What is a Body Corporate?

By October 22, 2020Body Corporate Basics

A body corporate is a legal entity which is created when land is subdivided and registered under the Land Title Act 1994 to establish a community titles scheme. When you purchase a lot in a community titles scheme you automatically become a member of the body corporate.

Community titles scheme

Community titles schemes (also known as strata schemes) allows someone to privately own an area of land or part of a building, and share common property and facilities (like lifts, carparks and pools) with other owners and occupiers.

A community titles scheme is made up of 2 or more lots.

They are most commonly a:

  • duplex;
  • residential unit block;
  • townhouse complex;
  • high rise accommodation building;
  • shopping complex;
  • or business park.

 The role of the body corporate

The role of a body corporate in Queensland is to administer common property and body corporate assets for the benefit of all the owners, and to undertake functions required under legislation.

 What does a body corporate do?

The body corporate is given powers under the legislation to carry out duties including.

  • maintaining, managing and controlling common property on behalf of owners;
  • deciding the amounts to be paid by owners to ensure the body corporate can function properly;
  • making and enforcing its community’s rules called by-laws;
  • organising insurance policies on behalf of owners, such as public liability insurance over the common property and building insurance
  • managing and controlling body corporate assets;
  • keeping records for the body corporate, including minutes of meetings, roll of owners details, financial accounts, registers of assets, improvements to common property by owners, engagements and authorisations.

The body corporate makes decisions about these and other things at general meetings and through the committee.

In performing these duties, the body corporate can enter into contracts, employ staff and generally deal with property. However, unlike a commercial entity, it cannot conduct businesses such as a letting agency, tour operation or restaurant.

However, the body corporate may engage in any business activities necessary to properly carry out its functions (eg. investing funds).

 What is the body corporate committee?

The committee are elected representatives of the owners. The committee of the body corporate represents owners or owners’ nominees and is responsible for the day-to-day running of the strata scheme.

The body corporate must elect a committee at each annual general meeting. The committee is made up of lot owners or people who act for them. A committee must have at least 3 members.

The committee oversees:

  • the administrative and day-to-day running of the body corporate
  • making decisions on behalf of the body corporate
  • putting the lawful decisions of the body corporate into place.

The committee can make decisions by calling a committee meeting or by voting outside a committee meeting.

If the body corporate has engaged a body corporate manager, it may authorise the manager to carry out some or all the powers of the committee.

 How is the body corporate funded?

Every lot owner contributes financially to the body corporate in payments known as ‘levies.

Levies are pooled together to maintain the community and common areas and to undertake other necessary functions of the body corporate.

Owners decide on the size and frequency of levy payments at the annual general meeting.

There are two types of contributions set by the body corporate:

  • The contributions to the administration fund- used to cover day to day expenses of the body corporate such as electricity, cleaning, gardening, insurance premiums, routine maintenance and repairs to common property, management fees etc.
  • The contributions to the sinking fund- used to cover the costs of future capital expenses, such as painting the building, and replacing common property items like stairwell carpeting and roofing.

How does the body corporate make decisions?

Decisions are made by owners in two ways:

  • At a meeting of all the owners (a general meeting)
  • At a meeting of the committee for the body corporate

No individual acting alone can make a decision.

Can I opt out of being part of the body corporate?

No. When you purchase a lot in a community titles scheme you are automatically a member of the body corporate.

This gives you voting rights when issues arise that require a vote such as electing committee members.

When is a body corporate manager needed?

A body corporate manager (also called a strata manager) can be appointed by the owners (body corporate) of a community titles scheme to assist with the administration of the scheme on behalf of all individual owners.

A body corporate manager will work for the collective interest of all owners and provide advice and guidance for matters like legal compliance and financial administration.

There is no legal obligation for a body corporate to have a manager. A body corporate may choose to engage a manager when:

  • there is a committee—to perform some or all of the powers of the executive members of the committee to assist the committee
  • there is no committee—to carry out functions in place of the committee.

Duties of a body corporate manager

The duties of a body corporate manager can differ depending on whether the body corporate has a committee or not.

In a body corporate with a committee

If a body corporate has chosen a committee, the body corporate manager is engaged to help the committee. The manager can only do what the body corporate asks them to.

The duties of the manager are contained in the written engagement entered into with the body corporate.

Maintenance of common property

The manager is not responsible for the maintenance of the common property but may organise work if the committee asks them to.

Click here for more information on bodies corporate and how they function.

 

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