What are the proposed Unit Title reforms?
Following from the lead of neighbouring jurisdictions who have made legislative changes affecting unit owners, particularly in complexes which include ‘mixed use’ development (i.e. commercial, retail and residential uses), the ACT Government is determined to re-vamp the Unit Title legislative regime.
Unit Title reform has been on the Government’s agenda for quite some time, with work undertaken in earnest in the last year or so.
The main changes being proposed and discussed with various interest groups in the ACT are:
- to create a new, tiered governance model for units plans in which each part of the complex would have a member or members elected to a governing body that would monitor and oversee the maintenance and upkeep of areas common to all units (shared areas)
- existing units plans could opt in to the new tiered governance model
- a management statement would be required under the legislation to regulate and outline the way in which the governance model would operate
- to clarify the notion of common property, in order for owners and owners corporations to more clearly understand where boundaries start and finish
- to review percentage thresholds for passing relevant resolutions at owners corporation meetings
- to review disclosure requirements to buyers of units and
- other changes allowing developers of staged projects more flexibility to make minor amendments to plans prior to registration.
The big change — new tiered governance model
The new legislation has not yet been drafted by the ACT Government. However, based on our industry knowledge and knowledge of legislation in other jurisdictions, it is our view that the proposed tiered governance model is likely to include the following attributes:
- a unit title management committee will be established, comprised of representative members from each of the parts of the complex. For example, there may be a representative of the residential unit owners, and a representative of the commercial unit owners
- the unit title management committee will be an over-arching body that assists with the management and upkeep of the shared areas and shared facilities within the complex
- a unit title management statement will document the separate responsibilities and obligations of the owners of each part of the complex, for example, to vote on certain matters, or to contribute to particular costs for the shared areas and shared facilities and
- the unit title management statement will be a registerable document forming part of the units plan.
In our view the above scenario would also be workable for those projects which include stratum leases, as each stratum lease could appoint a representative member to the unit title management committee.
New tiered governance — similar to, but not the same as, community title
In our view, the proposed tiered governance model is similar to the existing community title scheme in the ACT.
However, the existing community title legislation does not permit owners to be grouped based on the use of their units.
What does the Unit Title reform mean for strata managers?
When the draft legislation is released, unit owners in the ACT are likely to see newspaper articles regarding the proposed reforms.
Strata managers need to be ready with some initial information on how the new model will work in practice, and be ready to recommend the manner in which existing owners corporations can opt in to the new model if so desired.
Meyer Vandenberg is across the practical implementation and legal drafting of management statements such as those which may be proposed by the Unit Title reform. Our firm is able to assist owners and owners corporations in interpreting and complying with the new legislation when it is released.
For more information contact the Property Commercial & Finance Team: