in that your share of the assets and liability for costs are separated. A schedule of lot entitlements includes contribution lot entitlements and interest lot entitlements.

Contribution lot entitlements are your share of the costs.

Interest lot entitlements are your share of the assets.

The two are completely independent.

It might sound unnecessarily complicated but it really does give a more nuanced view to the notion of costs vs holdings.

For instance say a building had a two bedroom unit on the first floor and substantially the same two bedroom unit on floor 32. Which is worth more? Logic would suggest the unit higher up.

But, the two units are substantially the same. Why should the unit higher up pay more for upkeep of the scheme when they’re essentially costing the same.

By setting the interest entitlement higher it can reflect the capital expenditure on the 32nd floor whilst still maintaining the equality in contributing to costs that legislation demands.

It looks something like this:

Lot Contribution Entitlement Interest Entitlement
First floor Lot 100 90
32nd floor Lot 100 120

It’s this mechanism that allows things like granite bench tops and high end appliances to be accounted in the value of a property whilst capping the costs.

Different Body Corporate Processes

For the most part the way a NSW Owners Corporation operates is very similar to a QLD body corporate.

They both have by-laws, issue and collect levies and hold general meetings where Committees are elected who then get on with the business of running the scheme, with of course their employed contractors.

Although they’re doing substantially the same things the processes can be quite different.

One area where NSW and QLD differ completely is the registration of new schemes.

In NSW there is an Initial Period between the registration of a Strata Plan and the transfer of ownership of 1/3 the total aggregate unit entitlements.

Until the transfer is complete the developer is responsible for meeting the costs of the scheme and there are strict rules about what can be done prior to the first AGM which is held when that magic 1/3 of the scheme is sold.

Those restrictions include not changing by-laws, not creating easements or otherwise altering the common property.

QLD is very different.

When a new body corporate is registered the first thing that happens is a general meeting is held where levies are issued and major business enacted.

That major business may be creating easements, altering by-laws or subdividing or otherwise changing the common property, essentially everything that NSW legislation seeks to avoid.

In QLD the developer, or Original Owner, is the owner of all the lots so they have all the votes. They can therefore do anything they want, within the bounds of legislation.

Conclusion

Did you know in Victoria it’s possible to have a zero sum sinking fund balance? The body corporate can elect not to collect funds for capital works.

When I heart that it blew my mind. It is completely contradictory to every rule QLD and NSW has about sinking funds.

That’s another example of a fundamental difference in legislation. They are few and far between.

Don’t misunderstand, there are hundreds of differences state to state but unless you’re getting involved in the Committee it’s not going to have a lot of impact.

If you are considering investing in Queensland, or NSW or anywhere else for that matter, don’t let the differences put you off. The overriding factors, fairness and transparency, will remain consistent and the rest you deal with as it comes up, pretty much the same as if you’re investing in a scheme in your home state.

If you’re knowledgeable about NSW legislation please feel free to correct any errors I’ve made or highlight differences I’ve left out. People are investing across borders and need to know what to keep an eye out for.

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.


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Comments

  1. Michael says:

    The name ” Owners Corporation came in to being a number of years ago when the then NSW Minister
    of fair Trading changed the name from Strata scheme number to Owners Corporation to ,in her words better reflect of what a strata scheme was etc ,.

  2. Carol Hall says:

    I have a studio unit in a building in Mooloolaba and I pay the same levy as a three bedroom unit in the same building. How can this be fair. My unit takes up less exterior upkeep, as a single person lives in it, it uses less of all facilities, and is virtually now unsaleable because of the high contribution payable. This is grossly unfair and must be hurting lots of people in a situation such as this.

    • It does sound very unfair Carol. There could be other mitigating circumstances, such as you have more exclusive use or something else. Or they could just be unfair entitlements. They’re set by the developer, and sometimes without a great deal of thought or compliance with equity principles.

      If there are other lot owners affected it might be worth asking the body corporate to pay to do a review of the entitlements. If they’re incorrectly set they can be adjusted.

      If your body corporate doesn’t want to go that route it is even possible to do it yourself by getting a review done, and if they’re shown as unfair, making at application to QCAT to change.

    • Carol Hall. i did this myself with a bit of help from a friend (my husband.) It was quite easy, but we live in a complex of 47 free standing villas and are totally responsible for everything within our boundary. I didn’t need too much information and got it through.

      • I’m glad to hear someone’s done this Helen. It’s unfair the way many schemes have set up their contribution lot entitlements so its great to hear of a victory for justice.

  3. I am only interested in the difference at the moment between NSW and QLD whereas in NSW 75% of the owners of a block of units can decide to sell the block to a developer for them to demolish and then rebuild whatever. Whereas in Queensland I believe it has to be 100% – is this correct or are there changes taking place in Queensland. Thanks

    • Hi Eve,thanks for commenting. Yes you are correct extinguishing a scheme must be a resolution without dissent in QLD. We are in process of reviewing legislation though and changing to 75% is being suggested.

