It is recommended that current and potential members of a Body
Corporate in a unit title development understand the nature and
effect of a "section 74 Scheme".
What is a section 74 scheme?
Where a building in unit title development is damaged, perhaps
by reason of being a leaky building, the Body Corporate usually
takes charge of the repairs.
More often than not, the repairs involve work to both private
and common property. There is also a wish by owners that if repairs
are required, then they should be done to the same standard and at
the same time.
In general, a Body Corporate is not entitled to levy for or do
work to a unit's private property. So, and unless all unit
owners are in agreement about the way forward, the Body Corporate
is obliged to apply to the High Court for an order under section 74
of the Unit Titles Act to empower the Body Corporate to effect the
repairs, allocate the costs of the repairs equitably amongst unit
owners and levy owners to pay for them. The Court's order is
commonly referred to as a "section 74 Scheme".
Unit owners are invariably consulted regarding the proposed
scheme before it is put before the Court and, of course, if they
have unresolved concerns they have the right to be heard by the
Court when the application is made. The fact the Court is
involved helps to ensure that the scheme is fair and, ultimately,
binding on all owners.
What might this mean for you?
Once the High Court makes an order, the Body Corporate (or some
of its members) are empowered to commission the repairs and recover
the cost of them from unit owners even if some owners are less than
cooperative. Problems can and will be encountered, but a well
drafted scheme ought to anticipate this and offer practical and
fair solutions to those problems.
How we can help
Designing and implementing an inclusive scheme will ensure
repairs proceed as efficiently as possible and ought to help
members within the unit title community live together in harmony
once the work is finished. Our team can assist Body Corporates
to develop just such a scheme.