Market Acceptance

The benefits of community title have associated burdens that must be accepted by the purchasers of the land. The burdens are categorized below.  Our feeling is that these burdens are being more readily accepted. Statutory disclosure regimes across the states, and developers’ education programs at the point of purchase are two tools aiding the market acceptance of community title. The most relevant research supporting our assertion comes from the United States.

Acceptance of financial responsibilities

Ownership of a lot in a community title scheme brings obligations to make regular (usually quarterly or tri annually) payments to the body corporate. The amount of the contributions is set by the body corporate at the annual general meeting. Each owner’s contribution to the total budget is determined through “entitlements” that are assessed at the start of the development process. These contributions must be perceived by owners to be good value and to be reasonable.

Acceptance of governance

Many of the benefits of community title are delivered through the governance.  However, the governance needs to be sensible in order to be accepted by the market place. Residents must be still allowed choice in areas outside of the development vision. For instance, it may be ecologically necessary to prohibit cats in the development because of the bird life in the area. However, it may be unnecessary and unreasonable to restrict the colours of roof tiles that may be used in the buildings. One author has indicated that the governance must contain a “spirit of freedom clause”. Governance must only touch on matters that influence property values or peaceful co-existence of the residents.

Does the community really need to incur the cost?

The design of community title needs to be carefully thought through by the development team. The body corporate should only take on financial burdens that will be perceived by land owners to provide a benefit to the community.  For example, if wetlands were part of the land under consideration, before those wetlands were incorporated into the common property private open space a full analysis of the maintenance costs of those wetlands should be undertaken. If the costs were to be significant, and the benefits to the community only minor, then alternative titling treatments should be considered.

Are the budgets accurate over the long term?

It is a statutory requirement to disclose the first year budgets of the body corporate, and to disclose each owner’s contribution to the body corporate. However, disclosing the first year’s budget may not present an accurate picture of the ongoing financial obligations of the body corporate. Each scheme should interrogate the proposed costs for the completed project and set contributions at a level that is sustainable in the medium to long term. Budget variations (both increases and decreases) are perceived negatively by owners.

Airing of community concerns

Creation of a community forum means airing of owner concerns. Invariably, individuals with gripes are drawn to bodies corporate as a forum to air any grievance that they may have with the development. Consequently, it is essential that the vision promised in the marketing material be delivered to owners in a timely manner.  Failure to do so may result in the body corporate becoming a tool causing distress to the developer.  For instance, if community facilities are to be delivered as part of stage 3 of construction in twelve months time, then it is essential that those facilities be delivered in accordance with the expectations of the community.