What is a Body Corporate in Australia?

A body corporate, or owner’s corporation, is one of several incorporated legal entities in Australia that use a group structure as a management model. In Australia, a general body corporate represents a group of independent owners who run the company as a corporation to develop, manage, and maintain jointly owned land.

Bodies corporate hold the same powers and manage their affairs in a similar way to other incorporated entities, but are regulated by the state in which they are located. As membership-based organisations, a body corporate is accountable to its members who are also shareholders and owners.

What is a body corporate?

While each Australian state and territory has its own legislation, in a general sense, a body corporate is a legal entity formed by a group of independent owners who combine their common assets, lands, or properties for the benefit of the group members or residents. According to the Queensland government website, the role of a body corporate is to “administer common property and body corporate assets for the benefit of all of the owners, and to undertake functions required under body corporate legislation” ¹.

The main reasons for forming a body corporate are to: 1) establish a group ownership structure so that landowners can more easily purchase and manage multiple lots or units together, and 2) establish a legal identity as an organisation and reduce the liability of individual members.

A common body corporate structure is the community management scheme. It allows a person to own a piece of land or property as part of a larger complex while sharing common facilities with the other owners. This model is also called a strata scheme or body corporate strata group. Examples are residential unit blocks, townhouse complexes, high-rise condominium buildings, and business parks.

A body corporate is a committee-run organisation, making it more democratic than a company and offering stakeholders the opportunity to vote on important issues that affect their investments. The contributions each member makes to shared facilities allow the body corporate to improve the property and land, and make repairs when needed. This has the added benefit of making them more liveable and attractive and reducing the vacancy rate.

Roles and responsibilities

What does a body corporate do? Essentially, it can carry out duties on behalf of the group of owners, such as managing, maintaining, and controlling common assets.

nvolve deciding on procedures for payments to owners when revenue is generated, enforcing rules and by-laws, making purchases and repairs, or entering into legal contracts and agreements. Whether the body corporate is responsible for roof leaks and other repairs will depend on the strata plan, a document that describes which areas belong to whom.

As a general rule, the body corporate is responsible for maintaining the common area while individual owners are responsible for keeping their lot or unit in good condition. Independent owners are expected to follow the by-laws of the organisation and avoid interfering with the use or enjoyment of other owners.

The body corporate committee is formed by member owners willing to run the organisation. Committee members make decisions and vote on important issues that affect the membership at large, therefore, they have several obligations. Their responsibilities include appointing a chairperson to facilitate the voting process, and a secretary who will send notices, prepare election ballots, and take minutes during meetings. They must also select a treasurer to prepare financial statements each month and oversee payments or budget issues.

Occasionally, organisations don’t form committees and the body corporate manager makes decisions instead. Body corporate managers are hired by the organisation through the committee. They are responsible for performing the administrative duties necessary to run the organisation. It is not a legal requirement to hire a manager, but having one is useful for assisting the committee in its work. If a manager fails to perform their duties according to the by-laws or comply with legislation, their employment can be terminated, per the body corporate committee’s decision.

Body corporate law in Australia

In Australia, the body corporate is regulated at the state level rather than federal, though state laws often have similarities.

In Queensland, a body corporate is primarily governed under the Land Title Act 1994 and the Body Corporate and Community Management Act 1997 (BCCM Act). The Land Title Act governs the registration of freehold land, giving landowners the advantage of leasing their properties to other individuals or corporations.

The majority of land in Australia is held under freehold tenure vs leasehold. The BCCM Act states that a body corporate manager must:

• Act honestly, fairly and professionally
• Act in the best interests of the body corporate
• Not be fraudulent or misleading
• Not influence the outcome of committee elections, and
• Keep records required by the Act.

In Victoria, bodies corporate are regulated by the Owners Corporations Act 2006. In this case, the rules state that an owners corporation (body corporate) must meet several obligations:

• manage and administer common property
• repair and maintain common property, fixtures and services
• take out and maintain insurance
• raise owner fees to meet financial obligations
• prepare financial statements and keep financial records
• provide owners corporations certificates
• keep an owners corporation register, and
• establish a grievance procedure.

Most states also have a designated department to provide advice and assistance with land dealings and governance issues. For example, Land Use Victoria offers group owners a number of forms and guides on its website.

New South Wales has a Strata Hub, providing help with disputes, by-law development, and other topics. For more information on how each state and territory deals with bodies corporate, see the ‘resources’ section below.

Further Resources

Each state will have a body corporate commissioner responsible for overseeing bodies corporate and advising on issues related to community management. For example visit the Queensland Office of the Commissioner for Body Corporate and Community Management.

For information on how body corporate schemes work in each state or territory, click on the following links:

New South Wales Queensland Victoria Tasmania Northern Territory South Australia Western Australia Australian Capital Territory

For an example of a body corporate disclosure statement (seller disclosure statement) visit the Queensland government webpage.