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Are the rules the rules?

By Kay Keam - 17 May 2013

Care needs to be taken when looking at body corporate rules.  The first step is working out what the rules are.

Just because a notice of change of rules for a body corporate has been registered against the title to a unit doesn't mean that those rules are still current.  Don't be fooled as old rules may now be redundant. 

Generally if a change of rules was registered under the old Unit Titles Act 1972 and replacement rules under the new Unit Titles Act 2010 have not been passed and registered, those old rules will now be replaced by the default rules set out in the Regulations.  There will not be anything noted on the title to draw this to your attention and it would be quite easy to incorrectly assume that the old rules are still in effect.

The second step is working out what can be changed from the new Act

The new Act draws a distinction between the parts of the old rules for voting and meeting procedure which are now in the Act and the operational rules which are in the Regulations.  Only the operational rules can be changed.

When it comes to changing the default operational rules, we need to ensure that any changes are permitted by the Act.   A purported change to the default rules must not exceed the discretion given in the Act and if this discretion is exceeded then the new rule will not be valid.  The rules will also be invalid if they are contrary to the Act.

The default operational rules in the Regulations are very basic.  There are only two rules compared to the extensive rules that should be used for complex developments.  Rules for commercial developments will also be quite different from rules for mixed use or residential developments.  Examples of the types of changes you should consider would include control and administration of common facilities such as visitor parking, gym facilities or a swimming pool.  To ensure that your development is going to work for everyone, you should check that the operational rules are drafted specifically for your development.

Given that there are now more restrictions on what can be contained in body corporate rules, other options such as a land covenant should also be considered.

If you would like us to review your rules please call Kay Keam or one of our property team.

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Kay Keam

 

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