These articles and Q&A are about the new QLD strata regulation modules which came into effect on 1 March 2021.
Table of Contents:
- Question: As QLD caretakers, we are 12 years into our 25 year agreement. An owner has put forward a motion to change from an accommodation to a standard module. Can we challenge this?
- Question: Our unit is under the Accommodation Module. Shouldn’t we be a Standard Module? Are there benefits to the Accommodation Module we’re unaware of?
- Question: Do the new Strata Regulation Modules in Queensland cover just the BCCM module or does it also now embrace the BUGTA module?
- ARTICLE: Getting Ready for 1 March – Sweat the small stuff
- ARTICLE: QLD Legislation Changes: Strata Regulation Modules – Insurance
Question: As QLD caretakers, we are 12 years into our 25 year agreement. An owner has put forward a motion to change from an accommodation to a standard module. Can we challenge this?
We are caretakers of a QLD complex and our agreement is currently at 12 years (out of 25) in an Accommodation module complex.
A disgruntled owner has put a motion forward to change the module to the Standard module. We know that this will affect our ability to sell whilst this is on the table, but what would the module change mean to residents? Approximately 20% of the residences are rentals, plus we have a number of lockups (owners who live overseas).
Are there any strategies that have been successfully deployed to mitigate or defeat such a motion?
Answer: The biggest changes would be your caretaking and letting agreement will be capped at 10 years and you will need to get some advice about how this affects you.
This is something we’re seeing a lot of lately. I’m seeing a big shift where committees are looking at changing their regulation module. There are some requirements that I think should be factored into what module is appropriate for the scheme and that is something that individual schemes should get some legal advice on.
Generally your short term holiday letting style high rises with predominantly leased lots is more tailored towards your accommodation module where your townhouse Villa style mainly owner occupier lots he’s genuinely targeted towards your standard module.
What are the repercussions for owners? Not a huge amount apart from the biggest kick being that the caretaking and letting agreements are capped at your 10 years. As your term is currently at 12 years, you should certainly get some legal advice about what implications that change could have on your agreement.
In terms of challenging it, it’s an owner submitted motion. It should be included on the agenda and that’s what is required of the committee. The question for both the committee residents and yourself as a caretaker is whether there will be any grounds to challenge that motion, whether it’s on the grounds of unreasonability, or whether it’s on the grounds that it conflicts with the act or the module again. Unfortunately, that’s something that you would need to get some independent legal advice about.
Question: Our unit is under the Accommodation Module. Shouldn’t we be a Standard Module? Are there benefits to the Accommodation Module we’re unaware of?
I have just discovered that the Unit we bought 12 months ago, is under the Accommodation Module. Yet, the majority of units in the complex are owner/occupied. Only one is rented.
There’s no letting agent on site and it was never promoted or marketed as an investment or rental purchase.
Shouldn’t we be a Standard Module? Why would a developer allow this? Are there benefits to the Accommodation Module we’re unaware of? I realise the module can be changed, but that’s not the point.
Answer: Generally the Accommodation Module is preferred by developers as it allows for a longer period for service contractors to be engaged and has a few less minor administrative burdens that Standard Module building are faced with.
Section 3 of the Accommodation Module sets out the criteria for being in the Accommodation Module. This can come down to the intention of the original owner to have tenanted lots at the time of registration.
Generally the Accommodation Module is preferred by developers as it allows for a longer period for service contractors to be engaged and has a few less minor administrative burdens that Standard Module building are faced with.
This post appears in Strata News #494.
Question: Do the new Strata Regulation Modules in Queensland cover just the BCCM module or does it also now embrace the BUGTA module?
Answer: The module changes only relate to the BCCMA regulated buildings. There have been no changes made to BUGTA (or alternative strata legislation).
This post appears in Strata News #463.
Getting Ready for 1 March – Sweat the small stuff
The March 1 Strata Regulation Modules changes cover multiple amendments to the Body Corporate legislation.
Headline items such as changes to the quorums and electronic voting will capture most people’s attention, but there are also a number of smaller changes that can impact the way your building is run. Look out for the new rules below:
We have created a handy summary Factsheet of the Reforms for quick reference. You can download the pdf here.
Owners must now provide roll update information to the Body Corporate (including lease details and the sale of a lot) within one month.
The Body corporate has 14 days to update the details received on the roll.
Implication: This is important for new purchasers and owners with tenants. New buyers who don’t update their details can’t complain if they are charged late fees for unpaid levies if they haven’t provided their contact details. Owners and agents need to keep tenant details up to date. If tenants need to be contacted and details aren’t available owners could be to blame.
Modules affected: standard, accommodation, commercial, small scheme.
Insurance is no longer subject to the Committee spending limit.
Implication: Committees can now select and approve an insurance policy for their scheme. This regulation tidies up what is already a common practice at many schemes. It reflects the reality of the insurance market where renewals don’t always fall in line with meetings and quick decisions are sometimes required to be made.
Modules affected: standard, accommodation, small scheme.
VOCs or VOCMs (vote outside a committee meeting):
VOCs must now be decided within 21 days of issue or the motion will expire. If there have not been enough ‘yes’ votes to pass a motion the motion will be considered defeated.
