Changes to Lot Entitlements and Disclosure in Community Management Statement

Recent changes to the Body Corporate and Community Management Act (BCCMA) in April of this year have made it compulsory for owner’s registering a Community Management Statement (CMS) to outline and record the principles behind the calculation of the contribution and interest schedule lot entitlements. We will now deal with each lot entitlement category separately.

Contribution Lot Entitlements

Pursuant to section 66(db) of the BCCMA, when establishing a scheme, the owner must disclose in the CMS, among other things, the following:

· The contribution schedule principle under section 46(7) on which the contribution schedule lot entitlements have been decided;
· If the contribution schedule lot entitlements have been decided in accordance with the equality principle and are not equal, explain why they are not equal; and
· If the contribution schedule lot entitlements have been decided in accordance with the relativity principle, include sufficient details about the principle to show how the individual contribution schedule lot entitlements for the lots were decided by using it.

The two principles to be used, as provided for in section 46A, are the equality principle and the relativity principle.

The equality principle for deciding contribution schedule lot entitlements for the lots included in a community titles scheme is the principle that the lot entitlements must be equal, except to the extent to which it is just and equitable in the circumstances for them not to be equal.

The relativity principle for deciding contribution schedule lot entitlements for the lots included in a community titles scheme is the principle that the lot entitlements must clearly demonstrate the relationship between the lots by reference to one or more particular relevant factors.

Interest Lot Entitlements

Pursuant to section 66(dc) of the BCCMA, when establishing a scheme, the owner must disclose in the CMS, among other things, the following:

· if the interest schedule lot entitlements reflect the respective market values of the lots, state that the interest schedule lot entitlements reflect the respective market values of the lots; or
· if the interest schedule lot entitlements do not reflect the respective market values of the lots, explain why the interest schedule lot entitlements do not reflect the respective market values of the lots.

The interest schedule lot entitlements must comply with the market value principle pursuant to clause 46B and if they do not comply with the market value principle, you must explain why.

The market value principle for deciding interest schedule lot entitlements for the lots included in a community titles scheme is the principle that the lot entitlements must reflect the respective market values of the lots, except to the extent to which it is just and equitable in the circumstances for the individual lot entitlements not to reflect the respective market values of the lots.

These changes have only come into effect as of April this year, and therefore, in order to ensure that you are receiving up-to-date and practical legal advice, come and see the Commercial Team at Hatzis Lawyers and we will be more than happy to assist you.

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