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2017 Unit Titles Reforms

By Thomas Gibbons - June 2017

Introduction

The Regulatory Systems (Building and Housing) Amendment Act 2017 and the Unit Titles Amendment Regulations 2017 each came into force on 30 May 2017.  Many of the changes are cosmetic or technical, and much of the legislation remains untouched, but there are some substantial changes that need attention.

Definitions and format

A number of definitions in sections 5-7 of the Act have been tidied up.  Most notably:

  • The definition of body corporate operational rules has been amended to clarify that operational rules may be lodged when the unit plan is deposited, or after that. 
  • A principal unit may now be more than one car park: the difficulty of only a single car park (rather than multiple parks) being able to be a principal unit has now been overcome.

Ownership and utility interests

Deemed utility interests for future development units (FDUs) have been clarified.  

The revised section 41(1) records that ownership interests or utility interests may be reassessed by special resolution at a general meeting.  The revised section 41(3) states that a reassessment may be made only if 36 months have passed since the deposit of the unit plan or the last reassessment (if any), or the reassessment is for the purposes of a redevelopment.  This is a useful addition, as reassessments may arise in situations such as cancellation outside the timeframes otherwise permitted by section 41.

A reassessment of ownership interests must be made on a valuer’s assessment of relative value, while a reassessment of utility interests may be made on a fair and equitable basis, having regard to relevant benefits and costs.  However, any reassessment of utility interest not based on relative value must have the methodology approved by special resolution.  This highlights that determining a utility interest that is different from ownership interest is a difficult exercise.

Proceeds from common property

Section 56(7) has been amended to clarify that where proceeds are to be distributed following a sale, lease, or licence of common property, the distribution is to take place as at the date that payment fell due.  This useful change allows for periodic payments to be paid out to owners.

Easements and covenants

Changes to sections 62 and 63 clarify that an easement in gross may be granted over common property and/or a unit, which will be particularly useful to utility providers.  The amendments also allow for covenants in gross, when these are enabled by Land Transfer Act reforms.

Redevelopments

Changes to section 65 mean that ‘minor’ redevelopment must not:  ‘affect the common property’ (previously, this was ‘materially affect’); ‘materially affect’ the use, enjoyment or ownership interest of another unit (no change); nor ‘change the number of units’ (entirely new).  The scope of a minor redevelopment has therefore been restricted.

EGM

The new section 89A usefully clarifies that an EGM must be held if a notice requesting an EGM, proposing resolutions, and signed by 25% or more of unit owners (presumably based on numbers) is received by the chairperson.

The EGM ‘must be called by the chairperson’ where required by section 89A.  The new section 90(3) sets out that an EGM ‘may be called at any other time by the chairperson or the body corporate committee in accordance with the regulations’.

Cancellation

The cancellation provisions of section 177 have been amended.  Importantly, section 177(3) now provides that if there is a special resolution to cancel the unit plan, then either:

  • The ownership interests may be reassessed by a registered valuer; or
  • The body corporate may decide by special resolution not to reassess ownership interests, as long as reasons are stated.

This is an important and useful change, as reassessments on cancellation have proved problematic and often unnecessary.  

In the case of cancellation by court order, the application to the Registrar under section 189 must now include a certificate that all conditions and directions of the High Court have been complied with.

Designated resolution

There are now two additional circumstances under which a designated resolution may arise: a variation of lease under section 167, and a decision not to reassess ownership interests on cancellation under section 167.

Regulations - EGM

The Unit Titles Amendment Regulations 2017 amend the existing 2011 regulations, largely for consistency with the amending legislation described above.  There are also some amendments to the forms.

Conclusion

As noted from the outset, much of the legislation remains untouched.  There are substantive issues needing urgent attention: not just those in the Discussion Document released in December 2016, but a host of other technical and policy issues.  Further reform of the law relating to unit titles is needed.  

Thomas is a Director in our Property Team, specialising in Unit Titles and Body Corporate Issues,  and can be contacted on 07 958 7465.

Amanda Hockley is an Associate in our Property Team and can be contacted on 07 958 7451.