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Body Corporate and Community Management Amendment Bill 2009
Body Corporate and Community
Management Amendment Bill 2009
Explanatory Notes
Short Title
The short title of the Bill is the Body Corporate and Community
Management Amendment Bill 2009
Objective of the Bill
The objective of the Bill is to amend the Body Corporate and Community
Management Act 1997 to clarify the intent of the legislation and to ensure
that there is no diminution of consumer protection while providing for
certainty of contract.
Reasons for the Bill
Recent decisions of the Supreme Court and the Court of Appeal have
highlighted the potential for many pending off-the-plan contracts to be at
risk of cancellation due to a strict interpretation of section 212 of the Body
Corporate and Community Management Act 1997.
Section 212(3) of the Act provides that a buyer can cancel a contract for the
purchase of a proposed lot in a community titles scheme if the contract
does not provide that settlement must not take place earlier than 14 days
after the seller gives advice to the buyer that the scheme has been
established or changed. The Supreme Court and Court of Appeal decisions
found that a particular contract was deficient because a key clause omits
any reference to the Community Management Statement, the recording of
which is an essential element of establishing a new community titles
scheme.
A community titles scheme is established by the registration under the
Land Title Act 1994 of a plan of subdivision for identifying the scheme land
for the scheme and secondly, the recording by the Registrar of Titles of the
first community management statement for the scheme. Typically, this
occurs simultaneously although a scheme is not established until the
community management statement is recorded. It is not possible to record
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Body Corporate and Community Management Amendment Bill 2009
a first community management statement in the absence of a survey plan
that creates or identifies at least two lots and common property.
However, the Supreme Court and the Court of Appeal stated that the
registration of a plan and the establishment of a community titles scheme
are not the same thing, and that the contract does not adequately convey to
the buyer that more than registering a survey plan is necessary to establish
the scheme.
As off-the-plan contracts of sale provide a basis for property developers to
obtain financing for many residential developments, the recent decisions
could have serious implications for the property development sector and
the wider Queensland economy.
The respective decisions of the Supreme Court and the Court of Appeal
revealed that the framing of section 212 of the Body Corporate and
Community Management Act 1997 did not adequately clarify the policy
intent which sought to balance the interests of consumers and
developers/vendors. The amendment will rebalance the respective interests
of consumers with the need for certainty of contract as originally intended.
Achievement of the Objective
The Body Corporate and Community Management Act 1997 will be
amended to provide clarification to the requirements of a contract.
Contracts entered into before or after 5 June 2009, but excluding contracts
already settled or already cancelled before 5 June 2009 pursuant to the
previous section 212(1), will be deemed to contain the term, `providing that
settlement must not take place earlier than 14 days after the seller gives
advice to the buyer that the scheme has been established or changed', even
if the contract does not do so. The amendment also excludes legal
proceedings decided before the commencement of the amendments.
This provision will ensure contracts cannot be cancelled based on a mere
omission of reference (a technical breach) to the establishment of the
community titles scheme on the condition that the building plan and community
management statement has been lodged with the Registrar of Titles and
settlement does not take place earlier than 14 days after the seller notifies the
buyer that this process has been completed.
Estimated Cost for Government Implementation
The Bill will not bear any financial consequences for Government.
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Body Corporate and Community Management Amendment Bill 2009
Consistency with Fundamental Legislative Principles
Section 212 of the Body Corporate and Community Management Act 1997
provides for consumer protection by setting out the pre-contract disclosure
requirements for buyers of proposed lots in a community titles scheme. The
amendments to the Body Corporate and Community Management Act 1997
will have retrospective affect except as provided for contracts settled before
5 June 2009 or a contract that has, before 5 June 2009, been lawfully
cancelled because the contract failed to make provision as required by the
existing section 212.
Section 4(3)(g) of the Legislative Standards Act 1992 provides that one of
the fundamental legislative principles is whether legislation adversely
affects rights and liberties, or imposes obligations, retrospectively.
Retrospective laws are generally passed to validate past actions, correct
defects in legislation or confer benefits retrospectively. This Bill restores
the law to the position that was commonly accepted as applying in
Queensland before the recent court decisions relating to section 212 of the
Act were handed down.
There is no like complementary Commonwealth legislation impacted by
these amendments.
Consultation
Community
As the amendments to the Body Corporate and Community Management
Act 1997 are simply clarifying the intent of the existing provisions in the
legislation, it is not considered necessary in this instance to widely consult
with the community.
However, there have been calls from a number of community groups, such
as the Queensland Law Society and the Property Council of Australia
(Queensland Division), requesting legislation be introduced to remedy the
effects of the Supreme Court and Court of Appeal decisions relating to
section 212 of the Act.
Government
Consultation on the draft Bill occurred with the Department of the Premier
and Cabinet and the Department of Justice and Attorney-General.
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Body Corporate and Community Management Amendment Bill 2009
Notes on Provisions
Clause 1 provides that the short title is the Body Corporate and Community
Management Amendment Act 2009.
Clause 2 provides that this Act amends the Body Corporate and
Community Management Act 1997.
Clause 3 replaces section 212. The new section 212 provides further
clarification to the requirements of a contract for settlement to take place
by deeming the contract to contain the term, `providing that settlement
must not take place earlier than 14 days after the seller gives advice to the
buyer that the scheme has been established or changed', even if it does not
do so.
Clause 4 inserts a new section 362A to provide for the new section 212 to
have retrospective affect to a contract whether entered into before or after
5 June 2009. This provision provides for the exclusion of contracts
already settled, contracts already cancelled before 5 June 2009 pursuant
to the previous section 212(1) and legal proceedings decided before the
commencement of the amendments.
© State of Queensland 2009
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