Levy Recovery Time Limitations

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Bodies Corporate are urged to commence recovery action against lot owners with outstanding levy payments within 2 years.

A recent ruling made by a Queensland District Court Judge ruled that Bodies Corporate must start legal proceedings to recover a lot owners debt within two years and two months of the debt becoming due; otherwise the Body Corporate will be unable to take recovery action.

What happened for this ruling to occur?

The Body Corporate for Mount Saint John Industrial Park CTS v Superior Stairs & Joinery Pty Ltd – This case involved a Body Corporate that raised a special levy to lot owners in 2009 to rectify works on a road that was on the common property.  A lot owner disputed the contribution and insisted that they would not pay the levy raised.    The Body Corporate then commenced recovery proceedings about 3 and a half years after the special levy first fell due.

The lot owner defended that part of the recovery claim was made out of the two year time limit established in the BCCM (Standard) Module Regulation 2008 (Qld).

In this regulation it states:  ‘If the amount of a contribution or contribution instalment has been outstanding for 2 years, the Body Corporate must, within 2 months from the end of the 2 year period, start proceedings to recover the amount.’

The way it has been done in the industry in the past is to treat the above provision as compelling the Body Corporate to take recovery action to ensure the continued financial viability of the Body Corporate, but not stopping recovery action being taken outside of that period.  This means that:

  • Lot owners could compel a committee to take recovery action as that two year period approached.
  • A Body Corporate Manager could refer to the two year period as justification to a committee why a tough decision has to be made against an owner that may be experiencing hardship.
  • A claim to recover outstanding contributions was not considered to be barred until six years has passed pursuant to the Limitations of Actions Act 1974 (Qld).

Instead a District Court Judge found:

  • The general time limit in the Limitations of Actions Act does not apply in the face of the two year two month period set out in the BCCM regulation module.
  • There would be no point to the two year two month period set out in the BCCM regulation module unless it was taken to be a time limit on when the action must be taken.

So what happens now?

If a debt to the Body Corporate is identified that is more than 18 months overdue, then urgent action is required to be taken.  A letter of demand or negotiating a payment plan is not sufficient.

The Body Corporate is now required to make a claim in a court or tribunal to recover the contribution before two years and two months pass otherwise the Body Corporate will have lost the right to recover the contribution.

To assist in managing the above it is suggested that;

  • Committees are regularly reminded of outstanding levy contributions
  • A resolution is passed to adopt a debt management policy to establish timeframes in which the Strata Manager may issue reminder notices, letters of demand and refer arrears to a lawyer for debt recovery
  • Carefully consider must be made for any payment plan that would draw out a contribution for more than 12 months.


Source: Jason Carlson – Grace Lawyers





Aluminium Composite Cladding

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Action has been taken by the Queensland State Government to tackle an issue that directly impacts the safety of strata property owners: flammable cladding.  This issue has dominated the media since the tragic fire at the Grenfell Tower in London and in the first week of July the State Government has appointed a special Audit Taskforce to investigate the use of substandard building supplies.

The Palaszczuk Government has established an Audit Taskforce to conduct a targeted audit with a primary focus on buildings constructed between 1994 to 2004 using aluminium composite cladding, after a potentially non-conforming cladding product was found on the Princess Alexandra Hospital at Buranda.

Mr de Brenni said that the Audit Taskforce would begin examining buildings built from 1994 – 2004, focussing firstly on hospitals and aged care facilities, accommodation buildings, high occupancy public and private buildings and high rise office buildings.

 “Queensland has a strong and robust system of fire safety and certification for our built environment, which has been successful in discovering and rectifying recent cases on non-conforming products.

 “The Audit Taskforce will begin by examining buildings constructed when use of these products was relatively new.

 “Fifteen officers from across QFES and QBCC will be assigned to the Taskforce, led by a senior officer from HPW.”

The full media release can be read here

The Strata Community Australia (Queensland) is very supportive in the action taken by the State Government to see testing measures introduced.

Body Corporate Insurance Premiums & Excesses

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A Body Corporate must take out insurance for its Community Title Scheme.  Each owner must pay part of the costs for that insurance.

The Body Corporate collects money for the insurance premiums as part of levy contributions.  Levy contributions are collected each year.

