In this latest quarter update for 2019 we look at the different types of multi-unit/lot structures often requiring independent administration services. Most of these property structures are still quite commonly used and are often determined by the physical layout of the development.
Bodies Corporate – This is probably the most well known property structure for multi-units (and commercial, residential and mix-use property), and is governed by the Unit Titles Act 2010 and Unit Titles Regulations 2011. Most bodies corporate also have Operational Rules that govern day-to-day issues (noise, animals etc) and can be changed by owner majority. On the sale of a unit there is a requirement to provide purchasers with a Pre Contract Disclosure and Pre Settlement Disclosure Statement, which provides information on share of levies and notification on some weather-tightness issues (where applicable). There is a wide range of governance and compliance obligations. Disputes are often resolved through the Tenancy Tribunal.
Property Society – This structure is often used for freehold property with common/shared areas (such as a driveway, or gardens) and can have broad control on a range of issues. With this structure there is an encumbrance on the property title, binding owners together. There is a Constitution that outlines formal processes around formal meetings and committees as well as day-to-day operation rules (by laws) for which owners must comply – this could extend to noise, animals, exterior painting, etc. In addition to the Construction, the Society is also governed by the Incorporated Societies Act. Usually, upon the sale of a property, there is a requirement to provide the purchaser with a Statement of Indebtedness from the appointed administrators showing what is owed to the Society. Rules for a Society can generally be changed by a majority, and a Society can usually be wound down by agreement of the respective owners.
Cross-Lease – This structure predates the earlier Unit Titles Act 1972 and is also used on occasions for what would otherwise be a Body Corporate or Property Society structure. This structure is an encumbrance (Memorandum of Lease) on each property title and will detail how governance will work within the property. The encumbrance is not able to be changed without universal agreement. A cross-lease is generally a macro property structure, which does not go into day-to-day rules control, such as noise, animals, etc.
If you have any questions regarding the above structures, please feel free to contact Steve Plummer of Scope Strata Management Ltd on 09 320 5215. Scope Strata manage a range of these type of structures.