Managing buildings better

Owners corporations can now deal with a broader range of measures as special resolutions, which can be passed without a unanimous vote. Previously, some significant measures could only be passed if unopposed. Special resolutions are fairer because they don't allow a single vote to veto a measure.

Special resolutions need 75% of people to vote for them (that is, no more than 25% can vote against). Previously, the threshold was 67% (no more than 33% could vote against) but it has been lifted to align with other states such as NSW. Special resolutions apply to matters such as amending rules, changing levy contributions methods and granting special use of common property.

The number of proxy votes one person can hold has been restricted. Previously, there was no limit on the number someone could hold, which could influence voting outcomes.

If there are 20 or fewer units in the unit plan, an owner can hold no more than one proxy vote. If there are over 20 units, the number of proxy votes a person, other than the chairperson, can hold is capped at 5% of the total number of units. A new approved form (Unit Titles (Management) Act 2011—Form 2—Appointment of a proxy) has been developed for owners corporations to provide to their owners to enable them to appoint a proxy. This form must be used to appoint a proxy and must be provided with all notices for owners corporation meetings.

If an owner appoints a proxy, they can use the new proxy voting instructions template [110.7 KB] to instruct their proxy on how they would like to vote. There is also an attachment to instruct on multiple motions [252.7 KB]. This template is not compulsory, please refer to the template for further information.

In most circumstances, only one owner per unit is eligible to be on the executive committee. Previously, two or more part-owners of a unit could be voted onto an executive committee without such checks and balances. This gave them more voting rights on the committee and undermined the principle of one vote per unit.

Developers, builders and other parties involved in a development can no longer vote on matters relating to building defects, including potential litigation, unless they are permitted to do so via a special resolution passed by other owners, or through a declaration obtained from the ACT Civil and Administrative Tribunal. Previously, they could vote on such matters if they owned units within the development. This could block owners corporations from taking action to get building defects rectified.

Owners corporations and executive committees can now meet and vote electronically on ordinary or special resolutions. Previously, such decisions could only be made at formally convened meetings.

Meeting agenda guidelines have been developed to ensure important matters are addressed at every owners corporation meeting. The guidelines outline matters such as building defects, maintenance and delegations etc. which must be included as standard items on the meeting agenda for a general or annual general meeting.

Owners corporations should consider each of the agenda items at the meeting, even if they don't make a decision or record an action against each one.

Owners corporations' executive committees can form subcommittees to manage specific issues within units plans. Subcommittees are useful for progressing tasks and managing workloads, particularly within large, mixed-used developments.

Existing owners corporations need to prepare a maintenance schedule to identify any regular maintenance or servicing required for common property and buildings, such as lifts, swimming pools, air-conditioning/heating systems, window washing etc. The schedule ensures these assets stay in good working order for longer and help with planning for the required sinking funds.

For units plans of a certain size or nature, owners corporations need to undertake an annual audit of the funds, accounts and financial statements of unit plans. This ensures funds and financial matters are managed in accordance with the legislation and any decisions of the owners corporation. The audit must be prepared by a qualified auditor who is independent of the units plan.

If an insurance claim needs to be made against an insurance policy held by the owners corporation, the owners corporation is responsible for lodging all claims with the insurance provider and paying any excess on the claim. This helps streamline the claims process and ensures owners corporations promptly deal with insurance matters.

Unless they changed their rules previously, all owners corporations inherited new default rules for managing units plans from 1 November 2020. This means all owners corporations in the ACT largely operate on the same rules, ensuring more consistency.

Rules made by owners corporations need to be compatible with the Human Rights Act 2004 and not be harsh, unconscionable or oppressive.

Owners corporations will need to register the rules they make with the Land Titles Office within 3 months of passing the rules or they will have no effect.

Owners corporations need to create a rule for the granting of a special privilege to use common property for a period of 3 months or more. An example of a special privilege is, for example, giving a certain unit owner access to a goods lift or part of the common property area for outdoor café seating. Owners corporations can impose reasonable conditions on the special privilege. As it is a rule, the special privilege needs to be registered so other unit owners or buyers can find out what special privileges exist within a units plan and so the owners corporation can enforce them and any conditions that may apply. Further information is included below under Transitional arrangements for units plans.

The rules that apply to tenants renting a unit in a units plan have also been clarified. All tenants need only comply with the owners corporation rules if they are consistent with the residential tenancy agreement. The main exception relates to pets. Even if a tenant has a landlord's permission for a pet, they still need to comply with any owners corporation rule about animals, including any consent process or conditions for keeping pets. However, owners corporations are encouraged to adopt new, default pet-friendly rules – see Pets information below for further details.

