Buying and Selling Units in Body Corporate

Buying or selling a unit within a body corporate or community titles scheme involves a fundamentally different legal framework to standard residential property transactions. While purchasers acquire ownership of an individual lot, they also become part of a shared ownership structure that carries ongoing financial, legal and practical obligations.

At Vojdani Lawyers, we regularly advise clients across Queensland on transactions within community title schemes. A common misconception is that purchasing a unit is a simpler or lower risk transaction. In reality, these transactions require careful consideration of governance documents, financial commitments, and disclosure materials that can significantly impact both ownership and long-term value.

A community titles scheme is a form of land subdivision governed by the Body Corporate and Community Management Act 1997 (Qld). Within this structure, individual owners hold title to their lot (such as an apartment or townhouse), while also sharing ownership of common property, which may include driveways, lifts, gardens, pools and structural elements of the building.

The body corporate is the legal entity responsible for managing the scheme. It administers common property, enforces by-laws, manages finances, and makes decisions affecting all owners.

Recent changes under the Property Law Act 2023 (Qld) have also introduced a more formalised seller disclosure regime, including the requirement for a prescribed disclosure statement and supporting documents such as the Body Corporate Certificate (Form 33). These reforms are designed to improve transparency but also increase compliance obligations for sellers.

The Community Management Statement (CMS) is one of the most important documents in any scheme. It governs how the development operates and sets out key information including by-laws, lot entitlements, and the management structure.

The CMS also identifies how levies are calculated, typically based on contribution schedule lot entitlements, which determine each owner’s share of body corporate expenses. It may also include provisions relating to exclusive use areas, such as car parks or courtyards, and may incorporate a Building Management Statement (BMS) where mixed-use developments are involved.

Importantly, the CMS can affect not only current use but also future development within the scheme. Buyers should understand how the CMS regulates changes to lots, redevelopment rights, and voting thresholds for significant decisions.

Ownership within a body corporate comes with ongoing financial commitments in the form of levies. These are typically divided into administrative fund levies, sinking fund levies, and, in some cases, special levies.

Administrative fund levies cover day-to-day expenses such as cleaning, gardening, insurance premiums and management fees. Sinking fund levies are set aside for long term capital expenditure, including major repairs and replacements such as roofing, lifts, or repainting. Special levies may be raised where existing funds are insufficient to cover unexpected or significant costs.

Levies are calculated based on lot entitlements and can vary significantly depending on the size, age and facilities of the development. Buyers should be aware that levies are not static, they may increase over time, particularly where buildings require major works or where the sinking fund is underfunded.

Failure to pay levies can result in interest charges, recovery action by the body corporate, and restrictions on voting rights. Outstanding levies can also delay settlement or create complications in refinancing.

The operation of a body corporate is driven by formal decision making processes, primarily through Annual General Meetings (AGMs), Extraordinary General Meetings (EGMs), and committee meetings.

At these meetings, owners vote on matters affecting the scheme, including budgets, levies, major works, by-law changes, and the appointment of service providers or body corporate managers. Voting is generally based on lot entitlements, and different types of resolutions, such as ordinary, special or resolution without dissent, may be required depending on the issue.

Understanding how decisions are made is critical, as significant financial commitments or changes to the scheme can be approved by majority vote, even where some owners do not agree.

Under Queensland’s current disclosure regime, sellers of lots within a community titles scheme are required to provide a Body Corporate Certificate (Form 33) prior to the buyer entering into the contract.

This certificate contains key information about the scheme, including levies payable, contributions to the sinking fund, insurance arrangements, by-laws, exclusive use rights, and any outstanding amounts relating to the lot.

While the certificate provides a useful summary, it should not be relied upon in isolation. Buyers should also review body corporate records, including meeting minutes, financial statements and correspondence, to identify any issues such as planned major works, disputes, or financial concerns.

Failure to properly review these materials can expose buyers to unexpected costs or restrictions after settlement.

By-laws are a central feature of community living and can materially affect how a lot is used. These rules commonly regulate matters such as noise, parking, pets, renovations, short term letting, and the use of common property.

While some by-laws may appear minor, they can have significant practical consequences. For example, restrictions on short term letting may affect investment returns, while renovation approvals may limit the ability to modify the property.

Breaches of by-laws can lead to complaints, formal dispute processes, and enforcement action. Buyers should carefully review the by-laws to ensure they align with their intended use of the property.

Disputes within community titles schemes are not uncommon and can arise in relation to noise, parking, renovations, levy payments or alleged breaches of by-laws.

The dispute resolution process typically begins with informal resolution but may escalate to formal conciliation or adjudication through the Office of the Commissioner for Body Corporate and Community Management.

For buyers, the existence of ongoing disputes within a scheme can be a red flag. Reviewing body corporate records can provide insight into the history and nature of disputes, as well as the general management of the scheme.

The body corporate is responsible for maintaining common property, which generally includes structural elements of the building, shared facilities and essential infrastructure.

Buyers should carefully review the financial position of the body corporate, particularly the adequacy of the sinking fund. A well-funded sinking fund can indicate proactive management, while a deficit may signal future special levies.

Insurance is another key consideration. The body corporate typically holds insurance for the building, but the scope and adequacy of that cover should be reviewed. In addition, any known building defects or planned rectification works should be identified, as these can have significant financial implications.

Transactions within a community titles scheme involve additional steps for both buyers and sellers. Buyers should obtain and review the Body Corporate Certificate, CMS, by-laws, and body corporate records before entering into the contract. This due diligence is critical to understanding the full scope of obligations and risks.

Sellers, on the other hand, must comply with disclosure obligations, including providing the Body Corporate Certificate and prescribed disclosure statement prior to contract execution. Failure to do so can give rise to termination rights or disputes.

Outstanding levies, unresolved disputes, or uncertainty around major works can all impact the transaction process, including delaying settlement or affecting negotiations.

Transactions involving community titles schemes require a detailed and practical understanding of both legal documentation and the operational realities of shared ownership.

At Vojdani Lawyers, we assist clients by reviewing Community Management Statements, interpreting by-laws, analysing Body Corporate Certificates, and identifying financial and legal risks within the scheme. We also provide strategic advice on contract conditions and assist in managing issues that may arise during the transaction.

Our focus is to ensure that clients are fully informed and positioned to make confident, commercially sound decisions.