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PLEASE NOTE: This article was published on the date listed below and may now contain information that has since been updated or changed. We have retained this article as it may still contain helpful comments. However, we advise you to make an appointment to see us for the most up to date information on this topic.

December 2011

Unit Titles Act 2011

Significant changes from the old Act

For any client who owns an apartment or townhouse that has a freehold/leasehold title under the Unit Titles Act, you may not be aware that a new Act came into force on 1 July 2011. The Unit Titles Act 2011 has been designed to give more protection to unit owners and also have a fairer system for charging unit owners for their annual costs.

There are some fundamental differences including:

  • Body Corporate Rules are now called Operational Rules;

  • Prior to a Vendor entering into an agreement to sell a Unit Title property, they must provide the purchaser with pre-contract disclosure;

  • Prior to settlement, the Body Corporate Manager must provide a Section 147 Certificate (this Certificate is a more detailed version of the basic Section 36 Certificate under the old Act);

  • A purchaser can request additional information prior to settlement, but this must be at their cost.

It is important to note that the pre-contract and pre-settlement documentation costs will be for the Vendor client to bear, and could involve you in additional costs, on the sale of the property, of approximately $800. We also recommend that as part of the terms of the agreement for sale and purchase that a clause be inserted in the agreement stating that the purchaser has been given the pre-contract disclosure documents to avoid any misunderstandings later.

Some practical information for vendor clients to be aware of:

  • A body corporate committee is mandatory if there are more than ten units in the development.

  • Minimum age to vote as a unit owner has dropped to 16 years.

  • A quorum is now 25% as opposed to 33% under the old Act.

  • Under the new Act, it is now compulsory for a Body Corporate to have ‘long-term maintenance fund” and an “operating account”. The “long-term maintenance fund’ must be for a minimum term of ten years. The “operating account” is used to administer more general expenses relating to unit title management and for compliance service fees, e.g. air conditioning, fire service charges.

  • Under the old Act, each unit had a unit entitlement that calculated a unit owner’s share of any levies, charges etc. Under the new Act, the unit entitlement has been split into ownership interests (“OI”) and utility interests (“UI”). The OI is based upon the value of the unit as opposed to other units whilst the UI is assessed on a unit’s obligations in relation to the long term maintenance fund, an optional contingency fund and the operating account.

If you own or are considering purchasing a body corporate property you should see us now so that you have a full understanding of your rights and obligations.