Functions of community corporations
There are a range of important legislated functions which a community corporation must perform to ensure the effective management of each community titles scheme.
These functions include the need for a community corporation to cooperate with other community corporations in the community scheme. This is to facilitate the participation and decision making of all tiers of the community titles scheme in the community scheme.
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Participation within the community scheme
If a community corporation is a member of another community corporation in the community scheme, it has the function to:
- Participate in meetings of that other community corporation.
- Ensure relevant matters are communicated to the members of the community corporation.
- Ensure directions are obtained as to how the community corporation should vote or make representations at meetings of the other community corporation.
- Participate on the council of the other community corporation if required under the Act or the scheme by-laws for the other community corporation.
- Stand for election as a member of that council if that is permitted under the scheme by-laws for the other community corporation.
The control and management of property
The principal function of a community corporation is to control and manage the common property in the community titles scheme for the benefit of its members. If the scheme has community titles schemes that belong to it, this common property must also be managed for the benefit of the members of the community corporations of those schemes.
A community corporation has:
- An obligation to keep common property in good and serviceable repair, and properly maintained.
- An obligation to renew and replace common property (including its fixtures and fittings) as necessary because of damage or deterioration arising from fair wear and tear, inherent defect or any other cause.
- A power to improve or alter the common property.
- A power to use, or allow the use of, the common property for any lawful purpose (including a commercial purpose).
A community corporation may:
- Install and remove infrastructure on the common property.
- Operate infrastructure on the common property.
- Examine, maintain, repair, modify and replace infrastructure on the common property.
- Take other action as necessary for the performance of its function of controlling and managing the common property.
- Enter into a contract with a person under which the person owns and operates infrastructure on common property to which a statutory common property. infrastructure easement applies (if authorised by ordinary resolution in the case of sustainability or utility infrastructure and by special resolution in any other case)
- Enter into specified transactions in respect of common property by special resolution. For example, transferring common property out of the scheme and acquiring land for the purposes of adding to common property.
- Create temporary common property by accepting a lease pursuant to a special resolution and by special resolution surrender a lease of temporary common property.
A community corporation still needs to comply with other legislation, for example, the requirement to obtain approval of development under the Planning and Development Act 2005.
A community corporation must keep personal property in good and serviceable repair, properly maintained and, if necessary, renew and replace personal property owned by the community corporation.
Managing scheme insurance
Insurable assets to be insured by the community corporation
The community corporation is responsible for ensuring that all insurable assets of the scheme are insured against fire, storm and tempest (excluding damage by sea, flood or erosion), lightning, explosion and earthquake.
Insurance cover must be for the replacement value of the asset or the reasonable replacement value up to the maximum amount allowed for a specified event in the contract of insurance.
Insurable assets include:
- The common property of the scheme (including the fixtures and improvements on the common property).
- Parts of a scheme building that comprise the lots in the scheme building (community titles (building) schemes).
- Anything included as an insurable asset by the regulations.
Insurable assets do not include:
- Fixtures or improvements on the common property that are not themselves common property.
- Carpet and temporary wall, floor and ceiling coverings in a scheme building (for community titles (building) schemes).
- Fixtures removable by a lessee on expiry of a tenancy.
- Anything else excluded as an insurable asset in the regulations.
Responsibility of owners
The community corporation for a community titles (land) scheme is not responsible for insuring buildings and infrastructure on lots or for obtaining public liability insurance in relation to these lots. The responsibility of securing insurance in relation to a lot in a community titles (land) scheme lies with the lot owner.
Public liability insurance
A community corporation is responsible for obtaining public liability insurance against damage to property, death, bodily injury or illness for which the community corporation could become liable. The amount of cover to be maintained must be not less than the amount specified in the regulations.
Obtaining insurance on reasonable terms
Community corporations need to obtain the insurance required by the Act on reasonable terms.
The Act makes allowances for when a community corporation has taken all reasonably practicable steps to obtain the required insurances, however no insurer is willing to provide the required insurance on reasonable terms. In these circumstances, a community corporation must obtain whatever insurance it can obtain on reasonable terms, that most closely meets the insurance requirements of the Act.
If it is reasonably necessary for a community corporation to obtain the required insurance on reasonable terms, the community corporation can:
- Notify a member of the community corporation to take or stop taking specified action.
- Notify a member to pay an amount which fairly reflects the proportion of the premium attributable to the risk associated with something within that member’s control.
A member can negotiate to take some other step to enable the required insurance to be obtained on reasonable terms.
Exemption from insurance requirements
A community corporation may seek exemption from insurance requirements on application to the State Administrative Tribunal (SAT).
Managing scheme finance
Requirement for reserve and administrative funds
A community corporation must establish the following:
- An administrative fund from which the community corporation’s operating costs are paid. For example, insurance premiums, administrative costs of meetings and notices, scheme manager fees.
- A reserve fund for accumulating funds to meet contingent expenses (other than routine in nature) and major expenses likely to arise in the future (i.e. replacing a lift, or re-surfacing a private road).
