Changes To Lot Entitlements Legislation

This week the Queensland parliament have passed the Body Corporate & Community Management Amendment Bill 2012. The Amendment Act amends another amendment act that was passed in 2011 that amended some case law that had been in effect since 2004.

Specifically the issue all these laws relate to is levies, or more precisely the contribution lot entitlements of a body corporate from which levies are calculated.

All this wrangling is about who should pay what proportion of the costs of the body corporate.

A Little History

The problem started with developers, who are responsible for setting original contribution lot entitlements for a building. The contribution lot entitlements should be equal, unless one lot has more ‘benefit’ than another, in which case then the contributions should be altered to take that into account.

In practice contribution lot entitlements are all over the place. Sometimes the split is equitable and sometimes its not. In most cases those with larger or more expensive lots tended to pay more and that is the sticking point. Just because a lot owner paid more for their apartment doesn’t necessarily mean that they should correspondingly pay a larger proportion of the upkeep cost.

The proportion that each lot pays for levies, its argued, should be directly related to the proportion that each lot costs the body corporate.

In a 2004 case Fisher & Ors v The Body Corporate for Centrepoint CTS 7779 this point was successfully argued. The court agreed that the process for determining contribution lot entitlements should be based on a fairer and more equitable formula than “that’s what the developer set”. Further the court helpfully came up with a formula.

Following on from the Fisher decision many body corporates, particularly those registered prior to 2003, made applications to review the contribution lot entitlements through CCT or QCAT. Subsequently the contribution lot entitlements of those buildings were altered to a more equitable arrangements.

Legislating to Change Case Law

Unfortunately none of this happened in a vacuum and these contribution lot entitlements changed for real people and it resulted in levy increases and decreases throughout the body corporates affected.

Those with lots that were originally valued higher were the winners with big levy decreases, and those with lots valued lower the losers with big levy increases, thereby creating a real atmosphere in some body corporates of us against them.

In 2011 the then state government passed the Body Corporate & Community Management Amendment Act 2011 which included provisions for those body corporates that had had contribution lot entitlements amended through the court to now apply to have that change overturned and the original contribution lot entitlements re-established.

Contribution lot entitlements were again reverted and again levy increases and decreases happened across the board, only last times winners were now the losers and vice versa.

Body Corporate & Community Management Amendment Bill 2012

This Body Corporate & Community Management Amendment bill 2012 was introduced into parliament on 14 September 2012 and stopped the reversion process in its tracks.

Further the bill set out provisions where those who have had changes made through the court, then had those changes reverted back under legislation, now have the ability to have those changes changed back. Try saying that three times fast!

Basically its another volley in the ongoing war of contribution lot entitlements and, since the government has committed to overhauling body corporate legislation as a whole its unlikely to be the last.

What it will mean is that, yet again, contribution lot entitlements and levies will change across the board with a different set of winners this time.

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The other big change for the 2012 bill is the requirement for a Community Management Statement to be included in a contract is gone. From a reporting perspective, which hey, that’s what I’m all about, its a boon.

Although I whole-heartedly agree with the sentiment that those buying into body corporates should arm themselves with as much information as they possibly can, I don’t agree that the onus should be on the outgoing owner to provide.

So, big changes ahead. I look forward to seeing how they play out.