Page 2349 - Week 06 - Thursday, 23 June 2011
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Another key change in the bill is the simplification and clarification of the financial provisions. The financial provisions have been redrafted to clearly link budgets, contributions and expenditure for the general funds and sinking funds. The redrafted provisions create clear, express links to assist with the management of common funds.
The sinking fund plan provisions have also been redrafted and are now clearer and easier to understand. The amendments would change the resolution needed for annual administrative and special fund budget approval, from a special resolution, that is, less than one-third opposed, to an ordinary resolution, a simple majority. No other Australian jurisdiction requires a special resolution for approval of administrative funds and equivalents. The reduced voting requirement, in line with other jurisdictions, is intended to remove an excessive restriction on managing owners corporation funds.
The bill also clarifies insurance requirements for owners corporations. Consultation with stakeholders indicates that there is confusion about the extent of insurance coverage, the liability to pay excesses and liability to pay for events covered by more than one insurance policy. The redrafted insurance provisions seek to remove any doubt about these issues. A new feature of the bill is the compulsory disclosure of insurance details at the annual general meeting.
Importantly, the bill retains the consumer rights and protections that were introduced in 2008. While some stakeholders have recommended winding back these provisions, government remains committed to them—to protecting purchasers and owners. Measures such as ensuring appropriate disclosure to unit purchasers, regulation of managers and contractors and regulation of developer actions during the developer control period have been retained.
The provision requiring ACAT authorisation for contracts for terms of two years or more has been redrafted to give guidance to the ACAT in deciding what type of agreement should be authorised in these circumstances. The new section states that ACAT may authorise the owners corporation entering into the contract if satisfied that the terms of the contract are reasonable in all the circumstances. In making a decision, the ACAT must take into account any matter prescribed by regulation and may take into account any other thing it considers relevant. This may include short and long-term economic benefits and disadvantages of the contract, the existence of a financing agreement related to the contract and environmental sustainability measures provided for by the contract.
The content of a unit title certificate, former section 75, will now be determined by the minister in a disallowable instrument. This permits greater flexibility in modifying the requirements of the unit title certificate to better suit conveyancing and general disclosure requirements. New section 119 also provides that a fee may be fixed by the owners corporation of not more than an amount determined by the minister by disallowable instrument. This fee is currently fixed by regulation. Determining the fee by disallowable instrument gives greater flexibility in determining the fee in a way which reflects both the content of the certificate, as determined by the minister, and the costs that are incurred by an owners corporation in complying with the section.
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