Start a new discussion
There are examples of two or more bodies corporate (not in a principal scheme relationship), built side by side, that look like one body corporate. They may share facilities like driveways, car parks, and pools. They may have the same body corporate manager and the same resident manager. They have cross easements so that an owner in one scheme may walk over the common property of the other. They are for all purposes effectively one body corporate. The reason this situation exists is because the predecessor to the Body Corporate and Community Management Act, the Building Units and Group Title Act, was not sufficiently flexible to allow for staged developments.
In these situations, the two or more bodies corporate may, by resolution without dissent, amalgamate and then consent to a first community management statement for the amalgamated scheme. Alternatively, an owner or a body corporate may make application to the Court for an order to amalgamate. The Court will make an order if it is just and equitable to do so. It is recommended that the amalgamation be first put to a general meeting. If a small minority object then you should consider the Court process. It is also possible for subsidiary schemes to amalgamate (Body Corporate and Community Management Act Sections 83 and 85).
When the schemes are amalgamated, each existing scheme comes to an end. The common property for each of the existing schemes becomes the common property for the new amalgamated scheme. The rights and liabilities of each of the existing schemes become the rights and liabilities of the amalgamated scheme. Reciprocal easements must be surrendered. The amalgamated scheme may require a new financial year end date.
Amalgamation may result in cost savings for items like insurance (public liability, directors and office bearers liability), audits (no. per lot), bank charges (no. per transactions), tax returns, and possible bulk purchases of utilities. Complicated arrangements are dismantled. These include easements, cost sharing arrangements, accounts and financial administration procedures, and contractors deal with only one entity, and not multiple entities. Other positive consequences include the reduced chance for a conflict of interest between bodies’ corporate/lot owners, and the by-laws apply to everyone in all schemes, and so should be easier to apply.
The following is a list of matters to be considered during the amalgamation process:
- What will the name of the new scheme be? The current name may not be available. The name the body corporate requires should be reserved
- Are the current by-laws for the existing schemes all the same? If not, which do we adopt?
- Do we adopt the current entitlements? Are the current entitlements for the lots in the Scheme the same proportion? If not, what should the entitlements be?
- Financial Matters
- Account balances in each account for each existing body corporate
- Equal assets
- Equal liabilities
- Is the standard of buildings, gardens and grounds all the same?
- Do we negotiate new arrangements? Do we allow current arrangements to expire before we renegotiate?
- Impact of amalgamation on the seabed leases for any marinas
- Module for the new amalgamated scheme
- Surrender of Easements
- Will local authorities consent?
Upon amalgamation, the secretaries of the amalgamated bodies (or one of them if so authorised by both bodies corporate prior to amalgamation) have the power to call the ?rst annual general meeting of the new amalgamated body corporate. This must be done within three months after the amalgamation taking effect.
