There was a lot happening in 1965 – the invention of the internet, Kevlar and the cordless telephone, the escalation of the Vietnam War, a fly-by of Mars by NASA’s Mariner 4, the death of Winston Churchill, the birth of Robert Downey Jnr – but, as I am sure you will agree, those things all but pale into insignificance in the face of the momentous enactment of Queensland’s first strata legislation, the Building Units Titles Act 1965. 

For almost 60 years Queenslanders have been immersed in an evolving world of strata. There are an estimated 5 million people living in community titles schemes in Queensland today.

Most strata owners would have had some sort of disclosure statement plonked on their contract, the aim of which was to impart upon the starry-eyed purchaser some basic useful information regarding the nature of the proprietary interest in which they were about to invest. Strata owners in Queensland are also very fortunate to have their own unique office of the commissioner for body corporate and community management, which, in addition to offering a dispute resolution service for disgruntled “strataphiles”, provides an information service accessible by anyone.

Despite that rich strata history and free strata resources, for many people living and investing in community titles scheme in Queensland, strata remains an enigma.

Here are a couple of anecdotal common examples of situations that could have been avoided with a little more due diligence.

Chapter 1 – Diedre didn’t delve into Strata 101.

After her husband passed away, Diedre decided it was time to downsize. She sold the family home and purchased an apartment in Wuthering Heights. She almost fell off her rocking chair when she received her first contribution notice. Soon after composing herself, she donned her bonnet and walking cane and toddled to the nearest public telephone booth to call the body corporate manager from whom she had received the notice. The conversation went like this:

Receptionist: Good morning, this is Brilliant Body Corporate Management, how may I direct your call?

Diedre: “Hello, this is Diedre, is that the body corporate?”

Receptionist: Good morning, Diedre. We are a body corporate management company. Could I please ask which building you are calling in relation to?

Diedre: I’m in unit 29.

Receptionist: We look after several hundred bodies corporate Diedre. Do you know who the body corporate manager is for your building or do you know the name of your building?

Diedre: No, I am calling about the contribution notice I received from you.

Receptionist: Oh I see. Do you have that notice with you Diedre?

Deidre: I do.

Receptionist: Would you please tell me the name of the building at the top of the notice, it will be followed by the letters “CTS” and some numbers.

Diedre: I’ll have to get my glasses… (long pause)… ah, it’s called “The Infirmary CTS 1234”.

Receptionist: Thanks Diedre. Hank is looking after your building. I’ll put you through now.

Diedre: Frank?

Hank: Hi Deidre, it’s Hank here, how may I assist you today?

Diedre: Hello Frank. I moved into unit 29 last week and I received a notice… (ruffle ruffle)… a contribution notice for $2,321.45. What’s that for?

Hank:  That’s this quarter’s instalment towards the levies payable to the body corporate.

Diedre: I never agreed to that Frank, and I can’t afford to pay it.

Hank: I’m sorry Deidre but all members of the body corporate have an obligation to pay their levies.

Diedre: But I’m not a member. You are the body corporate!

Hank: I am the body corporate manager, Diedre. The body corporate consists of all the owners of lots in your building. Every year the body corporate holds an annual general meeting and approves budgets and levies to ensure it can meet its financial obligations for the coming year. Paying your levies is an ongoing commitment when you own a unit in a community titles scheme.

Diedre: In that case, please remove me from the body corporate and don’t send me any more of these silly notices!!

Diedre didn’t pay any of her levy notices. Two years later the body corporate commenced proceedings against Diedre to recover her body corporate debt. She told the court she had resigned from the body corporate 2 years ago and was not required to pay any levies. The body corporate obtained orders for a bailiff’s sale of Diedre’s lot.

Poor Diedre – ignorance is not always bliss.

Chapter 2 – Matt missed the mark

When “working remotely” became the new normal, Matt and his family decided to move away from the city and found a beautifully restored Queenslander in the country for a great price. When Matt inspected the house, he asked the agent about the 4 dishevelled apartments out the back that appeared to share the driveway. The agent explained the block was subdivided about 20 years ago by a developer and is now “strata” but not to worry because the house was “freehold” and the levies were really low. The agent told Matt this was a great opportunity for him to grab the house for cheap and then, with a bit of help from a town planner, apply to Council to separate the house from the “strata”.

