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How Does The Body Corporate And Community Management Act 1997 (Qld) “bccma” Affect The Contract?

Sunset Date An off-the-plan contract will usually contain a sunset date which is the date by which settlement must have occurred. The Contract will generally stipulate that if a settlement has not occurred by the sunset date, either party may terminate. Under the Body Corporate And Community Management Act (BCCMA), if the parties to a […]

How Does The Body Corporate And Community Management Act 1997 (Qld) “bccma” Affect The Contract?

How Does The Body Corporate And Community Management Act 1997 (Qld) “bccma” Affect The Contract?

By Aylward Game - Sep 9, 2021 Property Law

Sunset Date

An off-the-plan contract will usually contain a sunset date which is the date by which settlement must have occurred. The Contract will generally stipulate that if a settlement has not occurred by the sunset date, either party may terminate. Under the Body Corporate And Community Management Act (BCCMA), if the parties to a Contract have specified a sunset date, the settlement must occur by the earlier of that date and the date which is five and a half years after the date on which you enter into the Contract or you will be able to terminate.  If it does not contain a sunset date, you will be able to terminate the Contract if a settlement has not occurred by the date that is three and a half years after the date on which you enter into the Contract.

Under the Body Corporate And Community Management Act (BCCMA), the Seller has no right to extend the sunset date.  If you request a settlement date extension until a date that is after the sunset date and the Seller agrees, the sunset date will be extended to that date.

Our Contract and Property Report will set out details of how the Contract deals with the sunset date.

  • Settlement Date

Under the Body Corporate And Community Management Act 1997 (Qld), a contract for the sale of a proposed lot is deemed to include a term providing that, despite anything else in the Contract, a settlement must not take place earlier than 14 days after the Seller gives advice to the Buyer that the scheme has been established or changed.

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Our Contract and Property Report will set out details of how the Contract deals with the settlement date.

  • Seller Disclosure Obligations

The Seller is obliged to make certain disclosures to a Buyer prior to entering into a contract for the sale of an “off the plan” lot.  The disclosure statement must:

  • Be given before the Contract is entered into
  • Contain the information set out below in paragraph 6.4
  • Be signed by the Seller; and
  • Be substantially complete.
  • Content of Disclosure Statement

The disclosure statement contains information about the CTS which directly or indirectly affects your proposed lot and the financial obligations that come with ownership of a lot in the CTS, once established.

The Disclosure Statement must:

  • Identify the proposed lot;
  • Be accompanied by a disclosure plan prepared by a cadastral surveyor (the contents of which are specified below in paragraph 6.5);
  • State the period within which the Seller must settle;
  • State the amount of annual contributions reasonably expected to be payable to the body corporate by the owner of the proposed lot;
  • Include details about the engagement of any body corporate manager or service contractor for the scheme proposed to be entered into after the establishment of the scheme or proposed to be continued or entered into after the scheme is changed (including the terms of the engagement, the cost to the body corporate and the proportion of the cost to be borne by the owner of the proposed lot);
  • Include details of any authorisation of a person as a letting agent for the scheme proposed to be given after the establishment of the scheme or proposed to be continued or given after the scheme is changed (including the terms of the authorisation);
  • Include details of all body corporate assets  proposed to be acquired by the body corporate after the establishment or change of the scheme;
  • Be accompanied by the proposed community management statement for the scheme and (if applicable) any proposed community management statement for any higher scheme of which the scheme is a subsidiary scheme;
  • Identify the regulation module proposed to apply to the scheme, and
  • Include other matters prescribed under the regulation module applying to the scheme.
  • Disclosure Plan

The disclosure plan, which the Seller must deliver with the disclosure statement, must contain the following particulars:

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For a proposed lot to be created by a building format plan:

  • The proposed lot number;
  • The lot’s total area;
  • Identification of any parts of the lot proposed to be outside the proposed primary structure in which the lot is to be contained, including any proposed balcony, courtyard, or carport;
  • The lot’s proposed floor level;
  • Identification of other lots and common property proposed to be on the same floor level in the proposed primary structure in which the lot is to be contained; and
  • Identification of the proposed orientation of the lot by reference to the north;

For a proposed lot to be created by a standard format plan:

1. The proposed lot number;

2. A description of the dimensions of the lot as bearings and distances;

3. If the Seller of the lot intends that before settlement a building be constructed on the lot by the Seller or another person under an arrangement procured by the Seller:

  • The location of the building on the lot;
  • The total area, and number of levels, of the building; and
  • Identification of any features proposed to be constructed on the lot, including, for example, any proposed driveway, carport, courtyard, or pergola;

