What is covered (and not covered) by body corporate?

    If you’re new to body corporate, it can be confusing at first. What exactly is a body corporate and what does it cover?

    2nd Jul 2019
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    What is the purpose of a body corporate and who belongs to it? Who can make decisions, what decisions can be made and how are they made? Read on to find out the basics about bodies corporate, and how living in a body corporate scheme will affect you.


    Body Corporate



    What is a body corporate?

    A body corporate scheme comes into operation when a parcel of property is divided between multiple owners, and will contain both individual lots as well as common property which is shared amongst all owners. It exists as a legal entity and all of the operations of the body corporate are governed by the Body Corporate and Community Management Act 1997.


    To put it simply, a body corporate is like a company and the owners of each lot are like the shareholders in that company. The purpose of the body corporate is to uphold the best interests of all owners by managing and maintaining the common property. A body corporate will carry out general responsibilities such as:


    • Insuring the common property
    • Establishing by-laws which the complex will operate under
    • Keeping records of the operations of the body corporate, including financial records, meeting minutes, owner details etc.
    • Determining the amount of levies payable by owners, which go to fund the operation of the body corporate
    • Ensuring an adequate supply of funds is maintained for future maintenance of the common property
    • The body corporate is given powers under the relevant legislation to carry out its duties; and makes these kinds of decisions at general meetings and through a body corporate committee.


    Each body corporate has a community management statement (CMS), which contains:


    • The name of the body corporate
    • The community titles scheme number (CTS)
    • A description of the common property and the lots
    • The entitlements for each lot in the scheme
    • The body corporate by-laws
    • A list of exclusive use grants or easements


    The body corporate operates on a financial year that begins when the body corporate was first established; for instance, if it was established in September, the financial year for that

    body corporate would run from 1st September to 31st August each year. These key financial year dates are important for body corporate operations.



    Who is a member of the body corporate?

    All lot owners in the body corporate scheme (which allows you to privately own part of a building or a section of land, as well as share common property and facilities with other owners and tenants) are automatically members of the body corporate.

    No owner may opt out of this membership – it is compulsory for all. Each owner has a right to participate in decision-making and a responsibility to co-operate with their neighbours and follow strata schemes by-laws.


    Body corporate decisions and the purpose of the committee

    The body corporate needs to be constantly making decisions about all aspects of its operations. Many of these decisions are made by a body corporate committee. However, the law allows committees to only make certain decisions.

    Decisions that cannot be made by the committee (usually those of a more serious and consequential nature) must be made at a general meeting. Most bodies corporate are required by law to hold one annual general meeting (AGM) a year, where lot owners can vote on important decisions such as levies and budgets.


    How the committee is formed

    The body corporate committee is elected at the AGM each year through votes from body corporate members. The specific requirements of the committee will depend on the regulation model that applies to each body corporate scheme. The committee usually comprises the following roles:

    • Chairperson
    • Secretary
    • Treasurer
    • Ordinary committee members



    How can the committee make decisions?

    The body corporate makes decisions that enable it to manage its duties efficiently and effectively. These decisions can be made at a committee meeting, or alternatively, by voting outside of a committee meeting.

    The committee decision-making process needs to be transparent, and decisions and accurate minutes of each meeting must be recorded in full. How each committee conducts meetings depends on the regulation model that applies to each scheme. Some committees hold regular meetings, while others prefer to vote outside of meetings if issues arise.



    Funding

    A body corporate is funded by its members, who are the lot owners. It must set appropriate budgets and collect contributions from owners (called levies) to meet projected expenditure. Most bodies corporate operate using three separate funds:

    • Administrative fund, which covers maintenance of the common property and assets
    • Insurance fund, which covers insurance premiums
    • Sinking fund, which is a long-term fund designed to provide for the ongoing maintenance of common property and assets



    The body corporate manager

    A body corporate committee often engages the services of a manager to carry out various tasks which might include issuing levy notices, administration of bank accounts and preparing minutes.

    The committee remains responsible for making decision and instructing the body corporate manager – the two roles work in tandem for the benefit of the body corporate.


    A body corporate manager such as those found at Capitol BCA can streamline all the processes involved in running a body corporate scheme and help to provide stress-free living for those living within the scheme. Contact Capitol today to find out more.

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