Premiums for building insurance

How much you pay as an owner toward the building insurance premium is determined by what type of survey plan your Body Corporate scheme is registered under.

If your scheme is registered under a Building Format Plan then your share of the insurance premium is based on the interest schedule lot entitlement.

If your scheme is registered under a Standard Format Plan the Body Corporate has to insure buildings with common walls.  Your share of the insurance premium relates to the cost of reinstating the building on your lot.

If your Body Corporate sets up a voluntary insurance scheme and you decide to take part, then you must pay and amount that relates to:

  • the value of your building as a part of the total replacement value of the buildings insured under the policy;
  • What you do on your lot and how that affects the total risk covered by the policy (e.g. if you store chemicals which could be a fire risk)

Adjusting building insurance premiums

In some cases the Body Corporate can change the amount an owner pays towards to  insurance premium.

The Body Corporate can do this if…

  • The lot has better fittings and fixtures than other lots that affects the premium
  • Improvements have been made to the common property which benefit the lot and affects the premium
  • What is done on the lot increases the total risk covered by the insurance policy


The Body Corporate can decide to take out an insurance policy where an excess has to be paid on an insurance claim.  An excess is an amount of money paid towards a claim you make on the insurance policy.  The excess may be the Body Corporates responsibility to pay or the lot owners responsibility to pay.

Who pays the excess?

This depends on a number of things.  For example, if the Body Corporate claims on its insurance because a lot has been damaged by water from a leak in that lot, the lot owner would normally pay the excess.  However, if the damage to the lot happened because the Body Corporate did not properly maintain the common property, it would be reasonable for the Body Corporate to pay the excess.

The general rule is if an event affects:

  • One lot – the owner should pay the excess unless the Body Corporate decides that it is unreasonable for them to do so.
  • Two or more lots – The Body Corporate should pay the excess unless the Body Corporate decides it is reasonable for the excess to be paid by one or more of the affected lots
  • One or more lots and the common property – The Body Corporate should pay the excess unless the Body Corporate decides it is reasonable for the excess to be paid by 1 or more of the affected lots.



Committee Spending

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*The following information is for community titles schemes registered under the Standard, Accommodation and Small Schemes module.

Spending Limits

The relevant limit for committee spending (how much a committee can spend without having to go to a general meeting) can be set by Ordinary Resolution in a motion in either an Annual General Meeting or Extraordinary General Meeting.  There is no minimum or maximum limit that a Body Corporate can set.

If no amount is set by a general meeting resolution then the relevant limit is $200 x the number of lots in the scheme.  For example $200 x 20 lots = $4,000 committee spending limit.

The committee must allow for goods and services tax (GST) in its spending.  For example for a scheme with 20 lots the committee spending limit would be $4,000.  If the committee obtained a quotation that is $4,400 this can not be approved at committee level as it goes over the relevant spending limit.  The committee would need approval by a resolution at a general meeting for the quotation to be accepted.

The relevant limit for committee spending in a layered scheme is calculated by multiplying the number of layered lots in the scheme by $200.

For example: The principal scheme = 5 lots.  4 of these lots have 20 lots inside of them (these are referred to as layered lots).  The spending limit is calculated as: 1 (principal scheme) + 20 (layered lots) + 20 (layered lots) + 20 (layered lots) + 20 (layered lots) x $200 = $16,200.

Available Funds

The committee is not allowed to divide a single project into smaller parts to bring the project within its spending limits.  For example the project is the renovation of the foyer and there is quotations for tiles $8,000, light fittings $4,000 and painting $6,000.  Each quotation comes under the committee spending limit of $16,200 however the renovations cannot be done at committee level as the whole project is over the spending limit.  The committee would have to seek approval by resolution at a general meeting.

When can the committee spend over the committee spending limit?

The committee can only spend of its relevant limit if:

  • The spending is authorized by a resolution at a general meeting
  • The lot owners of all the lots in the scheme have given written consent
  • An adjudicator has authorised the spending to meet an emergency
  • The spending is needed to comply with a statutory order or notice given to the Body Corporate.


Why do I need a Strata Inspection Report?

