In Australia, there are several incorporated legal entities that use a group structure as their management model. A body corporate, or owner’s corporation, represents a group of independent owners who come together to run the company as if it were a corporation, with the purpose of developing, managing, and maintaining land that they jointly own. A body corporate is accountable to its members who are also the owners and shareholders.
Every Australian territory and state maintains its own legislation regarding these entities, so a body corporate in Essendon probably won’t have exactly the same rules as one in Brisbane, but is likely to be quite similar. The body corporate’s role in Queensland is stated as being in place “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”.
The two main reasons for forming a body corporate are to –
1. Install a group ownership structure that allows landowners to more easily purchase and manage multiple lots or units together.
2. Install a legal identity as an organisation in order to reduce the liability of individual members.
The most common body corporate structure found in Australia is the community management scheme that allows an individual to own a portion of land or property as a piece of a larger complex, while sharing common facilities jointly with the other owners. This is sometimes called a body corporate strata group or strata scheme. Some common examples can be found in townhouses, business parks, blocks of residential units, and high-rise condominiums.
A body corporate is a more democratic organisation than a company since it is run by a committee, and offers its stakeholders the right to vote on important issues affecting their investments. Each member makes contributions to the shared facilities which allows the body corporate to make necessary repairs and improvements to the land and property.
What exactly are the roles and responsibilities of a body corporate? Basically, it works on behalf of the owner’s group by maintaining, managing, and controlling their common assets. This might involve things like enforcing the agreed-upon rules and by-laws, deciding on procedures for making payments to owners for any revenue the property generates, purchasing necessary supplies and making repairs, as well as deciding whether or not to enter into legal contracts and agreements.
In general, the body corporate takes on the responsibility of maintaining the common areas, while individual owners must keep their own lot or unit well maintained and in good condition. The independent owners must follow the organisation’s by-laws and try not to interfere with the enjoyment or use of the property’s other owners. The body corporate takes the form of a committee of member-owners who are willing to help operate the organisation. These committee members are the ones who are then able to vote on important issues and make any decisions that have an effect on the entire membership.
To boil it all down, the body corporate is essential for making sure that a shared property is run by owners who wish to invest their personal time for the good of the community.
