This page explains many of the things you need to know about bodies corporate - what a body corporate is, how a body corporate operates and what you need to look out for when buying into a body corporate. We also explain the maintenance regime and answer many frequently asked questions related to unit title developments and bodies corporate.
At HOBANZ we offer a range of consulting services to assist committees and owners to plan and execute remedial projects and to deal with issues that arise around governance and body corporate management. If you do not find what you are looking for on our website please email or call us to discuss your situation.
In this section you will find:
- What is a Body Corporate?
- Owning in a Body Corporate
- Governance and Management
- Long Term Maintenance Plan (LTMP)
A body corporate, often referred to as a strata title or unit title development, is a unique feature of the unit title scheme and consists of all the owners of the units acting as a group. If you own a property that is in a body corporate, you are part of that group.
A body corporate has two main duties:
- To organise and maintain all buildings and other improvements; and
- To keep the common property in a good state of repair.
A body corporate has rules, which govern the unit owners' relationships with each other and with third parties. The body corporate also has duties that apply under its rules. Rules are based on the Unit Titles Act 2010 but can vary with each body corporate.
In large complexes a body corporate manager or management committee may be employed to carry out the body corporate's duties.
Within a body corporate, members own their dwelling (which is called a principal unit) and may own accessory units (car parks, storage lockers and courtyards). Areas such as grounds, gardens, internal halls and stairs in blocks are common property and are owned by all the owners collectively. The exterior of all buildings, including the roof, may be within the unit or part of the common property.
What is a Unit Title?
A unit title is a type of subdivision of a unit plan used to allow individual ownership of parts of a single building or separate buildings within a complex. It is similar to other property in that it can be bought and sold, or leased or mortgaged, but unlike other forms of title, a unit title is made up of three parts:
- Ownership in the particular unit and accessory units
- An undivided share in the ownership of the common property
- An undivided share in the ownership of the units if the unit plan is cancelled
Living in a Body Corporate
Body corporate rules are essential to ensure the smooth running and management of the body corporate. It is important that owners, and their tenants, as well as prospective buyers are aware of what is set out in these rules. Not all bodies corporate have body corporate rules. If a property does not have body corporate rules, the rules in the Unit Titles Regulations 2011 apply:
- An owner or occupier of a unit must not:
- damage or deface the common property:
- leave rubbish or recycling material on the common property:
- create noise likely to interfere with the use or enjoyment of the unit title development by other owners or occupiers:
- park on the common property unless the body corporate has designated it for car parking, or the body corporate consents:
- interfere with the reasonable use or enjoyment of the common property by other owners or occupiers.
- An owner or occupier of a unit must dispose of rubbish hygienically and tidily.
The purpose of body corporate rules is to uphold a good standard of living for all owners and a good body corporate will implement these rules fairly. While some body corporate rules may appear trivial, they set out standards for:
- How the upkeep of the property will be carried out so the maximum value of each property is maintained.
- Acceptable use of the buildings.
- Noise levels.
- Rubbish removal.
- Types of pets allowed.
The rules also cover the management and governance of the body corporate including:
- The duties of an owner.
- The powers and duties of the body corporate.
- An outline of powers that can be delegated to an owner’s committee.
- Running of general meetings.
Typically, an owner's obligations will be to:
- Grant the body corporate access to your unit at reasonable times for purposes set out in the Act.
- Comply with the body corporate rules.
- Pay all required funds to the body corporate on time.
- Repair and maintain your unit so there is no damage or loss in value to neighbouring units or common property.
- Not carry out any structural changes to the unit without written consent of the body corporate.
- The Financial Wrecking Ball- learn about the legislative environment (Unit Titles Act) for bodies corporate
- Body Corporate Chairman duties - Unit Titles Regulations 2011
- Body Corporate Rules - Unit Titles Regulations 2011
- Unit Titles Regulations 2011
Body Corporate Chairperson
The Unit Titles Act 2010 introduced the new role of body corporate chairperson (chairperson), who must be elected by the body corporate at every annual general meeting. It is a requirement of the Act that the chairperson must be an owner.
The role of chairperson has clearly defined duties in accordance with the Unit Title Regulations:
- Maintain the register of unit owners.
- Prepare the agenda for each general meeting.
- Chair each general meeting (unless it is agreed at the start of the meeting that another person will chair).
- Prepare minutes of each general meeting.
- Record resolutions voted on and whether they were passed.
- Keep financial accounts and records.
- Submit the body corporate’s financial statements to an independent auditor.
- Receive reports from the body corporate committee and distribute them to unit owners.
- Sign documents on behalf of the body corporate.
- Prepare and issue notices of resolutions to be passed without a general meeting.
- Notify unit owners of the result of any vote on a resolution to be passed without a general meeting.
- Notify the body corporate committee of any delegation of a duty or power to the body corporate committee.
- Undertake any other duties relating to the administration of the body corporate that the body corporate has decided by ordinary resolution to confer on the chairperson.
The body corporate can choose to delegate some or all of these tasks either to the body corporate committee or to a body corporate manager under a contractual arrangement. If employing a body corporate manager it is important to set out clearly within the contract exactly what the manager is expected to do.
For the sake of efficiency there seems little point in the Chairperson not being part of the body corporate committee. In many cases the Chairperson will also chair the committee and the meetings.
If the sitting Chairperson sells their unit, they must give notice of their intention to resign from the post of Chairperson. The Chairperson can resign at any time giving notice in writing to the body corporate. As the role of Chairperson is a requirement of the Act, following resignation or removal, the position must be filled as soon as possible. Any owner, including directors of company owned units and trustees of trust owned units, within the body corporate are eligible to be elected to the role of Chairperson as long as they are nominated by another unit owner and agree to be nominated.
Under the new Unit Titles Act all bodies corporate must have a long term maintenance plan (LTMP) in place. The LTMP must be for a minimum of 10 years and reviewed every two years. You should be very wary of maintenance plans that are prepared for the minimum of 10 years as there may be some significant maintenance that falls just outside of the 10 year period that has been assessed. We say that a prudent body corporate ought to have a 30 year maintenance plan and build adequate maintenance reserves in their Long Term Maintenance Fund to fully fund the LTMP over the years. You must apply extreme caution when analysing the financial records and the LTMP to ensure that not only is the LTMP adequate, but that the body corporate has built up adequate reserves otherwise you risk assuming a significant contingent liability if you buy the unit.
Who Pays for Maintenance?
Everyone who owns a property in a body corporate is responsible to pay for maintenance and repairs. For more details of exceptions to this, please see read Who Pays for Maintenance in a Body Corporate?