Requirement for 10-year plan
A community corporation must have a 10-year plan for the reserve fund and ensure that the plan is revised at least once every five years.
The 10-year plan is required to set out:
- The common property and personal property of the community corporation that is anticipated to require maintenance, repair, renewal or replacement. (other than of a routine nature) in the period covered by the plan
- The estimated costs for maintenance, repair, renewal or replacement.
- Other information required to be included by the regulations.
Operation of accounts
All money received by the community corporation must be credited to either its administrative fund or its reserve fund, and must:
- be paid into an Authorised Deposit-taking Institution (ADI) account in the name of the community corporation, or
- be paid into a trust account of a scheme manager of the community corporation under section 122 of the Act.
Interest on money paid into the administrative fund must be paid into that fund and interest on money in the reserve fund must be paid into that fund.
Accounting records and statement of accounts
A community corporation must keep proper accounting records of its income and expenditure and prepare a statement of accounts for each financial year showing:
- The assets and liabilities of the community corporation at the end of the financial year.
- The income and expenditure of the community corporation for the financial year.
A community corporation must prepare a budget for the scheme for each financial year and submit it for approval to its annual general meeting. The budget must be prepared taking into account the 10-year plan and any requirements set out in the regulations and scheme by-laws.
The budget may be approved by ordinary resolution at the annual general meeting or at a subsequent general meeting with or without modification. The approved budget may be varied by ordinary resolution.
If a budget or budget modification provides for expenditure on an improvement or alteration to common property (other than sustainability infrastructure) that exceeds an amount determined by the regulations, the community corporation must provide information to its members regarding that expenditure and the budget or budget variation must be approved by special resolution.
The Act places limitations on expenditure a community corporation may incur that is not authorised by an approved budget. In addition, scheme by-laws or the regulations may require a special resolution or other steps to be taken for expenditure of a particular class.
A community corporation can, by ordinary resolution at its annual general meeting or at any other general meeting:
- Fix the amount it requires by way of contributions from its members.
- Fix the amount of contributions received that are to be credited to either its administrative fund or its reserve fund.
- Fix the intervals at which it requires a member’s contribution to be paid.
- Allow a contribution to be paid in instalments specified in the resolution.
- Inflate the contribution or instalment payable to allow for a discount if a contribution or instalment is paid on or before the due date (subject to any limitations imposed by the regulations).
- If the contribution or instalment is not inflated and discounted, fix a rate of interest payable for a contribution, or an instalment of a contribution, that is in arrears (subject to any limitations imposed by the regulations).
- Determine not to charge interest or to charge a lesser rate of interest in a particular case or in a class of cases.
Apportionment of contributions
Contributions must be apportioned between the members of the community corporation according to the relative unit entitlements of their lots or tier parcels. However, scheme by-laws may provide for a different method of apportionment.
A contribution payable by a community corporation that is a member of another community corporation must be apportioned between its members according to the relative unit entitlements of their lots or tier parcels. However, scheme by-laws may provide for a different method of apportionment.
A contribution, or an instalment of a contribution, is payable on the date specified for payment in a notice served by the community corporation on the member of the community corporation.
The notice must be served at least 14 days before the date for payment and specify:
- The amount of the contribution or instalment.
- The date for payment.
- If a contribution, instalment, or interest is in arrears, the amount outstanding.
- The amount that will become payable if the contribution or instalment is not paid on or before the due date or the rate of interest payable on any amount in arrears.
- The apportionment of the contribution and any interest between the administrative fund and the reserve fund.
Payment of a contribution, instalment or interest is enforceable jointly and severally against the members of a community corporation and the members of subsequent community corporations. A contribution, instalment or interest may be recovered as a debt in a court of competent jurisdiction.
Interest paid on contributions is subject to the same apportionment between the administrative and reserve funds as contributions are.
If a community corporation is the respondent to a successful appeal to the Supreme Court from the SAT by a member of the community corporation, the community corporation cannot levy a contribution on the member towards the expenses of the community corporation on the appeal.
Making and keeping records
A community corporation has the responsibility of keeping the following records:
- The community development statement in force for the community scheme.
- Any current proposed amendments of the community development statement that it is aware of.
- The current scheme documents.
- Any current proposed amendments of the scheme documents that it is aware of.
A community corporation has the responsibility to make and keep the following records for a period fixed by the regulations:
- Minutes of the general meetings of its council.
- Records of the resolutions and the decisions of its council.
- Any other records required by the regulations.
A community corporation has the responsibility of keeping the following records for a period fixed by the regulations:
- Records and statements of account made or kept under section 86 of the Act.
- Notices of its general meetings and meetings of its council.
- Notices of proposed resolutions and material submitted to members of the community corporation in connection with proposed resolutions.
- Notices of disclosures made under section 67, 119(2) or 121 of the Act.
- All correspondence, other notices and orders it or its council sends or receives.
