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Lot Entitlements ± To Change or Not To Change, That is the Question«

In February 2010, redchip lawyers in this blog flagged proposed changes to body
corporate contribution lot entitlements by Gold Coast MP, Mr Peter Lawlor.

The ministerial release of February 24, 2010[1] stated,

The two views...

"... what this would mean is that an owner of a small one -bedroom place on a
lower floor at the back of a unit complex, for example, would not be required to
contribute as much towards common expenses as someone with a more
expensive place, such as a four-bedroom, top floor apartment with views...Once
passed in parliament, the new rules could be effective later on in 2010".

It remains our view that the price an owner initially pays for their lot accounts for such
differences. Once an owner is in possession of the residence or investment, the actual
day to day body corporate running costs are identical between lots with only some slight
differences. For example, if a lot has an additional balcony or balustrade length that
requires painting. As a result the contributions should be equal unless specific
circumstances exist for them not to be.

The proposal is ignoring this fact and instead focusing on merely seeking to regulate
speculative purchasers, named as 'astute buyers' who purchase with an intention to se ek
a change to the entitlements to increase the market value of a lot brought by lower
levies.

Ñtop Press Update -

In a speech on June 10, 2010 Mr Lawlor MP still states the government's intention to
make the system more fair by having it `
`

"The government doesn't think the balance is right so we intend to make

changes in the BCCM Act later this year. Changes we believe will make the
system more fair. For community titles schemes which have been subject to
contribution schedule lot entitlement adjus tment orders, the Government will
legislate for those schemes to be able to revert to their original method of
dividing body corporate fees before the adjustments were made." [2]
The Minister's office advises that Cabinet and the Qld Law Society are requesting a wide
and lengthy public consultation process to a draft bill later this year... the problem being
that there are not that many sitting days of parliament remaining.

What this means for you...

At present if you don't like the current unequal distribution in your scheme, you can
make an application to change the contribution lot entitlements, but you will have to
prove a case. This is usually by way of obtaining a supporting experts report that shows
that the prevailing scheme is not equal. It will be open to others to oppose your
application.

When the legislation will change, or if, is uncertain. What has not been released is the
detail of any reversal process. Presumably this will be decided from the consultation
process. It may be that any one lot owner in a scheme which has had contribution lot
entitlement orders made, may have an as-of-right basis for having the original
contribution scheme reinstated.

What you need to do...

Whether you should seek an adjustment now, or wait upon the proposed changes
depends upon your individual circumstances and we urge you to seek expert legal
advice. What we do agree with and advise, is the statement by Mr Lawlor that intending
purchasers of apartments and units conduct a proper and thorough due diligence prior to
purchase.

For more information...

Contact Stuart Harrigan at redchip lawyers on 07 3852 5055 or stuarth@redchip.com.au

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[1] "Bligh Government to make body corporate fees fairer"

[2] http://www.peterlawlor.com.au