4. Identification of the proposed orientation of the lot by reference to the north;

5. If there is operational work for the lot:

  • Contour maps of the lot showing the surface contours, with appropriate contour intervals, as at the completion of the work;
  • The location and height of any retaining walls that are part of the work (and if it varies, the lowest and highest points and an average height);
  • The areas of the lot to be cut or filled as part of the work; and
  • Information about any fill that is part of the work, including the depth of the fill, whether compaction will be in accordance with the relevant Australian Standard (and if not, the nature of departure from the Standard), and the level of inspection and testing services carried out; and

if there is no operational work for the lot, contour maps of the lot showing the existing surface contours, with appropriate contour intervals; and for a proposed lot to be created by a volumetric format plan:

  1. The proposed lot number;
  2. An isometric representation of the lot;
  3. The area of the lot’s projected footprint;
  4. The level of the ground surface in approximate values for illustrating the lot’s location in relation to that level;
  5. Identification of the proposed orientation of the lot by reference to the north; and
  6. If the lot is proposed to contain a building or to be located in a building:
    • The lot’s proposed floor level; and
    • Identification of other lots and common property proposed to be on the same floor level in the building.

Community Management Statement (“CMS”)

The CMS is the constitution for the scheme and all lot owners and occupiers must comply with it.

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The CMS contains the following information (where applicable):

  • The name of the scheme and the body corporate;
  • The regulation module applying to the scheme;
  • For all lots in the scheme, the contribution schedule lot entitlement (“CSLE”) and the interest schedule lot entitlement (“ISLE”);
  • In relation to the CSLEs, a statement about the contribution schedule principle on which the CSLEs have been decided and:
    1. if decided in accordance with the equality principle and the lot entitlements are unequal, explain why they are unequal; or
    2. if decided in accordance with the relativity principle, details about how the individual contribution schedule lot entitlements for the lots were decided;
  • In relation to the ISLEs for the lots in the scheme, a statement that they reflect the respective market value of the lots or an explanation about why the ISLEs do not reflect the respective market values of the lots;
  • An explanation of the development of the scheme land where it is intended to be developed progressively and the development is not complete;
  • An explanation of the layered arrangement of CTSs where the scheme forms part of a layered arrangement;
  • The by-laws for the scheme;
  • A services location diagram identifying the location of basic utility services and details of statutory easements affecting the lots; and
  • Exclusive use or special rights over common property allocated to lots.

The CMS must be registered with the title to the common property for the scheme.  A draft of the CMS must accompany the disclosure statement.

  • Lot entitlements

The CSLE determines a lot of owners:

  1. The proportion of contributions to the total administration fund and sinking fund levies issued by the body corporate; and
  2. The value of the Buyer’s vote on a poll.

The CSLE must be consistent with either:

  • The equality principle; or
  • The relativity principle.

The equality principle requires that lot entitlements must be equal, except to the extent to which it is just and equitable for them not to be equal.

The relativity principle requires that lot entitlements must clearly demonstrate the relationship between the lots by reference to one or more of the following relevant factors:

  • How the Community Titles Scheme is structured;
  • Nature, features, and characteristics of the lots;
  • The purposes for which the lots are used;
  • The impact the lots may have on the costs of maintaining the common property; and
  • The market value of the lots.

The ISLE is used to determine a lot of owners:

  • Share of the costs of the insurance premium for some of the items insured by the body corporate;
  • Share of the common property;
  • Interest in any proceeds in the event of winding up the scheme.

Except where the transitional provisions apply, the ISLE must be consistent with the market value principle.

  • By-Laws – Schedule C

The by-laws for the Body Corporate are set out in Schedule C to the CMS.  The by-laws contain the rules for the day-to-day management and administration of the building.  You should read these by-laws as they will affect the way you live within the community environment of the development.

If after reading the by-laws there are any issues of concern to you please telephone us to discuss.

  • Body Corporate Records Search

It is imperative that a search of the body corporate records be undertaken after the scheme is established or changed.  The search may:

  1. Assist in verifying the accuracy of the information contained in any disclosure statement;
  2. Provide you with details of body corporate contributions and insurances;
  3. Provide you with information regarding the current balances of the administration and sinking funds of the body corporate which are used by the body corporate to meet recurrent and regular expenditure and capital expenditure respectively; and
  4. Provide information about matters the body corporate has dealt with including disputes, defects, repairs, approvals for works, and alterations.

As time limits will apply in relation to any rights you may have to terminate the Contract if the search reveals anything adverse, the search must be undertaken immediately after the scheme is established or changed and relevant body corporate meetings have been held.

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  • Termination Rights

You may be entitled to terminate the Contract in the following situations:

Material prejudice further statement – Body Corporate And Community Management Act (BCCMA) s.214(4)

CORPORATE AND COMMUNITY MANAGEMENTIf the Seller becomes aware of any information contained in the disclosure statement that is inaccurate, the Seller must give you a further statement rectifying the inaccuracies at least 21 days before settlement.

