Strata Series: Units Plans with 4 or Fewer Units no Longer Exempt from the Unit Titles Management Act

The Strata amendments that came into effect in November 2020 have impacted many legislative instruments that help regulate unit titles in the ACT. (Check out our neat list here).

One interesting change worth noting for small scale developers is the removal of section 18 from the Unit Titles (Management) Act 2011 (UTMA) and the addition to the same act of a “Regulation-making power” in section 147.

Long story short: this change means that units plans with 4 or fewer units are no longer able to exempt themselves from the UTMA provisions and must instead rely on the Territory Executive to make regulations to exempt units plans from the application of a provision of the UTMA.

What did section 18 do?

Section 18 said the following:

18 Exemptions for units plans with 4 or fewer units

  • An owners corporation for a units plan with 4 or fewer units may, by special resolution, exempt itself from the requirements of this Act as prescribed by regulation.
  • An exemption may be revoked by special resolution.

For example, if a units plan had little or no common property, or only a driveway or meter box to manage, the owner’s corporation could draw up a special resolution that would exempt them from legal obligations to set up bank accounts or complex management structures in order to manage the small or non-existent common property.

The decision to remove this section was made following the observation that the old section 18 was unclear: can the owner’s corporation just make the special resolution to exempt themselves from any provision of the UTMA, or is a regulation required that addresses the provisions they wish to exempt themselves from before the self-exemption power can be relied on? So far, no regulation had been made to guide this power.

Noting that the regulatory frameworks for units plans are extremely important, the new approach aims to make it clear that any exemption to the Act must be permitted by regulation only.

How does it work now?

Section 147 now deals with exemptions from the Act:

147 Regulation-making power

  • The Executive may make regulations for this Act.
  • A regulation may—
    • exempt a units plan from the application of a provision of this Act; or
    • for schedule 3, section 3.31A (Alternative voting mechanism)—prescribe or prohibit a method or process that may be agreed by an owners corporation for voting on a matter.
  • A regulation may create offences and fix maximum penalties of not more than 60 penalty units for the offences.

This means that should an owners corporation of a units plan of any size wishing to exempt themselves from the UTMA, they must appeal to the Territory Executive to make a statutory instrument that is duly notified and presented to the Legislative Assembly in accordance with the Legislation Act 2001 (ACT).

The change acts to avoid a situation where owners corporations agree to their own bespoke exemptions outside of a regulatory structure. The Territory Executive will be able to present regulations dealing with exemptions that apply consistently and equally to all units plans where the provision is objectively considered too burdensome.

As a result of this change, all units plans of any size will be subject to all provisions of the UTMA without exemption unless the Executive draws up regulations stating otherwise.

What’s next?

We will keep an ear to the ground for any regulation that addresses exemptions. If you have any further questions about these requirements, or how the broader reform may affect you, please do not hesitate to contact us now.