20 February 2017

Queensland Body Corporate Law Reform: Could you be forced to sell?

The Queensland Government is considering law reform to the Body Corporate Community Management Act (“the Act”) that could force unit owners to sell their homes against their will if 75% of the owners in the scheme agree.

Under the current laws, termination of a community title scheme requires consent of all the owners in the scheme.  The rationale for the proposed changes is the problem that community titles schemes can face where the majority of owners want to sell (terminating the scheme), but one or two hold out preventing the entire sale.

A body corporate scheme might consider termination of the community title scheme where buildings have become old or are in disrepair and the cost to unit owners to fix the issues are not worth it considering the value of the lots.  It may also be the case that a scheme is approached by developers wishing to demolish the current buildings and redevelop the property.

The government property law review report, recommends that the Act include a prescribed procedure for schemes considering termination.  A 4­‑step process is proposed:

  1. Where a body corporate wishes to terminate the scheme for economic reasons (i.e. the building is old and in disrepair and requires costly repairs or upgrades) it will be required to collect ‘relevant information’ and give lot owners 90 days to consider this information.  The relevant information is to include expert reports and valuations for the property.
  2. The body corporate can then resolve (by majority) that there are economic reasons for scheme termination.
  3. The body corporate appoints a ‘facilitator’ (e.g. a property developer) to prepare a ‘termination plan’ which may include a collective sales agreement or a proposal for redevelopment.
  4. The termination plan is submitted to owners for consideration.  After 120 days, owners can vote at a general meeting of the body corporate whether to proceed with the termination of the scheme.  If 75% of the owners agree, the scheme will be terminated.

If the proposal to terminate the scheme is not for economic reasons (for example the termination of the scheme is based solely on the redevelopment potential of the land) all of the lot owners in a scheme will still be required to consent.  Additionally, it is proposed that there also be a mechanism to appeal the decision of the body corporate to terminate the scheme to the District Court.

Consultation on the proposed amendments is open to the public until 5 May 2017.

Download a copy of the Queensland University of Technology’s report on the matter here.

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