If you are materially prejudiced by a further disclosure statement or an inaccuracy in the disclosure statement then you can terminate the Contract by giving notice to the Seller within 21 days after the Seller provides the further statement.

  • Material prejudice without further statement – Body Corporate And Community Management Act (BCCMA) s.214(6)

If the Seller does not comply with its obligation to give a further statement (as required above), you can terminate the Contract by giving notice to the Seller before settlement if you are materially prejudiced given the extent of the Seller’s disclosure statement’s inaccuracies.

  • Inaccurate disclosure – Body Corporate And Community Management Act (BCCMA) s.217

If:

  1. The CMS recorded for the scheme is different from that which has been disclosed to you;
  2. A CMS to which the CMS for the scheme is subject is different from that which has been disclosed to you;
  3. The CMS does not include required information about lot entitlements, or
  4. Information disclosed in the disclosure statement as rectified by any further statement is inaccurate,

and you are materially prejudiced by the difference or inaccuracy you may terminate the Contract.  In such circumstances, a notice of termination must be given by the last of:

  1. 3 days before you are required to settle;
  2. 14 days after the Buyer is given notice of the establishment of the Scheme, and
  3. Another day agreed between the Buyer and the Seller.
  • Inaccurate disclosure specific to CSLE and ISLE – Body Corporate And Community Management Act (BCCMA) s.217A

If:

  • Acting reasonably, you believe:

    1. CSLEs have not been calculated in accordance with the principle on which they are proposed to be decided – equality or relativity; or
    2. ISLEs have not been calculated on the market value principle; and
  • You reasonably believe you would be materially prejudiced if compelled to complete, you may, prior to settlement, but not later than 30 days after the date you receive a copy of the Contract, terminate by notice in writing, stating the Contract is terminated under section 217A.
    • The settlement does not occur within a particular period –

      Body Corporate And Community Management Act (BCCMA) s217B

    As noted above, under the BCCMA, if the parties to a Contract have specified a sunset date for settlement of the Contract, a settlement must occur by the earlier of the stipulated date and the date which is five and a half years after the date on which you enter into the Contract or you will be able to terminate.  If the Contract does not contain a sunset date, you will be able to terminate if the Seller has not delivered the transfer of the lot to you by the date that is three and a half years after the date on which you enter into the Contract.

    • Implied warranties are given about the body corporate – Body Corporate And Community Management Act (BCCMA) s.223

    The BCCMA implies in the Contract certain warranties by the Seller, including that:

    1. To its knowledge there are no latent or patent defects in the common property or body corporate assets;
    2. The body corporate records do not disclose any defects in the common property or body corporate assets;
    3. To its knowledge there are no actual, contingent or expected body corporate liabilities that are not part of its normal operating expenses other than those disclosed in the Contract;
    4. The body corporate records do not disclose any liabilities other than those which are part of its normal operating expenses or disclosed in the Contract; and
    5. As at settlement, to its knowledge, there are no circumstances other than those disclosed in the Contract in relation to the affairs of the body corporate likely to materially prejudice the Buyer.

    You may terminate the Contract up until three days before the due date for settlement if, at the time you terminate, there is a subsisting breach of any of the above warranties.  You also have an ongoing right to damages if there is a breach of any of these warranties.

    If you think you have a right to terminate under any of the above sections and wish to exercise that right, please contact us immediately.

    • Budget and related financial information

    The budget must disclose the total estimated body corporate expenses for the whole scheme for the first year following the establishment of the scheme.  The budget is an estimate of the contributions that are payable for the first 12 months of the scheme and is indicative of the budget that will be passed at the first general meeting of the body corporate after the establishment of the scheme.

    There is no guarantee against increases in the body corporate budget after the first 12 months of the term.

    The sinking fund contribution is an estimate of the annual contributions required in order to maintain a fund for the ongoing capital maintenance associated with the buildings within the scheme.  Under the Body Corporate And Community Management Act (BCCMA), the original owner is required to prepare a Sinking Fund Analysis and present it to the body corporate at the first annual general meeting.

    The Sinking Fund Analysis then dictates the sinking fund levy that applies to the building for the next 10 years.

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    Annual contributions to the sinking fund from the commencement of the scheme are intended to ensure that when major painting and repair work is required, the body corporate has collected sufficient funds in order to undertake the work required and does not have to issue a special levy at that point in time.  The sinking fund may need to be revised upon receipt of the Sinking Fund Analysis.

    Details of the estimates of the lost contributions for the first year are set out in the Contract and Property Report.

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