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Common Body Corporate Terminology

Common Body Corporate Terminology

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Navigating the world of property ownership involves understanding various terms and concepts, especially when it comes to shared spaces and communal living arrangements.

In this article we look at common terminology used in the body corporate space and explain in simple terms, what they mean to you.

A body corporate is the collective term for the legal entity created and is made up of all owners within a community titles scheme (CTS). It can also be known as a strata-titled scheme or owner’s corporation. It is the structure that allows individuals to jointly own, manage, and pay for shared areas of the development. Its sole purpose is to manage and operate the development for which it was created.

 

A body corporate has the following legal obligations:

  • Maintenance
  • Insurance
  • Taxation
  • Financial accounting
  • Governance and management
  • Compliance and reporting
  • Record keeping

All owners are automatically members of the body corporate. Membership is not optional and comes with obligations like paying levies, however, participation in the running of the body corporate or its decision-making process is optional.
This is the technical term for a unit or townhouse within a body corporate.

A lot is the physical property that is bought and sold, and each lot is formally identified by a number in all body corporate matters. You automatically become a lot owner when you buy into a body corporate development.
The body corporate committee is a group of representatives elected by the body corporate at a general meeting and they are responsible for making day-to-day decisions on behalf of the body corporate and in their best interests. The committee is elected for a one-year period at the AGM and plays a crucial role in overseeing the management of the common property. The work closely with the body corporate manager, and if applicable, the on-site or caretaking manager.

Depending on the type of legislative regulation module, the composition of the committee can change, however the most common composition of the committee is a minimum requirement of three (3), being the executive committee made up of the Chairperson, Secretary and Treasurer, but no more than seven (7), with the ability to also elect four (4) ordinary committee members. One member can hold more than one executive position, however, an owner cannot be an executive committee member and ordinary member.
Each body corporate is legally required to manage and maintain the shared property and services of the scheme and ensure it is compliant with all of Queensland’s strata laws.

This takes time, experience, and an intimate understanding of the complex legislation that governs strata in Queensland. That’s why most bodies corporate choose to engage the services of a professional body corporate manager.

The tasks and responsibilities of the body corporate manager vary, depending on the scheme and the agreement, but generally this role covers:

  • Guiding and supporting the body corporate committee
  • Preparing all documents and meeting paperwork
  • Administering the bank accounts, levies, and creditor payments
  • Preparing financial statements
  • Coordinating other services like the ATO or legal support
  • Dealing with lot owner enquiries
Some buildings will have a building manager, often called the on-site manager or caretaker. This role can be based on-site in a full-time capacity, or off-site with regular attendance to carry out their physical duties. They are remunerated by the body corporate for carrying out the terms and conditions of their agreement, which is based predominantly around the following tasks:

  • Maintain the common property. Tasks like cleaning the pool, cleaning the BBQ area, and maintaining the gardens.
  • Maintain and supervise other service contractors. Including fire safety equipment, gages, lifts, and pool pumps.
  • Assist the committee to monitor by-law compliance on-site
  • Carry out minor repairs to the common property on-site

The CMS is a document containing the essential body corporate information for your scheme. It is registered with the Queensland Land Title registry, and it can be updated if the body corporate decides to make changes.


The community management statement (CMS) contains:

  • The body corporate’s legal name
  • The regulation module for legislative purposes
  • What lots are included in the body corporate
  • The lot entitlements for each lot, and the aggregate lot entitlements
  • The body corporate by-laws
  • Any exclusive use areas allocated to the lots
  • Any statutory easements over body corporate scheme land
  • Building covenants and specifications
Common property is all the area of the land and buildings not included within the boundary of a lot. It is jointly owned by all owners, and the body corporate is responsible for its management.

The boundaries of each lot and all common property are defined in your survey plans.

The body corporate is regulated in two main ways:

  • Legislation
  • By-laws – the internal rules for each body corporate

By-laws regulate what can and cannot happen inside the community titles scheme, and cover a wide range of topics:

  • Changes to each lot’s external appearance
  • Parking
  • Renovations of lots
  • Rules for using the shared recreation areas
  • Pet ownership
  • Speed limits on the shared driveways
  • Opening times of the shared facilities
  • What plants can be grown in the courtyards

 

By-laws are originally decided by the developer, but the body corporate has the power to change them through a democratic voting process. A by-law cannot be oppressive or restrictive in nature.

 

Complying with the body corporate by-laws is compulsory and the apply equally to owner-occupiers, tenants, and visitors. If all parties to the body corporate don’t comply with by-laws, breach notices can be issued to any offending parties requesting that breaches be remedied.

If a by-law is unsuitable or unpopular, owners can submit a motion to their body corporate to change the by-law in question.
Levies is the term referred to which describes the regular contributions made by lot owners to a body corporate bank account. There are three (3) types of contributions payable:

  • Administrative fund levy contribution
  • Sinking fund levy contribution
  • Insurance fund levy contribution
These funds are recovered from all lot owners to fund the maintenance and repair within a body corporate, pay for utilities, contracts, capital works, insurance, and any general day-to-day expenses either known or unforeseen. The amount each lot owner pays in levies is determined by the CSLE and ISLE which can be identified in the CMS.
The CSLE allocated to each lot in the CMS is the index or number used to apportion each lot owner’s share when it comes to paying contributions towards the administrative and sinking fund. The CSLE is also used to determine the share an owner is obligated to pay if special levies are required also.

Lot entitlements are determined by the size and value of the lot, access and use of amenities, facilities or assets, and any other impact by the lot to common property. For example, in a high-rise apartment complex where there are lifts, the ground floor unit owner who does not require the lift will have a lesser entitlement than the owner who lives on the top floor who requires the use of the lift.

The ISLE allocated to each lot in the CMS is the index or number used to apportion each lot owner’s share when it comes to paying contributions towards the insurance levies (only where the CSLE and ISLE are different). Where the CSLE and ISLE are the same, separate insurance levies are not required.

The administrative fund pays for the annual operating costs of the body corporate.

  • Paying the building manager or caretaker
  • Insurance
  • Electricity for the common property
  • Grounds maintenance
  • Water for the common property
  • Minor repairs and maintenance
  • Tax
  • Legal costs
  • The body corporate manager
The sinking fund is the body corporate’s long-term savings fund.

Owners pay into this each year as an ongoing contribution to the future cost of repairing or upgrading major components within the building and common property.

These including things like:
  • Painting the exterior of the building
  • Roof replacement
  • Pool resurfacing
  • Replacing or upgrading a lift
  • Purchasing new equipment for the gym
Given the complexity of the sinking fund calculations, these levies are usually set by an expert.

Every 5 years the body corporate engages a quantity surveyor to inspect the property and provide an estimate for all capital expenses likely to arise in the next 15 years. It considers the future cost of each item and estimates the remaining life span of the existing ones.

The sinking fund forecast report includes the levy amount required each year to achieve the target savings for those capital expenses and avoid special levies.

The administrative fund budget is set by the body corporate committee, assisted by the body corporate manager, based on the projected operating costs for the coming year.
From time to time a body corporate may be required to issue a special levy to all owners. A special levy is an additional levy issued over and above the usual administrative and sinking fund levies. It is usually issued when one of the following situations occurs when:

  • There are insufficient funds available in the sinking fund to carry out major works, like repainting or roofing.
  • The body corporate instigates a major improvement to the common property that is not included in the sinking fund forecast, for example the installation of a new BBQ, a gazebo area or new pool.
  • The body corporate runs out of money.
A special levy can only be considered and approved at a general meeting, voted on by all lot owners.

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