Legislation Amendment Bill – Temporary Financial Relief Measures
May 22, 2020
Earlier this week, the Justice and Other Legislation (COVID-19 Emergency Response) Amendment Bill 2020 was introduced to the Queensland Parliament to amend provisions of the Body Corporate and Community Management Act 1997 (BCCMA) and has passed last night.
The purpose of the amendment bill is to “provide measures to alleviate the financial burden caused by the COVID-19 emergency on bodies corporate for community titles schemes and owners of lots included in the schemes.”
Read on to learn more about the amendments and how they will affect your Body Corporate.
The amendments to the BCCMA will be in place from the commencement of the Bill and will end on 31 December 2020 which include:
Sinking Fund Contribution Temporary Reduction
The option to reduce the sinking fund budget and associated levies by excluding forecasted capital expenses that can reasonably be postponed. There is also the ability to refund any existing levied amounts in excess of the adjusted (reduced) budget once adopted, resulting in the total levies collected for the year equal to the budget total. The sinking fund budget will be required to increase again the following year to meet the requirements to accumulate funds to meet forecasted capital expenditure over at least the next 9 years to return to compliance with the BCCMA.
Extension of Levy Due Date By Committee Authority
The authority for the committee to postpone the due date for levy contributions to no later than the financial year of the body corporate. This is to provide lot owners suffering financial hardship as a result of COVID-19 with additional time to pay their contributions. Previously, this was a restricted matter for the Committee and could only be approved by amending the original motion approved at a General Meeting of the Body Corporate and therefore reducing the administrative burden currently in place which can create further costs.
Penalty Interest Suspended
Suspension of additional penalty interest on overdue levies which can be up to 30%p.a. if previously approved to be in place at a General Meeting. Penalty interest that has already accrued will still remain though but will not accumulate further until after 31 December 2020.
Levy Debt Recovery Suspended
Suspension of the body corporate’s requirement to recover unpaid levies. The Body Corporate still has the ability to recover levies however it will no longer be a requirements to initiate proceedings to recover lot owner contributions that have been outstanding for 2 years. This amendment is to enable Bodies Corporate to defer commencing debt recovery action against lot owners experiencing financial distress due to COVID-19
Borrowing of Funds Approval Threshold Reduced
Temporarily increase (double) the maximum amounts that bodies corporate can borrow when authorised by ordinary resolution (that is, for most schemes, allow the body corporate to borrow up to $500 multiplied by the number of lots in the scheme, and double the upper limit for borrowing under the BCCMA
These amendments are intended to provide flexibility for Bodies Corporate to approve financial relief for owners affected by the impacts of COVID-19 by reducing the administrative burden that often increases costs and the financial impacts already occurring.
Caution should be exercised when considering these financial relief options keeping in mind that there are many cost obligations associated with the scheme that cannot be postponed, particular when it comes to safety and maintenance aspects and therefore the individual circumstances of the Body Corporate and the individual owners affected need to be considered.
Want to Know More?
Click here to register for a webinar we are hosting to delve into the impacts of the amendments and provide guidance on responsibly living with and managing the financial and health impacts of COVID-19 in strata.
This article was contributed by Grant Mifsud, Partner – Archers the Strata Professionals
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