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When buying a unit it is very important to obtain a Strata Inspection Report.  A Strata Inspection Report does not replace a building report however it provides important information about what is happening within the scheme that you should be aware of before you take the leap of purchasing the property.

A Strata Inspection Report should provide the following details but may include more information not listed below;

  • Who the current owners is
  • What the levies are for the property, when they are paid to and is their any special levies for major works
  • What your unit entitlements are
  • How much is in the Sinking Fund and the Administrative Fund and are any of these in deficit
  • Is there a Sinking Fund Forecast Report
  • Are there any legal matters or disputes
  • Does the scheme comply with fire requirements
  • Are pets permitted
  • Is there building defects
  • What are the By-Laws
  • Is there any major expenditure planned or has there been any over the past three years
  • What is the current value of the building
  • Is the building insured
  • Copies of the meeting minutes
  • Copies of building reports

A Strata Inspection Report can cost as little as $250-$350.  This is not a huge outlay when you consider you may be about to make one of the biggest financial commitments of your life.  The information you receive in the report will be far more valuable to you than the cost of the report.

For further queries regarding strata searches or to order a strata inspection report for a building on the Sunshine Coast or Brisbane contact:

Inside Out Legal Services

Sun City Legal Services

REMINDER: Changes to DEFT Payments at Australia Post

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You may be aware that on 1st October 2016 a $2.75 processing fee was introduced for DEFT payments made at Australia Post outlets.

When you pay your levy via DEFT at Australia Post, you will be charged this processing fee at the time of payment.

For example, if your levy is $100.00, $2.75 will be added to your levy payment amount at point of payment at Australia Post, so your total payment due will be $102.75.

It is important to note that if you choose not to pay the $2.75 processing fee at time of payment, this amount will be deducted from your levy payment.

This will result in a shortfall in the actual amount outstanding to your Body Corporate.  Please note that the processing fee is applied by DEFT Payment Systems, and not Sunstate Strata.

Alternative payment methods are;

  • A direct credit into the Body Corporate’s bank account.  This can be done via the internet through your internet banking or in person at your bank.  You will need to contact Sunstate Strata for your Body Corporate’s bank account details prior to using this option.
  • Send a cheque to DEFT at GPO Box 141, Brisbane QLD 4001
  • Use one of the other options on the bottom of your levy notice
  • Set up a direct debit through DEFT or Stratapay

There is no $2.75 processing fee on the above options.

Can you build a contingency into a Body Corporate Budget?

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Contingency – a future event or circumstance which is possible but cannot be predicted with certainty.

Can you have a line item as a contingency in a Body Corporate Budget?  The short answer is no. Having a line item called Contingency in your budget is not lawful.

The legislation focuses on anticipated expenditure and a contingency is not that.  Some relevant comment from adjudicators includes:-

‘Contributions can only be raised to cover the estimated expenditure on specific budget items and should not be raised for unknown or uncertain contingencies.’


‘I consider it is contrary to the financial provisions of the legislation for a Body Corporate to deliberately seek to amass a surplus for unspecified or very loosely defined contingencies.  Section 92 refers to budgets covering estimates of ‘necessary and reasonable spending’.  Certainly it can be difficult to estimate exact costs and may be reasonable to estimate at the higher end of the anticipated range to cover normal increases in the costs of budgeted items.  However, contributions can only be raised to cover the estimated expenditure on specific budget items and should not be raised for unknown or uncertain contingencies.’

Rather than building contingency into your budget as an actual line item, it is recommended that it is built into each line of expenditure.  If you think it may cost $10,000 for the lifts to be replaced, make the anticipated expenditure $110,000.  In that way you create a contingency without actually calling it that.

For the full article visit Hynes Legal

Living or Investing In A Community Titles Scheme

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Owning a lot in a community titles scheme brings certain obligations beyond those of owning a detached house.  You should carefully consider whether living or investing in a community titles scheme suits your lifestyle and financial needs.

When you buy a lot in a community titles scheme you are automatically a member of the Body Corporate.  You cannot ‘Opt Out’ of being a part of the Body Corporate.


The BCCM Act is the legislation that regulates most Bodies Corporate in Queensland it sets out the rights and responsibilities of people involved with Bodies Corporate.  Each Body Corporate is registered under a regulation module.  The regulation module sets out rules for committees, general meetings, financial management, property management and insurance.