Owners corporations can now determine levy contributions via the new special resolution process. Previously, this could only be achieved through an unopposed resolution, which meant one vote could prevent change. This was particularly an issue in mixed-use developments.

Owners can separate the budgets for different parts of their units plan to apply contribution levies more fairly. Previously, costs had to be consolidated into one budget across an entire units plan. This meant that owners that used, or didn’t use, certain facilities such as lifts could unfairly pay the same amount for them.

Developers can propose different ways of calculating contribution levies from the start, as long as they are fair and equitable, before they register a new units plan. For example, they may choose to adopt a user-pays approach to water charging if the water is mostly consumed by businesses that own units in the complex. Any changes to the method of contributions determined by the developer must be disclosed to buyers in the disclosure statement. Previously, a new units plan defaulted to a standard way of determining levies, based on the value of an owner's unit as a share of the total value of all the units (unit entitlement).

Owners corporations can change the way they calculate contribution levies for their general and sinking funds. The new method of contributions needs to be adopted as an owners corporation rule and registered on the units plan. The ACT Civil and Administrative Tribunal can review any disputes that may occur as a result of a change in contribution methods.

Owners corporations in mixed-used developments are encouraged to represent all types of owners on their executive committees. Previously, there was no requirement for executive committees to include both commercial and residential unit owners.

Owners in complexes with different leases and uses have a new option for managing their building. Existing multi-lease buildings can adopt a Building Management Statement (BMS) and form a building management committee, made up of the owners of all the different leases, to jointly deal with issues such as shared facilities and easements.

The BMS is a binding agreement that requires all lease owners to comply with the terms of the statement to help manage and maintain the building into the future. That allows, for example, unit owners who occupy the upper floors of a building to work with ground floor businesses to manage areas of common property as well as the building as a whole.

From 1 November 2020, existing multi-lease buildings could opt into adopting a BMS if all lease owners agree, whether or not there was a units plan in the building.

New multi-lease buildings with at least one units plan must have a BMS from 1 July 2021.

Developers can tailor rules for running a new units plan in a way that makes sense for the development. For example, they may propose particular rules for use of a shared entrance foyer. Previously, the same, one-size-fits-all set of rules applied to all new units plans, leaving little room for flexibility or innovation in how they were managed.

If unforeseen circumstances arise, developers and owners corporations can change the rules for running a units plan during the "developer control period" – that is, the period when a developer owns two-thirds or more of units in a units plan. The rule change needs to be authorised by the ACT Civil and Administrative Tribunal, which must be satisfied it is fair and necessary.

Owners corporations can grant special privileges to unit owners or someone with an interest in a unit to use areas of common property. More information on special privilege rules is provided in the Rules information above.

Owners can apply to the ACT Civil and Administrative Tribunal (ACAT) to resolve a broader range of disputes between parties, such as when there is a dispute with an owners corporation’s executive committee member or current manager.

ACAT has additional powers to deal with disputes about owners corporation rules and whether they are harsh, unconscionable or oppressive. ACAT can also review rules that change the method of contributions to ensure they are fair and reasonable.

Developers must give owners buying off the plan a disclosure statement as a part of the contract. This document provides greater information at the point of sale about proposed levies, maintenance and mixed uses throughout the building as well as information regarding the development and its progress. Developers also need to provide update statements to notify buyers of any significant changes to the development, including registration of the units plan and any material changes made since the contract was signed.

These extra steps provide buyers with the information they need to rescind a contract if the unit or units plan is not as described. Previously, there was no requirements for a developer to disclose any changes that occurred during construction, and buyers were not always aware of these changes, which could sometimes be substantial, until just prior to settlement. These new requirements give buyers clearer rights to terminate a contract of sale where the end result (i.e. what is actually built) is significantly different to the plan they bought off. The optional disclosure statement template [118.8 KB] may be used for this purpose.

Owners buying within an existing units plan will receive more information about their unit and units plans in general through improvements to the unit title certificate, also known as a section 119 certificate. The certificate includes more details about all funds held by the owners corporation, any sustainability infrastructure built on the units plan, and current insurances, warranties and contracts the owners corporation has entered into. Find out what a unit title certificate must include in the Unit Titles (Management) Certificate Determination 2023.

Also, just before settlement, buyers can request an updated unit title certificate to make sure they are informed of any changes that may have occurred since contracts were exchanged. Buyers should receive any updated information like contributions or insurance that may have changed since the certificate was first issued. Buyers should talk to their solicitors to help secure this updated certificate before settlement. A template for an update certificate [173.9 KB]is available. This template is not compulsory, please refer to the template for further information.

