Does your common property require improvement, but your Committee is unsure of their rights or the requirements imposed on it by law? Or is your Body Corporate aware of its obligations but requires guidance? At Nautilus Law Group, our team can assist your Committee or Body Corporate to make the correct choices of how to implement any common property improvements.
A Body Corporate cannot make improvements to common property without meeting particular requirements. It must also make sure that the correct procedures are undertaken to ensure it cannot be held liable.
Section 163 of the Body Corporate and Community Management (Standard Module) Regulation 2008 (“the Regulations”) allows for a Body Corporate to make improvements to common property. (Depending on your Body Corporate Scheme, you may be subject to an alternate Regulation Module. For purposes of outlining, in principle, the process across all Modules, we only refer to the Standard Module in this Article. If you have specific questions about a different Module and the Improvement Limits associated with each, please do not hesitate to contact our Team.)
Basic Improvement Limit
A Body Corporate can only make improvements to common property providing the cost of the improvement is not restricted by the monetary limit stipulated within Section 163 of the Regulations. Simply, the improvement must not exceed the basic improvements limit for the community title scheme.
The Regulations provide a definition of this limit as being $300.00 multiplied by the number of lots within the community titles scheme (“the Scheme”). For example if your Body Corporate has five (5) lots, that number (being five) is then multiplied by $300.00, which is $1,500.00. Should the improvement be equal to or less than this amount, the Committee does not require Body Corporate approval to resolve the improvement.
Not only is this section beneficial for lot owners in that the Committee cannot approve a costly large scale improvement but it also allows for the Committee to make decisions on small scale improvements without requiring it being passed by ordinary resolution.
Ordinary Resolution Improvement Range
There are times when a Body Corporate wishes to make improvements to common property on a larger scale. When such a situation arises, the improvement must be approved by ordinary resolution of the Body Corporate. Generally an improvement of a larger scale will far exceed the Basic Improvement Limit of $300.00 multiplied by the number of lots within the Scheme. Large scale improvements may consist of the construction of a new swimming pool or the re-painting of the entire complex.
If the improvement is necessary, section 163 of the Regulations provides for the cost of the improvement to fall within the Ordinary Resolution Improvement Range. It further provides a definition of this limit being $2,000.00 multiplied by the number of lots within the Scheme. For example if your Body Corporate has five (5) lots, that number (being five) is then multiplied by $2,000.00, which is $10,000.00.
Some issue can arise in larger Bodies Corporate, such as those with hundreds of lots, where the proposed improvement reaches the maximum limit. In these situations, the budget for the improvement can be upwards of more than one hundred thousand dollars. There may be a time where you, as a lot owner, may not agree on the improvement or the amount it will cost your Body Corporate. Thankfully, Section 163 assists in protecting lot owners by imposing a maximum limit on large scale improvements and allowing each lot owner the opportunity to vote on whether the improvement should be allowed.
Conclusion
At some point during your ownership of a lot within the Scheme, there is a high probability that your Body Corporate will want/need to make improvements to the common property. When this occurs, it is critical that your Body Corporate meets the requirements under Section 163 of the Regulations. If you or your Body Corporate is unsure or it simply requires clarification or confirmation, the Body Corporate Team at Nautilus Law Group is here to help.
We welcome you to contact our offices on (07) 5574 3560 or email info@nautiluslaw.com.au. We thank you for considering Nautilus Law Group.