The Body Corporate is responsible for maintaining the common property and in some situations certain elements of a building that are not common property.  You will have certain rights and responsibilities for your own property  and also for the common property shared with other owners in your complex.  Common property ranges from a shared driveway or letterboxes to elevators, stairways, swimming pools, tennis courts and roadways.


As an owner you will need to contribute financially to the day to day running of the scheme by paying regular levies.  Levy amounts vary between scheme depending on the conditions and age of the common property and shared facilities.  Running costs almost always increase over time.

When considering to purchase a unit in a community titles scheme, you should find out if there are any levies and charges still owned by the current owner.  The levies run with the lot, therefore the new owner would be liable to pay any outstanding amounts.  It is highly recommended that Body Corporate searches are undertaken by your conveyancing solicitor and/or a Search Agent prior to purchasing.


By-laws are an additional set of rules particular to each scheme that regulate the behaviour of owners, occupiers and their invitees on the common property and within their lots.  By-laws cover a range of issues such as noise, pets and parking.  You should find out the By-laws for the scheme you are considering buying into so you can see what you can and can’t do or what you need to ask permission for once you become an owner.


Insurance: Changes in Terrorism Act

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Changes to the Terrorism Insurance Act 2003 (Cth)(the ACT) become effective from July 2017, and some mixed-use commercial and residential strata buildings will see new terrorism levies of up to 16%, plus statutory charges on affected policies.

These changes broaden the definition of eligible property to include buildings with at least 20% of floor space being used for commercial purposes, or schemes which have a single building sum insured of at least $50 million (whether used for commercial or other purposes).

Two key changes in terms of classification of strata buildings from the Australian Reinsurance Pool Corporation (ARPC) are:

  1. Commercial Strata – Commercial buildings now defined as greater than or equal to 20% commercial floor space ratio, irrespective of tenancy.  The result is that all Strata Community Insurance Commercial Strata policies will attract the ARPC terrorism levy.
  2. Residential Strata –  (i) ARPC terrorism levy to be charged on residential schemes where one or more single buildings has a sum insured equal to or greater than $50 million.  (ii) Where ARPC coverage under the Act does not apply for schemes consisting of multiple residential buildings having a combined sum insured greater than $50 million, these schemes remain protected under Strata Community Insurance’s specially negotiated terrorism cover up to $100 million.  (iii) Schemes consisting of single or multiple residential buildings with a combines sum insured of less than $50 million also remain protected under our specially negotiated terrorism cover.

Tiered approach

Location of the schemes will be a significant component with this upcoming change, given application of a tiered levy model under which physical location is used to determine the rate of levy applicable:

  • Classification A 16% levy – capital cities with a population over 1 million
  • Classification B 5.3% levy – urban areas with a population over 100,000
  • Classification C 2.6% levy – rural areas plus all other areas not captured by A and B

From 1st July  2017 Bodies Corporate will be liable to pay terrorism levies for all renewals and new business if the scheme meets the ARPC criteria.

For schemes that fall outside of the criteria for ARPC cover under the Act, Strata Community Insurance’s terrorism cover will continue to apply – up to $100 million.

*Information supplied by Strata Community Insurance


Smoke Alarm Requirements from January 2017

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For dwellings being sold, leased or an existing lease renewed;

  • Existing smoke alarm manufactured more than 10 years ago must be replaced with photoelectric smoke alarms which comply with Australian Standards.
  • Smoke alarms that do not operate when tested must be replaced immediately.
  • Existing hardwired smoke alarms that need replacement, must be replace with a hardwired photoelectric smoke alarm.
  • For best protection smoke alarms should be installed on each storey, in every bedroom and in hallways which connect bedrooms.
  • It is also recommended that smoke alarms be either hardwired or powered by a non-removable 10 year battery and ionisation smoke alarms be replaced with photoelectric type as soon as possible.
  • All smoke alarms should be interconnected
  • A well practiced fire escape plan is highly recommended
  • Property sellers must continue to lodge a Form 24 stating the requirements of the legislation have been met.

Click here for detailed information from the Queensland Government.


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