Owners corporations may charge a fee for a request for a unit title certificate or an update certificate. Find out the fees for a unit title certificate and update certificate in the Unit Titles (Management) (Fees) Determination 2023.

Advertising requirements for the sale or lease of a residential property have also changed to include information if the premises is an adaptable housing dwelling. This information helps those people looking for a premise with adaptable housing facilities to identify from advertising whether the premise may be suitable for their needs.

To help owners corporations understand and manage the building and its facilities, from 1 July 2021 developers need to present an initial maintenance schedule for a new complex at the owners corporation's first annual general meeting. The plan needs to detail the expected maintenance tasks and costs and include an asset register, warranties, manuals and contact details for manufacturers and installers. Previously, no such requirement existed, leaving owners and buyers in the dark about ongoing maintenance for these items and their estimated running costs.

Pet ownership in units plans has been made easier by encouraging owners corporations to pass pet-friendly rules and letting would-be buyers or renters know what the rules on pets are before they commit to a unit. Previously, a unit buyer or tenant had to wait until they moved in before they could ask for permission to keep their pet and were left in limbo until consent was granted.

Tenants still need their landlord's agreement to keep a pet in a unit. But, once they have landlord approval, they should find the owners corporation rules governing pets easier to deal with.

A new default pet rule permits an animal to be kept in a unit, as long as an owners corporation is given notice of its arrival. An owners corporation can adopt the new default pet rule or create its own rule in accordance with the requirements of the legislation. It can also opt to keep a consent process if unit owners prefer. However, if a rule requires unit owners or tenants to seek consent to keep a pet, the owners corporation needs to respond in writing to any such request within 3 weeks of receiving it. If the owners corporation does not respond to the request within 3 weeks, it is taken that consent is granted. Tenants and unit owners can lodge a request to keep a pet before moving in if they want certainty sooner.

Owners corporations are not allowed to unreasonably withhold consent for a pet, and any refusal is subject to review by the ACT Civil and Administrative Tribunal. Consent may be granted with or without conditions. If consent is refused, the owners corporation will need to explain why in writing. Previously, they were not obliged to document their reasons.

People living with a disability or illness do not need permission to keep guide dogs or other assistance animals in a units plan, although they may be asked for proof of their assistance animal's accreditation. Previously, the law did not differentiate assistance animals from other animals, so this reform provides more clarity.

Unit owners now have more rights to install solar panels, electric vehicle charging stations, clothes lines, rainwater tanks or other systems in or on their unit or the common property to make their homes more sustainable. If a unit owner applies to the owners corporation for approval to install a system to save energy or water, the owners corporation cannot unreasonably withhold consent under the reforms. For example, an owners corporation cannot withhold consent due to aesthetic reasons, but can withhold if there are safety or structural issues.

Any rule made by an owners corporation which restricts or prohibits the installation, operation or maintenance of sustainability infrastructure in a unit or on the common property is invalid.

When purchasing, buyers will be given more information about any sustainability infrastructure, like electric vehicle charging facilities, that may be available in the building. They will also receive maintenance plans for the building which will include information on any these facilities will be maintained by the owners corporation. These changes encourage and support owners corporations and unit owners who want to live more sustainably and reduce their environmental impacts.

Registration of alternative rules

The Unit Titles Legislation Amendment Act 2023 amended the Land Titles (Unit Titles) Act 1970 to require owners corporations to lodge an updated compilation of all of their alternative rules each time they change a rule or rules.

Previously, owners corporations were only required to lodge an amended rule or rules. This change means that prospective owners will have access to a full and current set of rules when they are purchasing a unit.

Unit owners may exempt themselves from the requirement to take out and maintain building insurance. This can only be done if the development contains class B units, and the exemption resolution must be unanimous. This typically occurs where each unit has building insurance, and unit owners decide that additional building insurance for the whole complex is not required.

Under the previous arrangements, once the decision to be uninsured was made, it later lapsed at the next annual general meeting. This was an issue as there was no notification of this exemption lapsing, meaning that owners, and particularly prospective and new owners, may not have been aware that their unit did not have building insurance.

The Unit Titles (Management) Act 2011 has been amended to:

• require owners corporations to register their resolution to exempt themselves from building insurance with the Registrar-General within three months of the decision
• clarify that the exemption remains in effect until another resolution amending or revoking the exemption resolution is registered and
• note that the exemption resolution does not affect the requirement for an owners corporation to take out and maintain public liability insurance.

The requirements for a unit title application are set out in the Unit Titles Act 2001 and the Unit Titles Regulation 2001. The combined effect of this legislation is that a unit titles application must include certain documentation (similar to a Development Application), such as a unit title assessment report.

