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Layered and structured schemes

By Frank Higginson24 Apr 2008

When the Body Corporate and Community Management Act (‘the Act’) commenced in 1997 it ushered in, amongst other things, a new regime for titling of developments in Queensland.

Before the Act commenced, the creation of staged developments with both commercial and residential components was difficult. The Act made this a far easier and more feasible proposition, and the proliferation of mixed use buildings since then has been testament to this.

Generally speaking, what governs the relationship of the various bodies corporate in any mixed use scheme is a Building Management Statement (‘BMS’). In addition there will be a set of different by-laws for both the residential component and the commercial component.

So what does all of this have to do with management rights?

What you usually purchase with a management rights business is the exclusivity to let units in the residential component of the building. This is done by restricting the use of all lots to residential purposes, except the management lot which may be used for caretaking and letting purposes.

What the by-laws can never protect you from is outside agents setting up competing letting businesses offsite. Such businesses, as long as they comply with planning laws, could be situated directly next door to your business.

One of the benefits of buying in a layered scheme is that the commercial by-laws and the BMS can protect you from competition from agents in that commercial component because the type of use to which commercial lots can be put can be restricted.

So, if you are considering buying in a layered scheme, in addition to making sure the residential by-laws provide the usual protection, you should also make sure the BMS and the commercial by-laws give you the same protection.

Otherwise, there is a risk that a competing letting agent could set up business right under your very nose, and in your building, and there would be very little you could do about it at law.

Managed correctly, the correct set of mixed use by-laws will allow you to remove the threat of competition from within your building.