Operational Rules – The Pitfalls

The Unit Titles Act 2010 (‘New Act’) has been a part of the legal landscape for almost a year now. The old act, the Unit Titles Act 1972 (‘Old Act’), has slowly been phased out and will be completely repealed on 1 October 2012.

In the meantime, we are left with the challenge of trying to manage two partially effective pieces of legislation. This has not always been easy, particularly in respect of the Body Corporate Rules, now known as the Operational Rules.

The Body Corporate Rules under the Old Act were comprehensive and have been extensively adopted by Body Corporates throughout the country. However, on 1 October 2012 these rules will be automatically repealed and replaced with the Operational Rules under the New Act which, by contrast, are limited and not particularly useful. If you have not already done so, we would strongly recommend that you review your existing Body Corporate Rules with a view to adopting new Operational Rules before 1 October 2012.

We know that many Body Corporates have already taken steps to adopt tailored and more detailed Operational Rules. This is a course of action that we would absolutely encourage, but it is essential that the process, by which your new tailored Operational Rules are adopted, is correctly followed. We have found that some Body Corporates are using a one step process to adopt their Operational Rules, when in fact, what is needed is a two step process:- early application of the Operational Rules regime by special resolution (75% vote) and any amendments to those rules by ordinary resolution (50% vote). Where Operational Rules and their amendments have been incorrectly adopted, they are deemed to be invalid and the entire process must be repeated.

If you have any questions about the contents of this article, please do not hesitate to contact us on 04 970 3600. For more information in the Unit Title Act 2012 please click here