The Unit Titles Bill (the “Bill”) is as a result of a review of the Unit Titles Act 1972. This was required as the 1972 Act does not provide for the creation and sustainable management of multi-unit developments taking into account unit title developments having become increasingly complex and having dramatically increased in number over the last 30 years.

1. Improved processes for creation/variation of unit tiles
2. Promotion of sound property management processes for body corporates
3. Easier decision making processes by body corporate
4. Introduction of disclosure requirements
5. Improved dispute resolution processes

A unit title development will still involve land being divided into principal units, accessory units and common property. However uncertainties in the 1972 legislation regarding the definition of a principal unit will be clarified in that a principal unit will need to contain a building or be contained in a building. For example a principal unit consisting wholly of airspace will not be permitted under the new legislation. Principal units may be places of residence or business (for example a shop or café) and accessory units are for use within a principal unit (for example a garage or car parking space).

Redevelopments have been divided into two categories to clarify how these are to be approached. The first being adjustments between units that do not affect common property or other units which will be able to be dealt with by allowing an amendment to the unit title plan being lodged rather than a completely new redevelopment plan. The second category relates to all other variations which will require a redevelopment plan supported by special resolution being lodged with the new plan replacing the existing unit plan. The category of redevelopment plan is a new concept as the 1972 Act required all redevelopments to deposit a new unit plan.

Promotion of sound property management processes for body corporates.

The Bill provides for four new funds to be established. Two are mandatory and two are optional.

The funds are as follows:

(i)   Operating Fund (mandatory) – fund for meeting annual needs of the body corporate
(ii)   Long Term Maintenance Fund (mandatory) – fund to cover budgeted maintenance
(iii)   Contingency Fund (optional) – fund for unbudgeted expenditure and in excess of anticipated matters covered by long-term maintenance fund (iv)  Capital Improvement Fund (optional) – fund for improving or upgrading the unit title development

Unit entitlements will be defined in two categories being “ownership interest” and “utility interest”. The ownership interest will be determined by reference to the value of the unit compared to other units. The ownership interest will determine matters such as beneficial interests in common property, voting rights and capital fund improvement levies. The “utility interest” will be will be the same as the ownership interest and used to determine matters such as unit contributions to the long-term maintenance fund, optional contingency fund and the operating account.

Body corporates will be required to develop long-term maintenance plans to ensure the capital value of the development is maintained. The plan must cover a term of least 10 years.

The ownership of common property by the body corporate and the widening of management and responsibility for repair and maintenance to include building elements and infrastructure affecting more than a single unit will mean it will be the responsibility of the body corporate to fix such matters rather than the affected unit owner.

Body corporate rules will be prescribed by regulation (subject to any alterations to those rules lodged with the unit plan) and no longer contained in schedules to the Act as in the 1972 legislation.

Easier decision making processes by body corporate

A new process for making decisions will be introduced. Instead of the requirement of unanimity in body corporate decision making as required in the current legislation it will be based on a special resolution being 75% of those who vote at a body corporate meeting.

Introduction of disclosure requirements

There will be new disclosure requirements introduced for purchasers, unit owners, and body corporates. For example purchasers of unit title properties will be entitled to request information from the vendor prior to entering into a contract and prior to settlement of the transaction such as, body corporate rules, audited accounts and maintenance plans. Further, a purchaser will be able to cancel a contract for purchase if a vendor does not meet disclosure requirements on time.

Improved dispute resolution processes

A new disputes resolution process will be implemented which will enable disputes to be dealt with more quickly, in a more appropriate manner and at less expense through the Tenancy Tribunal by way of mediation or adjudication rather than solely through the courts.

Disputes involving claims up to the value of $50,000 will be heard by the Tenancy Tribunal with any claims between $50,000 and $200,000 being dealt with by the District Court and any claims over $200,000 and title matters being dealt with by the High Court.

Application and Transition period

The Bill will apply to all existing and future unit title developments.

There will be a 15 month transition period in respect of the body corporate operational rules, the establishment of a long-term maintenance plan and fund and body corporate duties of repair and maintenance, unless a body corporate elects by special resolution to adopt the legislation earlier.

By Rosemary Sharp

For any questions on the Unit Titles Bill, please e-mail Rosemary here.