Review of the Unit Titles Act 1972 - Discussion Document, May 2006
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5.9 Smoothing the transition to the new Act
We recognise that there could be problems if we don’t provide an adequate lead-in time to the new Act, particularly for existing developments. For example, a compulsory long-term maintenance plan and fund may mean changes to body corporate levies, which owners would not have anticipated when they bought their units. They need time to plan for this.
After the lead-in time, we intend all provisions of the new Act to apply to all existing and new unit title developments from the commencement date which is when the new Act comes into force. There will be exceptions for certain matters which will have special transitional provisions.
The proposals in this section cover:
- a lead-in time for the new Act
- special transitional provisions.
| The unit titles industry will be given enough time to prepare for the requirements of the new Act. There will be a lead-in time of at least 6 months from the date the Act is passed to the commencement date |
| All provisions of the new Act will apply to all unit title developments where a unit plan is deposited on or after the commencement date. |
| All provisions of the new Act will apply to all unit title developments that legally existed before the commencement date, subject to the following proposals for special transitional provisions (see P90–P95). |
| Disclosure by the initial developer to the body corporate must be completed as far as is reasonably practicable. |
| Implementing the compulsory long-term maintenance plan and fund will be linked to a unit development’s existing financial year planning and reporting cycle. |
| If the long-term maintenance plan and fund are not made compulsory for existing schemes, existing bodies corporate will be able to opt in on a 75/75 percent vote. |
| An existing unit development may apply to the proposed dispute resolution tribunal to be exempt from the compulsory long-term management fund or maintenance plan where: - it will be uneconomic to maintain the unit development for more than 5 years, and
- there is a 75/75 percent vote to demolish the unit development after 5 years, and
- a structural engineer certifies that maintaining the unit development for more than 5 years is unsound or uneconomic.
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| A body corporate that wants to review a contract the developer entered into before the start of the new Act may apply to the proposed dispute resolution tribunal. This must be within 2 years of the new Act coming into force. Applicants must show that: - the developer has entered into such a contract with an associated party, and
- the contract provides such an unfair benefit to one party that it is reasonable to believe that it would not have been entered into during ordinary 'arm's-length' commercial negotiations.
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| Staged developments which began before the commencement date of the new Act will have the current voting requirements of unanimous agreement. They will be able to opt into the new provisions with a 75/75 percent vote, if the developer chooses to prepare and file a statement of future development. |
Effect of proposals
The transitional proposals will provide a simple, certain and fair lead-in to the new Act. We want the transitional proposals to strike the right balance between existing rights and expectations, and giving everyone the full benefits of the new law as quickly as possible.
| Do you agree with the proposed transitional provisions? If you do, is there anything else we should consider? If you disagree, please explain why. |
| What are the advantages and disadvantages of the proposals for you? |
| Will the proposals have any financial implications for you? If so, please explain giving as much information as you can. |
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