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Description of this module

Unit Title Developments

The term “unit title development” covers a wide range of property development. Traditionally you would think of a unit title development as being the development of a freehold site into “units”, but the term also covers:

• The subdivision of a principal unit into further units;
• A development being done in stages (including the creation of future development units (“FDUs”), and the subsequent development of the FDUs;
• Layered developments, whereby head, parent and subsidiary bodies corporate are created;
• Boundary adjustments between one or more units (either affecting the common property, or not);
• The “redevelopment” of all or part of a unit title development;
• Cancellation of a unit plan, and the subsequent development of the underlying freehold land.

Each form of “unit title development” has its own requirements (both under the Act, and pursuant to other legislative and regulatory requirements), and it is critical that the right advice is sought from the outset.

Ownership interests / Utility Interests

On the deposit of a unit plan each principal unit and each accessory unit is allocated what is referred to as an “ownership interest”. This essentially represents the size of each unit compared to others (in simple terms, the bigger the unit the higher the ownership interest, and vice versa). Body corporate levies are calculated based on “ownership interests” unless separate “utility interests” are assessed and registered.

“Utility interests” may be appropriate for a particular body corporate if it becomes apparent (at the outset, or further down the track) that assessing levies based on “ownership interests” creates a disproportionate, and fundamentally unfair, situation for owners; typically this may occur when a unit uses a disproportionately large amount of the utilities compared to the other units.

Assessing or re-assessing utility interests requires the involvement of both a valuer and a lawyer (as well as obviously the “buy-in” from the body corporate).

Common Property Licences

Informal licences over common property are all too common in unit title developments, and very often the requirements of the Act are not fully considered.

Licence situations typically arise where a party wishes to use part of the common property for a particular purpose (e.g. for storage purposes).
The Act has various requirements that need to be complied with to ensure that a licence is legally binding on existing, and future owners of the principal units contained within the unit title development – and not complying with these requirements can result in a number of issues for bodies corporate down the track.

Easements

Bodies Corporate have the powers under the Act to acquire easements or covenants for the benefit of the common property, grant easements or covenants over the common property, and vary or surrender easements that affect the common property.

There are a number of issues that must be considered when thinking about easements including:

• What value does a particular easement have to the body corporate?
• If surrendering an easement, is there an opportunity to leverage the surrender with some commercial gain? Is there other legislation in play that could prevent this from happening?
• Is an existing easement redundant?
• What is the cost of acquiring and maintaining an easement?
• What does the Act require the body corporate to do in each case?

Easements tend to be, by nature, complicated – and this is heightened when dealing with a body corporate (comprising a number of owners). The right advice from the appropriate professionals is needed right from the word go.

Body Corporate Rules

The Act (coupled with the Regulations) is intended to a large degree to regulate bodies corporate; and it might surprise you to know that the Regulations contain “body corporate rules” (see Schedule 1 of the Regulations).

There is the ability to amend, revoke, or add to the body corporate rules (both on the deposit of the unit plan, and at any time following), but this must be done in accordance with the requirements of the Act, and need to be registered to be binding.

Every body corporate has different requirements, and the Act, while being fairly far-reaching, doesn’t generally cover some of the idiosyncrasies that exist within specific bodies corporate (including, for example, relatively standard restrictions such as hanging washing on decks, and relatively complicated restrictions such as the inability of owners to tamper with structural beams that exist inside the individual principal units).

Body corporate rules clearly have an important part to play, but they must be current (as in registered under the new Act) and passed and registered in accordance with the necessary requirements.

Body Corporate Maintenance / Owner Maintenance

This is one of the most topical, and hotly questioned, areas of body corporate law. Unit owners have various legal requirements with regards to their specific unit, and the body corporate has repair and maintenance obligations with regard to common property and “building elements and infrastructure”.

So often when repair work is required it spans the obligations of both unit owner/s and the body corporate, and the question arises as to who should be carrying out the specific works.

Not only is this a complicated issue, but it is also an issue that can lead to serious problems for unit owners and the body corporate if not managed correctly. For example, what if a unit owner carries out repair works that included a portion of common property, and then in 10 years time the whole complex leaks? Is that unit owner suddenly liable for the problem as a result of the work they carried out? What about the insurance position? Was the insurance policy breached right from the word go? Is the owner liable for that?

If you own a unit title property, deal with a body corporate or manage a body corporate, you’ll know that there are a wide range of issues that can arise.  Contact for assistance with any unit title issues.