- Each lease accepted under section 78 and any instrument of surrender of such a lease.
- Each contract entered into by the community corporation and any variation, extension or termination of such a contract, including (without limitation):
- a scheme management contract
- an insurance contract
- an infrastructure contract
- a contract for services or amenities provided to the community corporation or members of the community corporation.
- Each lease, licence or other document granting a special privilege over the common property (other than exclusive use by-laws).
- Each key document it has received.
- Each document it has kept or received under section 56 of the Act.
- Each certificate given under section 97 of the Act.
The following records must be kept by the community corporation in a manner that facilitates access to the information:
- The terms of any current resolution about the use of the common seal of the community corporation or authorising persons to execute documents on its behalf.
- The current balance of the administrative fund and the reserve fund of the community corporation.
- The current budget (showing estimated income and expenditure) of the community corporation.
- The terms of the most recent resolution determining contributions, the period for which they are determined, the basis on which the contributions are apportioned amongst the members of the community corporation and the date on which they fall due.
- The most recent 10-year plan.
- Any termination proposal submitted to the community corporation that remains current.
The regulations may also impose additional requirements for the making and keeping of records by a community corporation.
Scheme contacts register
A community corporation for a community titles scheme must maintain a scheme contacts register which contains:
- The contact details of each related community corporation.
- The contact details of each member of the community corporation and the unit entitlement of the member’s lot or tier parcel.
- As notified to the community corporation, the contact details of an agent of a member of the community corporation.
- The contact details of each member of the council of the community corporation and each officer of the community corporation.
- The contact details of each scheme manager of the community corporation.
- The contact details of a person (other than a member of the community corporation) who is the owner of a special lot or holds a lease or licence over the common property, or otherwise occupies common property, in the scheme.
- As notified to the community corporation, the contact details of:
- a mortgagee of a lot in the community titles scheme
- a person who leases a lot in the community titles scheme
- a person who occupies (other than as the owner) a lot in the community titles scheme.
- If there is a common property infrastructure easement, the contact details of the infrastructure owner.
Provision of information
Application to community corporation for access to information
A person with a proper interest in information about a community titles scheme may apply in writing to the community corporation:
- For information that is contained in the scheme contacts register maintained by the community corporation.
- To inspect the scheme contacts register, information and records that the community corporation must keep or any other documents in the possession or control of the community corporation
- For certification of specified contractual or common property related matters.
A person has a proper interest in information about a community titles scheme if the person is:
- A member of the community corporation for the community titles scheme.
- A related community corporation or a member of a related community corporation.
- A buyer who has entered into a contract for the sale and purchase of a lot in a community titles scheme or related community titles scheme.
- A mortgagee of a lot in the community titles scheme or a related community titles scheme.
- A person of a class specified in the regulations.
A community corporation may charge a fee for an application for information, but that fee must not exceed an amount fixed by the regulations.
A community corporation may, but is not obliged to, provide a copy of any material requested by a person with a proper interest in the information and may charge a fee for these copies of an amount not exceeding an amount fixed by the regulations.
The failure of a community corporation to make information available for inspection or provide a certificate in accordance with the provisions of the Act, is an offence under the Act which carries a penalty of $3,000.
Legal professional privilege and defamation
A community corporation is not required to give or certify any information that is the subject of legal professional privilege. A community corporation also does not have to make available a document or part of a document if that would disclose information that is the subject of legal professional privilege.
It is a defence to an action for defamation if the defendant proves that:
- the defamatory matter was contained in information or a document that the community corporation is required to keep, and
- the publication of the information or document consisted of giving or certifying the information, or making a document available in accordance with the Act.
Execution of documents
A community corporation can execute a document by either of the following:
- Applying the community corporation’s common seal to the document.
- Having the documents signed by a person who is authorised by ordinary resolution of the community corporation to sign documents on its behalf. That person could be a member of the council of the community corporation, members of the council acting jointly, or a scheme manager.
If a community corporation has a common seal, the seal may only be used as authorised by ordinary resolution of the community corporation, and its use must be attested by the signatures of two members of the council of the community corporation.
A community corporation has a range of other functions, such as:
- Complying with the scheme by-laws.
- Enforcing compliance with scheme by-laws by others to whom they apply.
- Entering into contracts or arrangements with a local government regarding the enforcement of laws relating to roads on the tier parcel of its community titles scheme.
- Entering into contracts or arrangements with a local government about the enforcement of local laws on the tier parcel of its community titles scheme.
- The power to terminate certain service or amenities contracts after five years.
Limitations on a community corporation’s powers
A community corporation must not:
- Acquire or dispose of land except as authorised under the Act.
- Mortgage common property.
- Act as a guarantor.
- Establish a corporation or subsidiary of a corporation.
- Engage in an activity that a community corporation must not engage in under the regulations.
- Exercise a function that the regulations allow to be exercised only as authorised by a special resolution unless that special resolution has been passed.