Australia: Queensland developers must review their disclosure statements now

Last Updated: 21 April 2011
Article by Mark Mackay and Michael Richardson

Most Read Contributor in Australia, November 2017

Changes to the Body Corporate and Community Management Act 1997 (Qld) (BCCMA) will mean that previously accurate disclosure statements for proposed / off-the-plan lots will now be inaccurate.

In addition, a failure to comply with the new obligations in the Body Corporate and Community Management Amendment Act 2011 (Qld) (Amendment Act), most of which came into force on 14 April 2011, may give buyers the right to terminate an otherwise enforceable contract.

As a result, sellers will need to review their disclosure statements now.

The key changes at a glance

The key changes to the BCCMA introduced by the Amendment Act are:

  • changes to those provisions relating to lot entitlements, including a new requirement to use deciding principles (Deciding Principle) when determining contribution schedule lot entitlements (CSLE) and interest schedule lot entitlements (ISLE) for schemes established on or after 14 April 2011;
  • new drafting requirements for community management statements (CMS) in schemes established on or after 14 April 2011;
  • additional disclosure obligations altering compulsory disclosure requirements for existing / registered and proposed / off-the-plan lots; and
  • additional contract termination rights for buyers relating to the new lot entitlement principles and drafting requirement for CMSs.

Changes to lot entitlements for schemes established on or after 14 April 2011

Previously, the BCCMA required CSLE to be equal unless otherwise just and equitable (this is now known as the "equality principle").

The Amendment Act includes an alternative method of calculating CSLE – the "relativity principle". When deciding CSLE under the relativity principle, the lot entitlements must clearly demonstrate the relationship between the lots by reference to 1 or more relevant factors. The factors to be considered are:

  • structure of the community titles scheme;
  • nature/features/characteristics of the lots;
  • the purpose of the lots are used;
  • the impact the lots may have on the costs of maintaining the common property; and
  • the market values of the lots.

Generally speaking, ISLE for schemes established on or after 14 April 2011 must be consistent with the "market value principle", which requires ISLE to reflect the respective market values of the lots, except to the extent which it is just and equitable in the circumstances for the individual lot entitlements not to reflect the respective market values.

In the case of a lot created under a standard format plan/volumetric plan of subdivision, market values must be decided without regard to buildings and improvements.

The Amendment Act does allow for an exception to the "market value principle" for schemes which are established on or after 14 April 2011 if a contract for a lot included in the scheme was entered into before 14 April 2011. In this case the previous determination mechanism will continue to apply.

Changes to CMS drafting requirements

The CMS for a scheme established on or after 14 April 2011 must (in addition to existing requirements):

  • state the contribution schedule principle (ie. relativity or equality) on which the CSLE have been decided;
  • if the CLSE have been decided in accordance with the equality principle and are not equal, explain why they are not equal;
  • if the CLSE have been decided in accordance with the relativity principle, include sufficient details about the principle to show how individual CSLE for the lots were decided by using it;
  • if the ISLE reflect the respective market values of the lots, state that the ISLE reflect the respective market values of the lots; and
  • if the ISLE do not reflect the respective market values of the lots, explain why they do not reflect the respective market values of the lots.

These requirements will also apply to CMS for schemes established before 14 April 2011 if:

  • the contribution schedule for the scheme is adjusted on or after 14 April 2011 and, after the adjustment, the deciding principle for the CSLE for the lots included in the scheme is decided under either the relativity principle or equality principle; or
  • the interest schedule for the scheme is adjusted on or after 14 April 2011.

New disclosure requirements for contracts entered into on or after 14 April 2011

Disclosure statements for existing / registered lots must now attach a copy of the CMS and disclosure statements for both existing / registered and proposed / off-the-plan lots must now also state:

  • the extent to which annual contributions are based on CSLE and ISLE for the community titles scheme; and
  • that CSLE and ISLE are set out in the CMS for the scheme.

As a result of the new requirements for CMS and disclosure statements under the Amendment Act, previously accurate disclosure statements for proposed / off-the-plan lots will now be inaccurate, so further disclosure statements will need to be given in respect of these lots.

This will only allow buyers to terminate under the BCCMA on the basis of the further disclosure statement if they can show that they would be materially prejudiced by the change.

New additional termination rights: existing / registered lots

In relation to existing / registered lots, a buyer may now terminate a contract of sale prior to settlement where:

  • a new CMS is recorded after the contract is entered into but before settlement and the buyer would be materially prejudiced if compelled to complete the contract given the differences in the new CMS;
  • the copy of the CMS attached to the contract is different to the CMS most recently advised to the buyer, and the buyer would be materially prejudiced if compelled to complete the contract given the difference; or
  • where the seller is the original owner (ie. the developer) for the scheme and the buyer reasonably believes the CSLE are inconsistent with the principle on which they were decided, and the buyer reasonably believes the buyer would be materially prejudiced if compelled to complete the contract.

The other pre-existing termination rights under the BCCMA still remain.

New additional termination rights: proposed / off-the-plan lots

In relation to proposed / off-the-plan lots, a buyer may now terminate prior to settlement where the CMS most recently advised to the buyer does not:

  • state the deciding principle on which the CSLE have been decided;
  • where the equality principle has been applied and the CSLE are not equal, explain why CSLE are not equal (under the equality principle);
  • where the relativity principle has been applied and there are insufficient details to show how individual CSLE were decided (under the relativity principle); or
  • if the ISLE do not reflect the market value of the lots, include an explanation as to why the ISLE do not reflect the respective market values of the lots,

and the buyer would be materially prejudiced if compelled to complete the contract.

A buyer may also terminate in relation to proposed / off-the-plan lots if:

  • the seller is the original owner (ie. the developer) for the scheme; and
  • the buyer reasonably believes the CSLE or ISLE are inconsistent with the relevant deciding principle; and
  • that the buyer reasonably believes that the buyer would be materially prejudiced if compelled to complete the contract.

This termination right will expire 30 days after the buyer receives his or her copy of the contract.

The other pre-existing termination rights under the BCCMA still remain.

How does this affect you?

It is important for each seller of lots in a community titles scheme to take the following steps to ensure compliance with the new obligations introduced by the Amendment Act:

  • review and alter CMS for schemes which have not yet been established so that they comply with the new entitlement principles;
  • review and alter disclosure statements to ensure that they include the additional information required by the Amendment Act; and
  • provide a further disclosure statement to existing purchasers to rectify the inaccuracies arising as a result of the additional requirements introduced in the Amendment Act.

A failure to comply with the new obligations in the Amendment Act may give buyers the right to terminate an otherwise enforceable contract.

You might also be interested in ...

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration
Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:
  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.
  • Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.
    If you do not want us to provide your name and email address you may opt out by clicking here
    If you do not wish to receive any future announcements of products and services offered by Mondaq you may opt out by clicking here

    Terms & Conditions and Privacy Statement

    Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

    Use of www.mondaq.com

    You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

    Disclaimer

    Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

    The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

    Registration

    Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

    • To allow you to personalize the Mondaq websites you are visiting.
    • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
    • To produce demographic feedback for our information providers who provide information free for your use.

    Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

    Information Collection and Use

    We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

    We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

    Mondaq News Alerts

    In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

    Cookies

    A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

    Links

    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

    Mail-A-Friend

    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

    Emails

    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .

    Security

    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at enquiries@mondaq.com.

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.

    By clicking Register you state you have read and agree to our Terms and Conditions