Differences in Regulation Modules
December 17, 2020
Most bodies corporate in Queensland are regulated by the Body Corporate and Community Management Act 1997 (Qld) (BCCM Act). There are a small number of schemes that are regulated by some specified legislation (for example, some schemes located at Hope Island, Sanctuary Cove, Royal Pines and Southbank).
There are over 50,000 bodies corporate in Queensland that are governed by the BCCM Act, which deals with issues such as:
- how a body corporate is created and other development matters;
- lot entitlements and community management statements;
- operation requirements of a body corporate;
- by-law enforcement; and
- disputes (and the creation of the Commissioner’s Office).
Each body corporate is then further regulated by a more specific subordinate legislation called a “regulation module”. Regulation modules contain different provisions that are intended to allow the different schemes to operate under rules that best suit the scheme.
For example, a scheme with only two lots does not need the same governance requirements as a scheme with 300 lots.
What are the regulation modules?
There are five different types of regulation modules including:
- Standard Module – which makes up approximately 62% of all schemes;
- Accommodation Module – which makes up approximately 8% of all schemes;
- Commercial Module – which makes up approximately 4.5% of all schemes;
- Small Schemes Module – which makes up approximately 21% of all schemes; and
- Two Lot Module – which makes up approximately 4.5% of all schemes.
What are the differences between regulation modules?
A detailed comparison of the differences can be found in a prescribed BCCM Form 19 here.
The more noteworthy differences are listed below:
- The Two Lot Module does not have a committee and does not hold meetings.
- The Commercial Module does not have a committee spending limit.
- The Standard Module allows certain committee decisions to be “vetoed” by owners if more than half of the lots dispute the decision within 7 days so that any committee decision can only be implemented after that 7 days has passed.
- The Small Schemes Module does not require voting papers to be sent for general meetings.
- The Standard Module and Accommodation Module have limits on proxy use at general meetings.
- The Accommodation Module and Commercial Module has less restrictions on borrowing funds.
- The Accommodation Module and Commercial Module allows management rights contracts of up to 25 years and the Standard Module allows management rights contracts of up to 10 years.
- The Accommodation Module and Commercial Module allows leases up to 10 years with a special resolution and the Standard Module allows leases up to 3 years with a special resolution. This is something we discussed in more detail here.
Can you change from one regulation module to another?
Yes. However, to change from one regulation module to another, the body corporate must:
- meet the qualifying criteria; and
- pass a special resolution at general meeting and record a new CMS reflecting the change.
The qualifying criteria for each module is as follows:
- Standard Module – this is the default module so can apply to any scheme.
- Accommodation Module – which requires the lots to be predominantly (or originally intended to be) accommodation lots. Accommodation lots are lots that are not owner-occupied.
- Commercial Module – which requires the lots to be predominantly (or originally intended to be) commercial lots. Commercial lots are lots that are used for commercial, retail or industrial purposes.
- Small Schemes Module – which requires the scheme to have 6 or less lots in the scheme and no letting agent.
- Two Lot Module – which requires the scheme to have 2 lots in the scheme and no letting agent.
In its simplest terms, a special resolution usually only requires two-thirds of the votes cast to be in favour of the motion – a relatively achievable process when compared to a resolution without dissent (where a single no vote will cause the motion to fail).
Interestingly, if a standard module building wanted to enter into a lease for more than 3 years, and did not want to risk the resolution without dissent not passing, it could firstly change to the accommodation module and then enter into the lease (all of which would be done by special resolution).
If you are considering changing your module, or someone has proposed a change by submitting a motion, you should seek legal advice to make sure that the consequences of the proposed change are fully understood and any approved change is carried out correctly.
This article was contributed by Todd Garsden, Partner – Mahoneys Lawyers