New Unit Titles Legislation now in Force


August 16 2011


New rules for body corporate and unit title holders

On 20 June 2011 the Unit Titles Act 2010 and the Unit Titles Regulations 2011 came into effect. The most widely understood form of a unit title is an apartment consisting of ownership of part of a building together with a share in the common property. Unit titles are used for retail and commercial properties, as well as hotels and apartment blocks, and are also commonly used in smaller two, three and four unit developments.

The new legislation has brought many changes to the unit titles regime, some of which are outlined below.

Common Property

The common property is now owned by the body corporate. Under the previous legislation the common property was owned collectively by all the unit owners.

Long-term maintenance plan and funds

Operating account: The body corporate must now establish and maintain an operating account to meet the expenses relating to the management and governance of the development, the provision of services and amenities for the benefit of the units, the costs associated with statutory compliance, any ground rental or licence fee relating to the base land, and the annual maintenance expenses.

This is not a significant change for large body corporates as they would generally already be running an account of this nature. For small developments however, for example a two unit development with no common property, it is unlikely that there would be an operating account. Contracting out of this is not an option; it is a statutory requirement.

Long-term maintenance plan: The body corporate must establish and maintain a long-term maintenance plan to cover at least a 10-year period. The plan should identify further maintenance requirements, estimate the costs involved and create a fund to pay for the long term maintenance. The plan must be reviewed at least once every three years.

Most large body corporates would have considered the long-term maintenance of the development so complying with this statutory requirement should not be too onerous. For small developments, however, this creates a new obligation to which they must comply.

Long-term maintenance fund: A body corporate must establish and maintain a long-term maintenance fund, unless the body corporate decides not to do so; this must be undertaken by special resolution. It is important that if a body corporate chooses not to establish a long-term maintenance fund a resolution recording that decision must be passed.

Disclosure statements are compulsory

Pre-contract disclosure to a prospective buyer: Before a buyer enters into an Agreement for Sale & Purchase for a unit the seller must provide a pre-contract disclosure statement to the buyer. This must include information on the body corporate levies, planned maintenance and how that is to be funded, details of money held by the body corporate, disclosure of any watertight home issues, the body corporate rules and other information about unit title ownership.

Pre-settlement disclosure to a prospective buyer: After the seller and the buyer have entered into an Agreement for Sale & Purchase, the seller must then provide the buyer with pre-settlement disclosure. This must include comprehensive disclosure about the body corporate levies and metered charges, including any outstanding debts, whether there are any unpaid costs relating to repairs to the building or infrastructure of the unit, penalty interest being charged by the body corporate, details of any proceedings pending against the body corporate in any court or tribunal, and any changes to the body corporate rules since the date of the previous disclosure. The disclosure must be provided no later than the fifth working day before settlement.

Additional disclosure: The buyer may request additional disclosure, at their own cost.

Consequences of failing to provide disclosure: If the seller does not give the pre-settlement disclosure statement and any requested additional disclosure statement to the buyer no later than the fifth working day before the settlement date the buyer may:

  • Delay settlement, or
  • Cancel the Agreement for Sale & Purchase by notice.

The seller, or a person authorised by the seller, must sign the disclosure statements and the buyer is entitled to rely on the information contained in the disclosure statements.

Operational rules

The default body corporate rules have been amended by the new legislation. Existing unit title developments have 15 months (from 20 June 2011 to 19 September 2012) to amend, revoke or make additions to their operational rules.

If this is not carried out, the new default rules will apply.

Insurance: a reminder

All unit title developments must be insured by the body corporate, and not by the individual owners. The individual owners should have insurance for their internal fixtures, fittings, chattels and contents which are not covered by the body corporate insurance. The new legislation has brought in major changes. If you run a body corporate or own a unit title property and need some guidance on how to comply with these new provisions, please be in touch.

NB: We have more on the management agreements required by this new legislation on our page “Buying and selling a unit title property: management agreements


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