Building Management Statement – What are they?

Changes to the Real Estate Institute of Queensland (REIQ) contracts have come into effect for residential unit purchases. A buyer’s method of terminating a contract now includes failure to register an interest. It is important for buyers, sellers and body corporates to understand what a building management statement is and how it relates to registering third party interest in units and apartments.

What is it?

A Building Management Statement (BMS) is a written agreement between two or more parties that share and maintain common property within a building. It is a document that directs how common property is accessed, managed and maintenance repairs funded between the parties to the BMS.

Because a BMS deals with shared property for unit holders, a BMS would affect the common property that unit owners have access to use.

Usual examples of common property include

• shared car park,
• lifts
• access to public areas of the building (e.g. a foyer), and
• water and sewerage services and pumps

A BMS provides the benefit of providing unit owners with guidance on the apportionment of costs to each unit holder for the management and maintenance of the shared property. Furthermore, because the shared services are individual to the unit complex, BMS’s are drafted uniquely for the body corporate scheme it relates to. Every provision of the BMS will apply and be of importance to unit owners.

How does a BMS differ from other Body Corporate Documents?

The biggest difference between a BMS and other Body Corporate documents is that it is not regulated under typical body corporate legislation. Instead of being regulated under the Body Corporate and Community Management Act 1997 (Qld), it is regulated by the Land Title Act 1994 (Qld).

Because a BMS is registered under the Land Title Act, the terms and conditions stated in the BMS must be complied with by the parties to the BMS. This is similar to how by-laws in a Community Management Statement operate. A BMS must contain terms for:

the supply of the shared property to the lots;

rights of access to the shared property;

rights of support and shelter; and

insurance for the shared property.

A BMS may contain terms relating to the maintenance of the shared property, standards of build, rules for using the shared property and proposed developments to the shared property. This can provide a concern for owners of shared property particularly when it comes to payment of shared costs. If costs for maintenance of shared property is not correctly allocated or recovered by the shared owners, there is no recourse to be reimbursed.

The non-effect of the Body Corporate and Community Management Act 1997 (Qld) is also a concern for a dispute resolution process. If the BMS does not provide in its terms any type of dispute resolution process, then parties cannot rely on the Body Corporate and Community Management Act 1997 (Qld) to provide guidance on the success of their claim. Therefore, parties should seek legal advice on how successful they would be if pursuing a court claim.

How to amend a BMS

A BMS can only be amended by two methods. The first method is amending the BMS through the method that is prescribed in the terms of the BMS. The second method of amending it by a vote. The terms of the BMS will dictate the voting process, there is no general law that applies to BMS meetings and voting. You should read the terms of your scheme’s BMS carefully to determine:

if it provides a process for amending the BMS; and

the terms surrounding meetings and voting for the BMS.

New REIQ Contract changes and how it impacts a BMS

On 20 January 2022, REIQ contracts were amended to include new provisions. One of these provisions allows for buyers to terminate the contract for a seller’s failure to disclose services unrelated to the land that are not protected by a BMS (for example, sewerage pipes for somebody else’s property). Please see item 4 of our previous article regarding this.

It is now crucial that any services for gas, water or sewerage be at least disclosed and ideally registered on the BMS in order to remove the buyer’s option to terminate the contract on that basis.

If you have any questions or require assistance with a BMS or conveyancing matter in Queensland, please contact the property team at NB Lawyers for more information.

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