      • Hi Lisa – has this legislation changed formally now? If so, can you point me in the right direction to read more about this (I tried searching but I must not be using the correct terminology). Thanks in advance 🙂

        • Hi Brian

          If you’re talking about NSW legislation then yes it has been passed though not adopted for a couple of months yet.

          Have a look on LookupStrata.com.au…they have had a number of articles about changes.

  4. Catherine says:

    Can you please let me know. If a leasing agent is suppose to tell new tenants that the town house they decided to rent had problems with termites. You see my husband and myself thought we were doing the right thing down sizing. Being in this rented town house for 2 months in a gated area. in QLD. Have just been told the house had termite problems and we cannot lock our side gate as the The termite people need to come in and check the traps once a month.. Apparently now I have been told by pest control people the whole inside and outside of this town house had very bad termite problems. And we cannot even put up a sun brolly so we can at least sit out the back. Because of the traps all around the place. Please where do we stand with this terrible night mare. I am trying to get the C.T.S.Number any ideas where I can get this. This is the last thing we need now.Where do we stand.

    • Hi Catherine, thanks for your comment. All I can say is it’s a good thing that you didn’t buy!

      I’m a little confused by this question. The courtyard of a townhouse is either going to be exclusive use for the resident or is actually part of the lot. Either way the body corporate doesn’t have much of a say in what happens in that area. I think it’s strange that the body corporate would install traps on a lot. It’s as likely to be the lot owner who has done it.

      The pest control people have no authority to order you to keep the gate unlocked. Neither does the body corporate for that matter, unless it relates somehow to safety issues.

      Nor do I understand why you cannot have a sun umbrella simply because there are termite traps on the property. It shouldn’t interfere. I can understand you feeling different about the property now you know what’s happened, a lot of people do.

      Breaking you lease, or indeed the need to notify tenants of issues, is not covered in body corporate legislation I’m afraid, even if the leasing agent in an Onsite Manager. The issue is regarding rental contract law. I suggest you contact the tenants tribunal

  5. Matt Franich says:

    Hi Lisa,

    My partner and I own a unit in a block in broadbeach. There is currently an offer from a developer. The developer is pressuring us to sign otherwise he has stated that the legislation is going to be amended whereby we will all be entitled to the value.

    I personally disagree with the 75% concept. In areas of Syd etc densification is vastly different. I don’t feel that developers are unable to unlock development sites in Qld. (Gold Coast). All this legislation, if adopted, will achieve is cheaper land acquisition costs for developers.

    Is there a public consultation process taking place? Do you have any update?

    Thanks
    Matt

    • Hi Matt

      Some discussion papers have been issued as a result of the review of the legislation but submissions are already closed on the final one. Scheme termination was included in the discussion paper before.

      There has been no draft of legislation or even talk of what might change, other than the papers themselves. Even when the draft is out, and I’m not sure there isn’t more discussion papers yet, the legislation will need to be debated and pass through the house. Its not going to be quick.

      You are correct the 75% vote to extinguish a scheme is being mooted. I’m on the fence about this one. I’ve seen some instances where one lot owner has stopped a sale which I think unfairly penalises the balance of the owners.

  6. Henk Vandermeer says:

    25 year Management Right Contracts are NOT in the best interest of the owners.
    We had a Caretaker, who always promoted that they were here for the long run while they sold the idea of changing the module from ‘Standard’ to ‘Accommodation’ to the apathetic owners.
    Then the year after they sold the idea of a 25 year contract to the same apathetic owners (because neighbouring complexes had it as well!).
    3 months after the AGM they put the MR on the market and they are gone!
    The existing contract already had been in place for 20 years with annual CPI increase and the value above the market value. Now the owners are up for another 25 years with annual CPI increases putting it even further above market value.
    There is no protection from this for unsuspected owners as the legislation seems to favour the Caretakers.

    • Hi Henk

      Thank you for your comment. I agree there are few instances when a 25 year agreement is going to be beneficial to lot owners. Unless you’re in a very large, complex scheme I’d say don’t bother. And the practice of changing regulation module so the Building Managers can make money from the owners makes me furious. I’ve written about it before here.

      I disagree about protections however. There are a lot of hoops that Caretakers have to jump through before they can do this and there is plenty of information out there for owners who take an interest and try and find out what’s going on. If you’re apathetic you get burnt and I have to say I’m all for suffering the natural consequences of the lack of attention. More protections in place would make compliance harder and costlier for schemes without addressing the problem, apathy on behalf of owners.

  7. Marlene Dowling says:

    Hi Lisa,
    I have some issue with the Body Corporate, few months ago I emailed them, & even rang but no avail. It seems that all my letters has been ignored. I supposedly, sold the townhouse but unfortunately, the contract didn’t go through because I have problems with high rising dampness underneath the subfloor whilst the water coming from outside the common property sipping through the brick wall. Few years ago, I have termites problem, I have to replaced the whole floor board & done few Reno. Then, a month ago, I went to see a solicitor asking him to write a letter to the body corporate asking them to do something about the problem. I am still waiting for their response . So far, it really cost me a lot of money & beside I don’t work .At this stage, I just don’t know what to do. I’d like to sell this property as soon as I can, who I can contact to do the work & decide to pay the cost. It really seems to me that body corporate doesn’t care at all.

