New bill brings old community title developments up to speed

In Brief - New bill benefits owners in affected developments with improved protections and access to information and services to help them protect their interests

On 21 June 2022, the Building Units and Titles and Other Legislation Amendment Bill 2022 (the Bill) was introduced into Parliament. 

The Bill aims to improve the operation of the Building Units and Group Titles Act 1980 (BUGT Act) and the Mixed Use Development Act 1993 (MUD Act), by incorporating provisions based on the Body Corporate and Community Management Act 1997 (BCCM Act) and its regulation modules. 

The proposed amendments are intended to modernise and improve the operation of the BUGT and MUD Acts, though new provisions focused on making body corporate governance arrangements fairer for proprietors.

Legislative context 

Prior to the BCCM Act, most multi-owner developments in Queensland were established and regulated under the BUGT Act.

The majority of bodies corporates once regulated under the BUGT Act were transitioned to the BCCM Act shortly after it commenced. However, the BUGT Act remains in effect for certain bodies corporate in developments across Queensland. 

To complement the BUGT Act, five special purpose planning Acts (including the MUD Act) were passed to allow, in combination with the BUGT Act, the creation of complex developments with a mix of distinct uses, ownership and governance structures.

Deficiencies in the BUGT Act and MUD Act have become increasingly apparent

The BUGT and MUD Acts have not benefitted from the incremental reforms to the BCCM and its regulation modules, experiencing only limited reform. This has resulted in two legislative frameworks that are increasingly disparate. 

Complex developments such as integrated resort developments and mixed use developments remain regulated under a mix of the BUGT Act and the MUD Act have not kept pace with modern governance requirements for bodies corporate and are now failing to ensure sufficient protections for proprietors. 

Proprietors of such developments have increasingly experienced outcomes such as:

• disputes focussed on non-payment of contributions;
• disruptions of utility services;
• decision-making tainted by conflicts of interest; and
• an inability for proprietors to contribute to scheme governance.

Bringing the BUGT Act and MUD Act up to speed

The proposed amendments would provide benefits to bodies corporates and their proprietors still regulated by the BUGT Act and developments established under the MUD Act.

The proposed amendments include:

• improving access to dispute resolution services and providing increased flexibility to Referees (i.e. no longer bound by the rules of evidence);
• requiring bodies corporate established under these Acts to act reasonably when carrying out their functions;
• expanding and enhancing eligibility requirements for people seeking to represent a subsidiary body corporate on overarching community precinct bodies corporate, to ensure the probity and quality of governance provided by these committees;
• improving committee decision-making by installing conflict of interest provisions that will require a voting committee member to disclose a conflict of interest in relation to a matter being considered by the committee, and to refrain from voting on the matter;
• supporting financial viability of bodies corporate by ensuring proprietor contributions are paid in an appropriate manner (i.e. in money and not “off-set” arrangements); and debts are recovered in a reasonable timeframe (by imposing a specific timeframe of two years and two months within which subsidiary bodies corporate must commence proceedings to recover outstanding proprietor contributions);
• imposing an express obligation on community and precinct bodies corporate that arrange utility services for proprietors to take all reasonable steps to ensure continuity of essential utilities (e.g. by carrying out any repair and maintenance of utility infrastructure); and
• increasing transparency and accountability requirements for body corporate governance.

Where to from here for developments impacted by the bill?

The Bill represents a substantial step forward for body corporates and proprietors in developments still governed under the BUGT Act and the special purpose planning acts, serving to modernise the legislation and bring it closer to the BCCM Act.

It will be critical to ensure that relevant parties are aware of the new legislation and educated on its use. Awareness programs and education services will go a long way to closing the gap between developments governed under the BCCM Act and those still under the BUGT Act and other specialised Acts.