Implication: Previous legislation allowed for the VOC to be issued but no conclusion reached. VOCs will now provide a definitive answer within 21 days. Committees need to be aware that if they don’t respond the motion may be defeated. While this may be appropriate, it also allows owners to challenge that decision.
Modules affected: standard, accommodation, commercial.
Committee member financial status:
If a committee member has a debt to the body corporate they are unfinancial and cannot vote at a meeting or via a VOC.
Implication: To be active, committee members need to stay up to date with their payments. Arrears will need to be checked before each meeting. Note that even if the member can’t vote their presence at the meeting still counts towards the quorum.
Modules affected: standard, accommodation, commercial.
Body Corporate Manager to receive documents:
A body corporate manager is now permitted to receive documents on behalf of the Secretary.
Implication: While this is already common practice it clarifies the procedure. Claims that voting papers may be challenged as they were sent to the BCM rather than the secretary are no longer valid.
Modules affected: standard, accommodation, commercial.
Body corporate contractors now have to declare any commission they receive and the amount of that commission.
Implication: this is a welcome transparency change for the industry that allows owners to clearly see the value of commissions received by agents while working on owners’ behalf.
Modules affected: standard, accommodation, commercial, small schemes.
For more information please go to the BCCM website.
QLD Legislation Changes: Strata Regulation Modules – Insurance
On 1st March 2021, new regulations made under the Body Corporate and Community Management Act 1997 (Qld) (BCCM Act) will take effect.
The changes include:
- Changes to the major spending limit which allow the committee to spend above the limit for committee spending to incept or renew an insurance policy. If the cost of the insurance policy exceeds the major spending limit, the committee must supply two insurance quotes. The committee will not be allowed to exceed the major spending limit if arrangement of insurance is a restricted issue which is an issue reserved, by ordinary resolution of the body corporate, for decision by ordinary resolution of the body corporate.
- If a body corporate is considering entering into a contract for the supply of goods or services, under which under another contract or arrangement a relevant person (being a body corporate manager or caretaking service contractor) is entitled to receive a commission, payment or other benefit, then that relevant person is required to give written notice to the body corporate disclosing the benefit including the monetary amount (if applicable). Whilst benefits are currently required to be disclosed, this reform introduces stricter arrangements as to notices disclosing the specific monetary amount. ‘Generic’ disclosure by way of generic descriptions or percentages will no longer be sufficient.
We also wanted to take the opportunity to answer some common questions posed by owners regarding existing strata legislation.
- What is the minimum insurance required for body corporate? The BCCM Act requires the body corporate to insure common property and body corporate assets for full replacement value for “damage”, defined in strata legislation. The body corporate is also required to insure to full replacement value, all buildings created under a standard format plan of subdivision where in one or more cases a building on one lot has a common wall with a building on an adjoining lot. The body corporate is also required to insure Public Liability for a minimum of $10,000,000.
- Can I insure my lot separate to the body corporate insurance policy? Buildings that do not have common or shared walls are not required to be insured under a strata policy. In such cases an owner is entitled to insure their property under a separate policy (such as home and contents or landlords) but it must be noted that the body corporate will still be required to insure any common property and public liability.
- Who pays the excess in insurance claims? Legislation does provide some flexibility on who pays the excess in circumstances where the body corporate believe it is unreasonable for a certain party to pay the excess. For claims affecting one lot only, the excess is paid for by the lot owner unless the body corporate decides it is unreasonable in all the circumstances for the owner to pay the excess. For an event affecting two or more lots, or one or more lots and common property, the body corporate is liable to pay the excess unless the body corporate decides it is reasonable in all the circumstances for the excess to be paid for by the owner of a particular lot, or to be shared between owners of particular lots, or between the owner of a lot and the body corporate, or between owners of particular lots and the body corporate
- Am I required to get an insurance rebuild valuation for my property? The BCCM Act requires every five years, the body corporate to obtain an independent valuation stating the full replacement value of the building that are required to be insured.
- A lot owner in a commercial property occupies their lot in a way that increases the premium for all owners. Can premiums be allocated in a way different to the proportion of building sum insured? Yes, the body corporate is able to adjust the premium payable by a lot owner that fairly represents the proportion of premium payable attributable to activities carried on the owner’s lot. For example, if a building would normally cost $5,000 to insure but due to a lot owner occupying the building with high hazard activities the premium is $7,500, the body corporate may require that lot owner to pay the $2,500 difference in addition to their standard insurance contribution.
This information is of a general nature only and neither represents nor is intended to be personal advice on any particular matter. Shandit Pty Ltd T/as Strata Insurance Solutions strongly suggests that no person should act specifically on the basis of the information in this document, but should obtain appropriate professional advice based on their own personal circumstances. Shandit Pty Ltd T/As Strata Insurance Solutions is a Corporate Authorised Representative (No. 404246) of Insurance Advisernet Australia AFSL No 240549, ABN 15 003 886 687.
This post appears in the March 2021 edition of The QLD Strata Magazine.
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