Qld reforms make it easier for body corporates to sell up

Controversially, the reforms allow for the termination of a strata scheme with the support of 75 per cent of lot owners if the scheme is deemed not economically viable to maintain.

This change has been considered for a long time, with the Property Council stating that it has been advocating for the adjustment for “over a decade”.

Previously, a community titles scheme could only be terminated in order to be sold with the support of all residents or an order of the District Court.

Now, if a majority is willing to sell and independent reports deem it too costly to maintain within five years, the majority can move forward with their plans.

The law also makes provisions for dispute resolution services to amicably settle issues arising when a minority share of owners are unwilling to part with their units.

The state’s Housing Minister Meaghan Scanlon said that the reforms aim to strike a balance in protecting all parties, and ultimately assist in bringing more supply to the market.

“There are cases where a majority of owners want to sell but even a single person can stop them from being able to make that collective decision about their property,” Ms Scanlon said.

“This bill is about weighing the rights of people who want to facilitate new housing projects and terminate expensive, uneconomic title schemes, while also providing protections and safeguards for lot owners,” she added.

According to the Property Council, the changes mirror what has been successfully introduced in other states, and have the potential to unlock land that could pave the way for developing newer buildings with a larger housing capacity.

“Other states have embarked on strata reform and Queensland has done so with safeguards and consumer protection provisions that go above and beyond what has been put in place in other jurisdictions,” noted Property Council of Australia Queensland’s deputy executive director, Jess Caire.

“In Queensland and in particular areas like the Gold Coast, there are countless older apartments that are beyond repair and are likely to become financial sinkholes for residents.

“This reform will help ensure that if the majority of residents choose to do so and the scheme is deemed economically unviable to maintain, that they are able to wrap up their scheme and unlock the capital from their unit.

“In the midst of a housing crisis, it is a commonsense change, and the Queensland laws come with numerous safeguards to assuage the fears of those who believe they will be used to pressure people out of their homes,” Ms Claire said.

The Real Estate Institute of Queensland (REIQ) similarly applauded the change, stating that the reforms “strike the right balance”.

“From our perspective, it was particularly important to see adequate consumer protection measures included for vulnerable people, such as options for recourse, and compensation for lot owners as well as for parties with contractual interests in the scheme,” commented REIQ CEO Antonia Mercorella.

Other substantial changes that were passed in the Body Corporate and Community Management and Other Legislation Amendment Bill 2023 include:

• Allowing body corporates to make by-laws to prohibit smoking (including vapes) in outdoor areas and communal areas of strata communities.
• Preventing body corporates from making by-laws with blanket pet bans in community title schemes, and introducing a mechanism for pet approvals.
• Clarifying and enhancing the ability for body corporates to tow vehicles from common property in a timely manner.

Ms Mercorella commented that the reforms are an important update to keep pace with the times.

“As our population grows, living in apartments and units is becoming more commonplace, and it’s important to ensure our laws keep pace with changing community standards and expectations, and are balanced so that this lifestyle remains attractive in our state.”

In addition, the Queensland government made some adjustments to the ability of developers to use “sunset clauses” to terminate sales agreements, which are more frequently being invoked due to market conditions that will favour selling land in a rising market.

Previously, if a contract included a sunset clause, developers could terminate a sales contract for an “off-the-plan” land purchase if it was not settled within a stated time period.

The new laws limit when property developers can invoke these clauses. Once the amendments commence on assent of the bill, a sunset clause can be invoked by a developer to terminate off-the-plan contracts for land in three situations: with the written consent of the buyer, under an order of the Supreme Court, or in another situation prescribed by regulation.

The sunset clause amendments will apply to new off-the-plan contracts for the sale of land, as well as contracts that have not yet settled.