What is a body corporate?
A body corporate scheme starts its’ existence when a parcel of property (land and buildings) is divided amongst a number of different owners. This property will be comprised of both individual lots owned by individual owners, as well as common property, which is shared among all owners and can be used by everyone who is part of the scheme.
The body corporate itself is a legal entity that is tasked with managing and maintaining the common property and upholding the best interests of all owners.
The body corporate performs a wide variety of functions, and helps alleviate the problems that inevitably arise when a diverse group of owners tries to manage the scheme.
In a nutshell, a body corporate is like a company in which the shareholders are the lot owners.
How is a body corporate formed? A body corporate automatically comes into existence when a parcel of land is subdivided and registered under the Land Title Act 1994, and what’s known as a community titles scheme is established.
This type of scheme allows owners to privately own a portion of the building and land, as well as sharing common property with the other owners.
Who is a member of the body corporate?
In short – everyone. All lot owners automatically become members of the body corporate when they purchase their lot. It’s not an optional membership either, and no one is able to opt out of membership.
What does the body corporate do?
The body corporate will carry out all the tasks involved with running, maintaining and managing a building comprised of multiple owners, on behalf of those owners. These tasks include:
- Establishing by-laws which the complex will operate under
- Determining the amount of levies payable by owners, which go to fund the operation of the body corporate
- Keeping records of the operations of the body corporate, including financial records, meeting minutes, owner details etc.
- Insuring the common property
- Ensuring communication between different parties, and managing disputes and conflict between lot owners
- Ensuring an adequate supply of funds is maintained for future maintenance of the common property
- Maintenance and repair of common property
- Security
- Controlling and managing body corporate assets
Who makes body corporate decisions?
Most decision-making in the body corporate is carried out by a committee, made up of a small number of lot owners who are elected to make decisions on behalf of all the owners. There’s a lot of decision-making required in a body corporate, and the committee is tasked with making most of these decisions about all aspects of its operations.
However, some important decisions (usually ones of a more serious or consequential nature) will need to be made at a general meeting of all lot owners, rather than just by the committee. This allows all owners to have a say on big decisions such as budgets or levies.
Some bodies corporate will employ the services of a body corporate manager, who will carry out various tasks, such as preparing meeting minutes, administering bank accounts or issuing levy notices. It’s important to note however, that a body corporate manager can’t make any decisions in the scheme – they can only carry out tasks as instructed by the body corporate committee. To find out more about body corporate management, click here: https://www.capitolbca.com.au
How does the body corporate fund projects and essential costs?
All the funds needed for maintenance, upkeep, repair and insurance of a building are raised through something known as levies. As a lot owner, you are naturally expected to contribute towards the operating and running costs of your building and land – and each lot owner is required to make a financial contribution each year, known as a levy.
The amount of levies to be paid is set every year and is based around the budget and projected expenditure.
Levies will be distributed into two different funds – the Administrative fund, and the Sinking fund. The Administrative fund covers all the regular maintenance, repair and upkeep of the common property and assets; think of it like a day-to-day expense account.
In contrast, the Sinking fund is a long-term fund designed to provide funds for bigger or longer-term projects, such as painting the building or repairing the roof. Think of it like a savings account, to be spent on big projects.
Is the body corporate different in Queensland than in other states?
Essentially, a body corporate works the same way in all Australian states; however, regulations and legislation may differ from state to state.