Question: What can owners do if a developer buys most lots and may use voting power to force special levies or a collective sale?
I am an owner in an older Queensland community titles scheme. A developer has acquired close to 60% of the lots. The building was recently certified as structurally sound.
Can the developer use their voting power at the next AGM to push through a large special levy, forcing owners to consider selling? Do recent changes to the Body Corporate and Community Management Act 1997 (the BCCM Act) mean a developer may only need 75% ownership to acquire the remaining lots, resulting in lower compensation for the remaining owner?
What options do owners have, and what steps can we take to protect ourselves from a developer using voting power in a way that disadvantages minority owners?
Answer: If the maintenance work is required and must be done, and the money is raised from lot owners to do it, then there is a very dangerous trap waiting for a developer who does not follow through and spend the money to do the work.
Property rights must always be considered against the backdrop of community need. When the balance is not right, Parliament will take action. The BCCM Act was changed to allow for a 75% vote on an ‘economic reasons’ termination (of the community titles scheme) where it is not, or will not be within 5 years, ‘economically viable for the body corporate for the scheme to carry out repairs and maintenance to any property or assets the body corporate must maintain in good or structurally sound condition’.
In Queensland, if bodies corporate and lot owners comply with their mandatory and very strict maintenance obligations, theoretically, a community titles scheme building could last forever. The maintenance standards differ for different building elements, from maintenance in a ‘structurally sound condition’, to maintenance in ‘good condition’ (which includes structurally sound condition).
The new termination provisions recognise that buildings cannot be repaired and maintained in an economically viable (or sensible!) way forever. There comes a point at which, for example, the site value of the entire community titles scheme exceeds the sum of the values of each unit. That is usually because the whole scheme makes more economic sense to redevelop than to try to ‘fix up’.
Whether it’s a developer calling for maintenance work, or just a group of ‘normal’ owners, the questions are the same:
- is the work required,
- is it required to be done by the body corporate,
- is the works cost a market price and
- is the way that the money is raised to pay the costs fair and reasonable?
If one or more of the answers to these questions are ‘no’, concerned lot owners should seek dispute resolution under Chapter 6 of the BCCM Act ASAP after the vote. If, by voting as they did, the majority has done the wrong thing, the result is liable to be overturned, as occurred with the majority owner in The Bantry [2023] QBCCMCmr 103.
If the maintenance work is required and must be done, and the money is raised from lot owners to do it, then there is a very dangerous trap waiting for a developer who does not follow through and spend the money to do the work. If a developer plans to ‘deep pocket’ owners through the issue of large levies, but never to spend those levies for the purposes for which they were raised, then the developer may be engaged in a ‘fraud on the power’ or ‘fraud on the majority’. Those doctrines are explained in the context of community titles schemes in Dindas & Anor v Body Corporate for One Park Road CTS 2114 & Ors [2006] QDC 302 and Body Corporate for Palm Springs Residences CTS 29467 v J Patterson Holdings Pty Ltd [2008] QDC 300.
A body corporate agreeing to borrow money to fund works is generally accepted as a way to ease the financial burden on owners. The issue with maintenance works is that they typically must be done ‘now’ and paid for when completed. Any special levy raised to pay for them has to be based on those requirements. A loan, on the other hand, can be repaid over (for example) 5 years, greatly lessening the adverse cash flow impacts on owners. While the required level of approval for a loan is high (usually a resolution without dissent or special resolution), it still makes sense for ‘ordinary’ (non developer) owners to get a loan proposal together for the works, and get a motion to approve the loan onto the agenda of the general meeting when the works are being considered. If the loan is not approved but the works (and special levy) are, then the ‘normal’ lot owners have the option of seeking to overturn the ‘no’ vote as unreasonable (or perhaps even because it was based on fraud, a power or minority).
The largest remaining issue is whether it is normal owners are better to band together or work out their own solutions separately. Every building, community titles scheme and situation will be different. That said, it’s typically easier for owners to try to block redevelopment if they stick together. Still, the corollary is that it’s also easier for the developer to negotiate with them as a group. Individuals can potentially maximise their personal returns if they act as individuals (see my article Gaming the housing crisis: Can Queensland legislate unit owners out of a Nash Equilibrium? noting that its yet to be seen if the result stays the same under a ‘economic reasons’ termination), but they also risk being left with the ‘hot potato’ at the end of the game (negotiations and/or court), if the rest of the owners sell out.
Any lot owner faced with this scenario should get legal and financial advice based on their particular circumstances and situation. Given the stakes, let alone the stress, that is money well spent.
© 2026 Bugden Allen Legal Group Pty Ltd, ⓗ humans only; no AI was used to create this response
This post appears in Strata News #784.
Michael Kleinschmidt
Bugden Allen
E: michael.kleinschmidt@bagl.com.au
P: 07 5406 1280
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