The Queensland Government has called for submissions in regards to its review of the allocation and adjustment of lot entitlements in community titles schemes under the Body Corporate and Community Management Act 1997 (Qld) (BCCM Act).
Lot entitlements are used to govern voting rights of owners and to allocate expenses and liabilities to each lot owner within a community title scheme. In recent decades, the methods for allocating lot entitlements have undergone significant changes in an attempt to keep up with the growing number and complexity of community titles schemes in Queensland.
Since its inception, the allocation regimes under the BCCM Act have resulted in undesirable consequences for many owners. This was recognised in 2011 when owners were granted the right to apply for adjustment of lot entitlements which had the effect of creating inconsistencies and unfair distribution of costs and levies between neighbours.
The current Queensland regime has been reviewed in Issues Paper 2 of the Queensland Government Property Law Review.
Community titles scheme are currently required to have 2 lot entitlement schedules: the interest schedule (which determines an owner’s share of the common property) and the contribution schedule (which determines an owner’s share of costs for common areas).
Under the BCCM Act, developers may calculate contribution schedule lot entitlements by reference to either:
- An equality approach which divides costs equally between owners, or alternatively;
- A relative approach which takes into account a number of factors (such as market value or the purpose or characteristics of the lots etc).
Despite its intended flexibility, these wide parameters have often resulted in unjustified and controversial allocations between owners. The Issues Paper considers the pros and cons of the following options available for reform:
Click here to view table.
The BCCM Act was amended in 2011 to provide owners with the right to apply to the Queensland Civil and Administrative Tribunal (QCAT) for adjustment of lot entitlements.
The Issues Paper questions whether it is necessary to confer upon lot owners the open right to apply for an adjustment. It is suggested that the right to review be limited to circumstances where the lot entitlement is manifestly unfair or unreasonable due to exceptional circumstances.
The reform proposals for adjustment of lot entitlements include:
- Enforcing a percentage limit on the financial impact an adjustment order can have on all individual lot owners’ contribution schedule lot entitlements;
- Refusing remedy to an applicant who had actual or deemed knowledge of the lot entitlements at the time the lot was purchased;
- Enabling lot owners to agree on alternative methods of allocating expenses by a resolution or by-law;
- Requiring registered interest holders to consent to any adjustment.
The closing date for submissions is 14 March 2014.