Body Corporate ManagerLegislation

March 2020 – Duplexes – An inconvenient truth

There are about 25,000 duplexes in Queensland. When selling a duplex, a problem can arise for the buyer, the seller, or both. There can be some significant blind eye and misinformation being transacted.

At one extreme is a duplex that is under body corporate administration by a body corporate manager. In a recent example, the total annual levies were $2,800 per lot owner. $5,600 for both lots together per annum. Buyers often baulk at proceeding when they uncover significant future recurring outlays such as these. In our case, the buyer was advised by the real estate agent – ‘Don’t worry, the government is getting rid of bodies corporate’. There is a very small grain of truth in what the agent said. Back in 2012, the government legislated to enact a new regulation specifically designed for duplex lots that form part of a body corporate. If the duplex takes action to be regulated by the new regulation, a ‘set and mostly forget’ administration regime can be implemented. Under such an arrangement, the need for a body corporate manager is significantly diminished and consequently so are the outlays. (It is rare that a body corporate manager advises lot owners to convert to the new regulation and to dispense with their services.)

The good news for the seller in this story is that, from a conveyancing perspective, there should be no issues in transacting this lot because all body corporate records are available and up todate. The bad news for the seller is the potential lack of buyers! The bad news for the new owner is that the high levies are unlikely to diminish without some significant action by the lot owners acting together.

In our second example, a buyer entered into a contract unaware that the lot they were buying was part of a body corporate. An astute real estate agent should not allow that to occur since a body corporate disclosure statement is required to be signed by the buyer before the real estate agent permits a contract to be signed by a buyer.

Even if the disclosure statement was prepared, the real estate agent is likely to have advised the buyer that the lot owners in the duplex have ‘got rid’ of their body corporate. The more likely reality is that the high compliance legislative requirement for the body corporate is in place but the lot owners are simply ignoring their obligations and going about their business as if they were on a freehold block of land. Both the real estate agent and the conveyancing lawyers largely maintain the fiction in order to transact the lot.

In cases like these, the good news for the seller is that buyers are not dismotivated from buying the lot. The bad news for the seller is that the conveyancing process can come unstuck and the contract aborted or significantly delayed once a buyer uncovers the inconvenient truth about the body corporate. The bad news for the new lot owner is that body corporate issues can arise after settlement … for which they are uninformed.

Tracsafe can help in most situations. We can readily convert a duplex to the low compliance duplex regulation. We recommend that sellers talk to us before putting their duplex on the market. Real estate agents are encouraged to call us, we can often complete a conversion very quickly depending upon the situation. Conveyancers, please make contact when your transaction gets stuck – we can usually help.