Responsibilities of Original Owner

The developer is the original owner of all lots in the scheme upon creation of the scheme by registration of the plan of subdivision in the Titles Office.  The original owner has many responsibilities to ensure the body corporate commences operation. These responsibilities include

• The original owner must exercise reasonable skill, care and diligence and act in the best interests of the body corporate in selecting the body corporate contractors and negotiating the terms of their agreements with the body corporate (Body Corporate and Community Management Act Section 112).
• Under the Body Corporate and Community Management Act Section 191 are details relating to the obligations of the original owner for the scheme regarding insurance.  The main focus is the responsibility of the original owner to ensure when the scheme is established that the required issuance under the regulation module applying to the scheme is in force immediately for a 12 month period.  Section 191(5) provides for an opportunity for the original owner to recoup the balance insurance costs for the remaining period from the buyer by agreement.  It must be noted that non compliance by the original owner with the terms of Section 191 may result in a maximum penalty of 150 penalty units.  In a practical sense the new scheme will not have funds available to pay for the necessary insurance expenditure.
• The original owner has the responsibility of the secretary of the body corporate to call for committee nominations for the election at the first annual general meeting (Standard Module Section 20(a)).
• The original owner must call and hold the first annual general meeting of the body corporate (Standard Module Section 77).
• The original owner must pass to the body corporate certain building records at the first annual general meeting (Standard Module Section 79(1)).

The records which must be passed by the developer to the body corporate are set out below.

• Register of all body corporate assets
• All plans and diagrams as built relating to the body corporate
• Policies of insurance
• Independent valuation for each of the buildings that the body corporate must insure
• Any other documentation relating to the body corporate
• Seal of the Body Corporate
• Contracts for building work carried out on scheme land
• Certificates of building classification
• Certificates of fire safety
• Administration and sinking fund budgets showing the estimated spending for the schemes first financial year
• Sinking fund forecast

Upon establishment of the scheme the body corporate the owners of the lots are subrogated to the rights of the original owner for any contracts existing that relate to the scheme land (Body Corporate and Community Management Act Section 36).

It is usual for the original owner to have a proxy in the contract of sale for the off-the-plan lots.  There are stringent restrictions on these proxies. Firstly, the contract must disclose the issues where the proxy may be used, and these issues are statutorily limited to service contracts, letting authorizations, body corporate management contracts, and by-laws. The proxy must end 1 year after establishment of the scheme. (Standard Module Section 110(3)(a)

Generally, the committee of the body corporate is compulsorily elected at the annual general meeting each year.  Consequently, the original owner is left in a difficult position when the body corporate is first registered.  On a narrow reading of the Body Corporate and Community Management Act, it is not possible for the original owner to constitute the committee.  However, on a more practical reading, Standard Module Section 13 should prevail and allow the original owner to constitute the committee until the first annual general meeting is held.