A week or so after Matt and his family moved into their new home, Matt received a notice of an extraordinary general meeting in his letter box. The purpose of the meeting was to engage a builder to conduct some work on the apartment building including the replacement the roof, the replacement of all the windows and the painting of the exterior. Since there was no money in the sinking fund, the meeting also included a motion to raise $150,000 to fund the works by way of a special levy. The contribution schedule lot entitlements were 10 for each apartment and 39 for Matt’s house. In other words, Matt would have to contribute $74,050 towards that work, without any direct benefit to him.

Matt told his wife not to worry and that he’d speak to a town planner in the morning to remove the house from the body corporate before the meeting. The town planner told Matt the house could not be excised from the community titles scheme because there was insufficient remaining land area to meet the requirements of the planning scheme.

Matt then appealed to the body corporate to waive the requirement for him to contribute towards the costs associated with the apartment building. The other 4 members of the body corporate smirked sympathetically as they regaled Matt with the details of an adjudicator’s order made 2 years ago in which they were each required to contribute to the costs of restoring the Queenslander. Those 4 other members effectively subsidised half the cost of the external renovations to the Queenslander prior to Matt buying it and were, consequently, acutely aware of Matt’s statutory obligation to reciprocate.

After 2 failed attempts at dispute resolution proceedings (one seeking to avoid paying the special levy and another seeking to reduce the contribution schedule lot entitlements for his lot) Matt paid his share of the special contribution and the work on the apartment building was completed.

Matt learnt the hard way.

Chapter 3 – Penelope’s painting problem

Penelope had been the chairperson, secretary and treasurer at Stand Alone Cottages for 15 years, not because she had a proclivity for power, simply because no one else wanted to be burdened with the job – particularly since there were some troublesome owners who liked to complain about everything and vote against motions just to be obstructive. The scheme was established under a standard format plan of subdivision but had “accidentally” been operating as though it were a building format plan. The body corporate had been raising sinking fund contributions from owners since its inception for the purpose of painting the outside of the cottages and for maintaining and replacing the roofs. It wasn’t until the body corporate engaged a new body corporate manager that the accident was identified.

Most of the owners were on fixed incomes and were keen to utilise the sinking funds to paint their cottages, as scheduled, next year. Penelope decided the best way forward was to go to the root of the problem and, since the body corporate had always operated as though it were created under a building format plan, simply change from a standard format plan to a building format plan. Voila!

She approached a senior strata lawyer (who was renowned for being very generous with his time) for preliminary advice and a fee estimate. He told Penelope her proposal was possible, but unlikely to be economically viable in circumstances where:

• The approval would require a resolution without dissent
• The owners would have to transfer parts of their lots to the body corporate (including from the centre point of the walls, floors and ceilings, the ground to the centre of the Earth and the airspace to the Heavens)
• The owners would have to obtain valuations for all the property being transferred (to calculate the stamp duty payable by the body corporate)
• Planning approvals would be required from Council
• New survey plans would be required from a cadastral surveyor
• One or more new community management statements would be required
• New exclusive use by-laws and plans would be required to retain the entitlement for occupiers to use the yards surrounding their cottages
• Mortgagee consent would be required for each lot in the scheme that has a mortgage
• Insurance policies and valuations, budgets, service contracts and sinking fund forecasts would need to be reviewed and renewed
• The associated costs would likely be more than the painting
• The matter would likely not be finalised prior to the scheduled start date of the painting

The lawyer suggested Penelope consider a different approach – reimburse the owners for the funds that had been accidentally raised, engage a painting contractor and enter into agreements with the owners who require the body corporate to coordinate the painting for them.

Penelope took that advice. However, the troublesome owners then commenced proceedings against the body corporate seeking orders that it was beyond the power of the body corporate to reimburse sinking funds to owners in the manner approved at the general meeting. The application was dismissed.

The painting was completed by the body corporate’s contractor on all but the troublesome owner’s lots. The body corporate then obtained orders against the troublesome owners for failing to maintain their cottages in good condition. 

Penelope dodged a bullet.

You can dodge a bullet too, by subscribing to strata publications (such as this excellent resource published by our good friends at Hartley’s), reading strata news, visiting the Commissioner’s website, attending information sessions and seeking advice from industry experts (like your body corporate manager and ME).