    • Hi Marlene

      I would continue with your efforts to contact the body corporate manager or committee. If you’ve had no response from them don’t assume they have received the correspondence. Your next step will be to attempt adjudication to force the issue.

      In the meantime I would get quotes for repairing the issue. You can then submit them to the body corporate, perhaps as a general meeting motion with alternatives, to get the scheme to pay for the works.

      Before you can move forward with adjudication you will need to prove that you have tried multiple times to address the issue. The Solicitors letter will help. Maybe resend it. Check you committee meeting minutes to see if the matter is tabled. If there are no committee meeting minutes the problem could be the committee is not engaged. Consider joining the committee yourself to get things moving.

  8. Humphrey Hollins says:

    I would like to know what qualifications one needs in Queensland to become a building manager with management rights. I live in a complex where were finally removed the lazy caretaker two years before his Agreement ended. Now we are in limbo with a broken down, neglected building and a disparate group of lazy agents who do not have the best interests of the BC in mind.
    Much better to have a live in caretaker to look after the maintenance and vet new tenants and evict existing bad ones.

  9. Susan Tognolini says:

    Hi Lisa
    I purchased a unit in Feb with a caveate over it due to a pending court case over property damage to the unit block caused by construction of a new building next door. This has now been settled out of court and now majority of old owners want to claim legal fees back with no allocation to my lot even though the fees for the case came from the sinking fund that my former owner paid into. They also do not want to make the full repairs to the property as were stated in the documents related to the court case where engineers report said the building needed further stabilization than done by neighboring owner at first instance of damage and documentation of which was included in the disclosure statement on purchase. My unit at the back has the most damage and I want a clean building report to refinance it to a stand alone loan or resell, as my bank would not finance or regard this property as an asset due to the caveate and building report. The hope to sell as a whole lot has gone as a newer owner than me wants to stay and suggested legal reembursment to old owners as a sweetner which they dived on. He now wants to buy my unit!! and without the repairs to my unit I think he will be the only option as a potential buyer will see all the paper work about the foundations with no resolution. I feel stitched up as I believed when the case was settled the repairs would be done or at least some cash paid out to me to do them independently. The committee feels like a bit of a boys club and were sacastic and rude. I had asked that the body corp be lowered now shed B for court case management was over and body corp manager laughed and said there’ll be other things to spend money on now and they all began talking about new letter boxes, roof, plumbing and picket fences and lighting to walk ways without addressing the damage to foundations and cracks to wall which they are now saying were originally fixed by builders next door well enough after all and what I had read in purchase documents about $6000 being spent on my unit interior and more work to be done on foundations was just to get more money from the court case. Please help!!

    • Hi Susan

      Let me see if I understand this understand correctly. Your body corporate has sued the builder / developer of a neighbouring property for damage done to foundations during construction, damage that significantly affects your lot. The case has now been settled out of court and reparation made. The body corporate is now proposing not to have the foundations repaired.

      If this is correct you need to take action immediately. The body corporate is required to address the issue. The issue may well be repaired to an acceptable degree however if they had documentation that said it wasn’t now they need documentation that says it is. You need the new documentation to resolve your lending issues.

      Ask them, in writing, to provide an Engineers Report on the condition of your lot. If they won’t then you will need to make an application for Adjudication, both to stop them spending the funds and to force them to do the repairs. It would be beneficial for you to get the help of a Solicitor as the matter is complex. Even if you don’t though you may still make an application via Office Commissioner Body Corporate.

      You must try to self resolve first, hence the writing to the committee. Outline your situation as you have here. Ask them for a new report. If you’ve done that already, and they said no, then your next step is to speak to the Commissioner’s Office.

  10. Goerge Saalmann says:

    When our Company, with hundreds of Building Professionals were invited to become involved in the draft of the Australian Building Code, there was NO confusion as to what “Class2 Residential meant and it was not intended for tourists”. Class3 Residential, was intended for tourists. Investors and developers, referred to as Stakeholders in Queensland, have been given free reign, Infrastructure ? Town Planning Guidelines ? What is That ?. Enter the “White Shoe Brigade”,. The Australian Building Codes Board in Canberra, have acknowledged, that, “they have no control over how any council complies with the intent of the Building Code. The powers to be, are those with the money & political influence. Queensland the “Smart State” ???
    it at while they mak

  11. Great article

    I was wondering is there a big difference between queensland and NSW in the way they terminate a current manager and elect a new manager?
    Is it harder in Qld to change strata managers?

    • Hi Jane

      In both NSW and QLD the termination of the strata manager would be covered by contract law and not body corporate legislation. Entry into the agreements requires certain things, but, so long as the entry is valid, after than you would need to go to QCAT or NCAT re terminations.

      Basically it depends what’s agreed in the contract. Though the agreements have to tick certain boxes, things like maximum length and code of conduct of the manager, but everything else, including termination, is negotiable and taken on a case by case basis.

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