The contents for the unit titles assessment report are prescribed by the Regulation. The Regulation also prescribes accompanying material for a unit titles assessment report. The legislation did not afford any discretion to the planning and land authority to waive the provision of all required documents.

Lodgement of the Unit Title application for a completed development was often delayed because the certificate of occupancy and use and the Transport Canberra and City Services operational acceptance for works on public unleased land had not yet been obtained.

Reforms to the unit title application process will make it possible to lodge a Unit Title application without the following 'required material':

1. the most recent certificate of occupancy and use—
   1. for each unit in the parcel and
   2. for any structure within the boundaries of the common property.
2. if a work approval for the development is required under the Public Unleased Land Act 2013, section 19 (Approval to carry out work on public unleased land)—a copy of the approval.

The 'required material' may now be lodged with the unit title application and if not lodged must be provided by the applicant as further information to accompany the Unit Title application prior to approval of the Unit Title being granted.

Subleasing of the common property of a units plan is permitted in certain circumstances. This provision formalises the process of using common property for business activities, provides a clear framework for subleasing common property, and provides a structure to protect the rights of unit owners.

What business activities will be allowed?

The changes to the Unit Titles (Management) Act 2011 have been drafted to be deliberately broad. They allow individual owners corporations to agree to agree to host a wide range of activities on their common property. Subleased businesses or activities could include a coffee cart, a florist, or the installation of parcel lockers.

It will be a decision for the owners corporation to determine what businesses or activities best suit their complex, common property and residents.

Sublessees will be required to take out and maintain public liability insurance for the affected part of the common property. This will need to be agreed to by both the owners corporation and the entity conducting the business or activity.

What protections will unit owners and occupiers be given?

Rather than specify what activities may or may not be permitted as part of a sublease, the provisions instead ensure that unit owners and occupiers will not be unreasonably disadvantaged by any business or activity taking place as part of a subleasing arrangement. Subleasing will only be able to be:

• approved via a special resolution
• apply to common property not already subject to a special privilege and
• not unreasonably interfere with the use or enjoyment of a unit.

The unreasonable interference test will provide will ensure that unit owners and occupants do not have their access to their unit restricted, their views obstructed, or are not affected by strong odours or loud sounds.

Approval of sustainability infrastructure may be withheld

The Unit Titles Legislation Amendment Act 2020 included amendments to the Unit Titles (Management) Regulation 2011 that were aimed at ensuring unit owners and occupiers are able to install and access sustainability infrastructure. These changes provided that permission to install sustainability infrastructure must not be unreasonably withheld. The 2020 changes did, however, allow for permission to install sustainability infrastructure be reasonably withheld where there are safety or structural considerations.

The Unit Titles Legislation Amendment Act 2023 adds further examples where permission for the installation of sustainability infrastructure may be withheld, being financial considerations or equity of access to common property, easements, utility services, or facilities.

Why is the ACT Government broadening the grounds for withholding approval of sustainability infrastructure?

These changes are not intended to prevent or discourage unit owners and occupiers from installing or accessing sustainability infrastructure. They will, however, help address circumstances where the installation by one owner of sustainability infrastructure may impede another unit owner's equal access to similar sustainability infrastructure in the future, or impose a large cost on unit owners.

For example, the installation of an electric vehicle (EV) charging point for a unit owner may result in a significant impact on the electrical loading for existing electrical conduits, and prevent another unit owner from installing an EV charger as it may overload the electrical system. It may also require a major upgrade to the existing electrical network within a units plan, which could be prohibitively expensive.

Decisions to install sustainability infrastructure on common property have the potential to impact on an owners access to the shared spaces, and may result in additional levies paid by owners to cover installation and maintenance costs. The new provisions will help make the owners corporation aware that these types of issues should be considered before any decisions are made.

The Unit Titles Legislation Amendment Act 2023 delivered stage two of the Unit Titles Reform Project. It streamlined and improved legislative processed by amending several Acts that related to development and management of units plans. These reforms included:

• removing the requirement to lodge multiple copies of units plans, now plans are lodged online
• preventing the elimination of a unit in a two-unit Class A units plan if one unit is the subject of a building damage scheme
• allowing existing owners corporations to opt in to a Building Management Statement via a special resolution
• clarifying circumstances in which owners corporations may recover insurance excess payments
• removing the requirement for a unit owner to give the owners corporation notice if they enter into an agreement to sell the unit, with notification to be provided at settlement
• placing a four month time limit for an eligible person to request a unit title update certificate from an owners corporation, after they have obtained a unit title certificate
• clarifying that all units plans with more than $250,000 in the combined funds under management must participate in an annual audit of their financial records.