Unit Titles Legislation Amendment Bill 2023
Mr Gentleman, pursuant to notice, presented the bill, its explanatory statement and a Human Rights Act compatibility statement.
Title read by Clerk.
MR GENTLEMAN (Brindabella—Manager of Government Business, Minister for Corrections, Minister for Industrial Relations and Workplace Safety, Minister for Planning and Land Management and Minister for Police and Emergency Services) (11.02): I move:
That this bill be agreed to in principle.
I am pleased to present the Unit Titles Legislation Amendment Bill 2023. The unit titles reform project commenced in 2016. The aim of the project is to look at unit title laws and policies and how they can be improved to better support those who live, work and invest in the ACT, and, in particular, to deal capably with mixed-use developments. Extensive consultation with stakeholder groups was undertaken in 2016-17 to identify key issues, followed by an internal government review.
The reforms are being progressed in two stages. Stage 1 of the reforms, outlined in the Unit Titles Legislation Amendment Act 2020, commenced in November 2020. This act introduced several positive changes for unit owners and prospective buyers. These included better decision-making processes for owners corporations to deal with financial matters and rules; improved disclosure requirements for buyers of off-the-plan units, including more information up-front and updates when important details in the development change; new requirements for building maintenance to make it clearer to owners and buyers what their responsibilities are; and encouraging more pet-friendly units plans, with improved pet rules and streamlining arrangements for assistance animals.
Further improvements to the unit titles laws were also made in the Planning and Unit Titles Legislation Amendment Bill 2020, which included some minor amendments to support implementation of the stage 1 reforms; and the Planning and Unit Titles Legislation Amendment Bill 2021, which made some minor amendments to simplify the process for lodging a building management statement.
We have continued to work with the Unit Titles Reform Consultative Group on the second and final stage of this project. The consultative group includes representatives from the ACT Law Society; the Housing Industry Association, ACT/Southern NSW; Legal Aid ACT; Master Builders ACT; the Owners Corporation Network (ACT); Planning Institute of Australia (ACT); the Property Council of Australia (ACT Division); the Real Estate Institute of the ACT; the Strata Community Association (ACT); and the Surveying and Spatial Sciences Institute (ACT).
The consultative group made suggestions for reform, reviewed the draft legislation, provided feedback on implementing the reforms and distributed communication materials to their stakeholders. I thank each member of the consultative group for their time and their important contributions to this project.
The unit titles reform project completed a range of other ACT government projects under the Managing Buildings Better reforms, including the Better Building Quality program, the Planning System Review and Reform Project and implementation of the ACT Planning Strategy. In addition, improvements to the unit titles legislation support the reforms to residential tenancy and occupancy laws underway since 2016.
The bill amends the building damage scheme under the Unit Titles Act 2001. Sections 152 and 159 of the act provide that, unless it is reinstated, the elimination of a unit within a class A units plan may occur. The eliminated unit would then be included as common property for the units plan. In the circumstance of a two-unit class A units plan, the elimination of the unit should not be permitted, as a units plan cannot consist of only one unit. In this circumstance the units plan should be cancelled, in accordance with section 160.
The bill also amends the Unit Titles Regulation 2001 to update the process for unit titles assessment reports, as well as the specified content and accompanying material required for an application. The unit titles application process requires, amongst other things, a certificate of operational acceptance and a certificate of occupancy and use. The requirements for these certificates are similar; however, a certificate of occupancy and use can only be granted after a certificate of operational acceptance is issued.
Consultation with industry has indicated that the unit titling process, including the applications and approvals processes, could be further refined and expedited. It is therefore proposed to amend the regulation to enable a unit titles application to be lodged with the planning and land authority, and for assessment of the application to commence, with final approval being subject to asset acceptance and the issuing of a certificate of occupancy and use.
The bill amends the Unit Titles (Management) Act 2011 to simplify the requirements for updating a units plan’s corporate register. Currently, the act requires owners to inform the owners corporation when they enter into an agreement to transfer the lease within 14 days of the contract exchange. The bill amends the legislation to only require notification once the settlement has occurred, as this ensures that the lease change will proceed and avoids duplication of reporting.
The bill clarifies the fees and timing of the unit title certificates. The act currently requires an owners corporation to, upon request, provide a certificate to an owner with information about the unit and the common property. Section 119(1)(b) allows for an update of the certificate to be provided, and specifies a lower cost for updated certificates, but does not provide a time limit in which an update can be requested.
This has caused challenges, as some people have requested an update after a significant period of time, rather than a full certificate. This requires the same amount of work to be done as for a full certificate, but at a reduced cost, which is an onerous obligation to be placed on the owners corporation. The bill amends the legislation to limit the time for an update to be requested to be within four months of the original certificate being provided.
The bill provides a further clarification about recovering the costs of paying an insurance excess. Under section 100A(2) of the act, the responsible entity for a units plan is required to lodge an insurance claim and pay any excess in relation to the claim. There is some confusion about the interaction of this section with section 31 of the act, which allows an owners corporation to recover expenses due to a wilful or negligent act or omission. The bill clarifies that owners corporations may recover insurance excess costs where the requirements of section 31 are met.
