Proposed legislation to change lot entitlements and body corporate charges - our view at Capitol

The Queensland Government announced plans last week to change the legislation relating to contribution levies for body corporate fees, in order to, in the words of Fair Trading Minister Peter Lawlor “prevent owners unfairly passing on their costs to others.”

Ian D’Arcy, director at Capitol Body Corporate, explains the situation:

The current position on contribution lot entitlements under the Body Corporate and Community Management Act 1997 is about to change, according to a media release issued last Friday by the Minister for Tourism and Fair Trading, the Honourable Peter Lawlor.

Rather than giving unit owners more certainty, the media release will be of great concern to many unit owners. However, that concern will pale into insignificance if the Minister goes ahead and introduces legislation along the lines proposed in the release.

Currently, all body corporate contribution lot entitlements are set or adjusted equally, except in circumstances where it is "just and equitable" for them not to be equal.

The Minister is apparently now proposing that in the case of a standard format plan, which applies to most town house style development contribution schedule lot entitlements will revert back to the provisions that were in place 20-years ago, that is, they will be based on the unimproved capital value of the town house properties. Value has no relevance whatsoever to the actual expenses of the body corporate.

In the vast majority of cases it is just and equitable for the lot entitlements for town houses in a complex to be equal. The majority of the problems with the current system relate to apartment buildings and there is really no reason for the Minister to fiddle with the lot entitlements for town house complexes.

The media statement then goes on to say that in the case of a building format plan, which is applicable to apartment buildings both low rise and high rise, developers will have to set them with regard to some legislative guidelines but there could be some scope to factor in market conditions and value.

The Minister says:

“Had the current legislation been properly applied this would have been the result. All that the Minister needs to do is to introduce some legislative guidelines for “just and equitable” and remove the presumption that the starting point for the calculation is that the entitlements are equal and the Minister will go a long way towards solving the current problems.”

The most disturbing part of the media release is the statement that the Queensland Government will allow those buildings and complexes which had lot entitlement adjustments made, to revert to their original method of dividing body corporate fees when the plan was registered.

In some instances unit owners and bodies corporate have been through a great deal of angst and have spent tens of thousands of dollars before the lot entitlements were adjusted. To suggest that might now be reversed with the stroke of a pen shows no regard for those buildings where owners are all happy with the adjustment or those owners who have been through enough and do not want to go back to where they started from.

There are a number ways in which the lot entitlement issue can be dealt with, without having to resort to old legislation and which would achieve a just and equitable outcome for all owners. Hopefully, the new legislation will be a more considered document than the media release.

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