The bill updates the requirements to register alternative rules on title. Executive committees are currently required to maintain a set of consolidated rules for the records of the owners corporation. However, the registration of rules with the Land Titles Office only requires an amended rule or rules to be registered. This can cause confusion for prospective owners and other people viewing a units plan’s records and trying to establish what the current rules of the owners corporation are.
To address this, the bill requires a full set of alternative rules to be registered whenever the owners corporation makes amendments to the rules. It does not require them to provide a consolidated set of all rules, because the majority of owners corporations use the default rules set out in the act. The act further provides that if an owners corporation amends its rules it must register the rules within three months of the date of the decision; otherwise, the rules are deemed to have not been made.
Stage 1 of the unit titles reform project introduced building management statements and building management committees to help coordinate shared facilities, access and easements in multi-lease buildings. A building management statement is mandatory for any new multi-lease developments that include a units plan. This bill establishes a mechanism for existing multi-lease buildings with a units plan to opt in to a building management statement, via a special resolution. The special resolution process is appropriate, as signing a building management statement is a significant decision to make and commits the owners corporation to financial and legal obligations.
The bill clarifies the audit requirements under the act. The act prescribes that an audit must be completed if the annual budget of the owners corporation is more than $250,000. It is unclear whether this applies to the budget of the general fund, the sinking fund or both. The bill provides that the annual budget includes levy contributions, owners corporation income and any other amounts held. This is similar to the approach taken in New South Wales.
The bill improves the process for managing insurance in class B units plans. The act allows class B unit plans to exempt themselves from having building insurance for the whole complex, typically if each individual unit is insured. Once a decision is made, it later lapses at the next annual general meeting. This is an issue, as there is no notification of its exemption lapsing, which could leave prospective owners unaware that their unit or another one in the units plan is not covered by a plan-wide insurance policy, potentially even leaving it uninsured.
The bill requires the decision to be exempt from building insurance to be registered on the title. This will provide a proper process for the exemption and ensure that the decision has been notified to owners. The exemption can then only be lifted through a resolution of the owners corporation and the exemption will not apply to public liability insurance, which is still required.
The bill also allows owners corporations to sublease common property. The subleasing of common property within unit titled buildings for revenue purposes is currently prohibited under the act, but it is permitted in other jurisdictions, including Queensland, New South Wales and Victoria. This is a growing area of interest for many owners corporations who are looking to utilise unused areas of the property or provide additional services to residents. The bill allows the subleasing of common property through a special resolution for a maximum of five years, to enable minor activities such as businesses hiring the space for a coffee cart, florist or parcel locker. The bill makes clear that these businesses and activities must not unreasonably interfere with people’s access to, and use and enjoyment of, those individual units.
The bill updates the requirements to provide multiple copies of units plans, now that they are lodged in an electronic format. Previously, upon approval of a units plan, the planning and land authority provided the approved plans to the Land Titles Office and to the applicant. Upon registration, the Land Titles Office notified the applicant and the authority in writing. The bill removes the requirement to provide multiple copies of the units plans and reflects the new process of notifying the applicant and authority of the registration of the units plan.
Finally, the bill makes further improvements to the provisions about installing sustainability infrastructure, to clarify when consent may be withheld. Following the stage 1 reforms, the owners corporation cannot unreasonably withhold consent for the approval of the installation of sustainability infrastructure in or on a unit or the common property, or make a rule prohibiting or restricting its installation, operation or maintenance. The installation of these provisions is to ensure that a unit owner can access or improve the sustainability of their unit or subsidiary, as well as improving the overall environmental impact of the units by, for example, reducing carbon emissions or water usage.
However, there are circumstances where the installation may be cost prohibitive or may impede another unit owner’s equal access to similar sustainability infrastructure in the future. For example, the installation of an electric vehicle charging point for a unit owner may require a major upgrade to the existing network or result in significant impact on the electrical loading for existing electrical conduits and prevent another unit owner from installing a charger as it may overload the electrical system.
In this instance, all members of an owners corporation might benefit from a more considered approach, such as upgrading existing electrical infrastructure to improve access to EV charging, or, in the short term, the installation of a shared charging facility. This provision will allow owners corporations to make decisions that avoid disadvantaging some unit owners and users. It will bring additional scrutiny to the consent process for application to install sustainability infrastructure, without conflicting with the original intention to allow and promote greater access to sustainability infrastructure. The bill provides two further examples where permission to install sustainability infrastructure is not unreasonably withheld—financial considerations and equity of access.
To complement the bill, a package of communication materials and legislative instruments is also being prepared to address further unit titles issues such as repairs, access to the sinking fund, payment of insured excess, attendance of non-members at meetings, independent building certification and the expiry of the developer control period.
I am pleased to present this bill, which delivers on stage 2 of the unit titles reform project, to deliver a fairer and easier way to live and work together.