Compliance

Compliance

Complying with the Unit Titles Legislation

 We acknowledge that this is a tedious topic but we'll try to succinctly discuss all of the relevant points before your eyes glaze over.  So grab a cup of coffee, take a deep breath and try to follow along.  

There are 18 subsections in the legislation relating to long term maintenance that prescibe what a body corporate must do.  Below we have explained how Plan Heaven deals with each of them.

The Unit Titles Act 2010 (UTA)

First let’s look at the requirements of S116 of the UTA in regard to long-term maintenance plans (LTMPs).  The first couple of points require no explanation.

 (1) UTA S116(1)  Every body corporate must have a LTMP.

 (2) UTA S116(2).   A LTMP must cover a period of at least 10 years from the date of the plan or the last review of the plan.  

Now let’s look at the “purpose” of the LTMP as defined in the UTA S116(3).     

(3) (a)  The first purpose of a LTMP is to identify future maintenance requirements and estimate the costs involved. 

(4) (b) The second purpose is to support the establishment and management of funds. 

(5) (c) The third  purpose is to provide a basis for levying owners of principal units to pay for the maintenance.  

(6) (d) The fourth and final  purpose is to provide ongoing guidance to the body corporate to assist it in making its annual maintenance decisions.  

When we prepared the initial design of Plan Heaven, we took these four purposes into consideration.  We see that collectively they require we have a system that allows for easy editing and updating of the jobs. Then we must also have have the the cost of those jobs flow into a cashflow forecasting tool to assist with planning levies and managing a reserve.  That's pretty much the core of what Plan Heaven does.  

The Unit Titles Regulations 2011 (Regs)

Now let’s look at S30 of the Regs.  The Regulations are more specific and provide more detail. 

S30(1)(a)  A long-term maintenance plan must cover,      

(7) (i) the common property, building elements and infrastructure of the unit title development, and 

(8) (ii) any additional items that the body corporate has decided by ordinary resolution to include in the plan.

Considering these subsections in isolation it would be easy to presume that all maintenance must be included in the LTMP, plus anything else you want.  However, if take a look at UTA S115(2)(e) - which has nothing to do with LTMPs and relates to the Operating Account -  we see that the Operating Account is to be used for “those (expenses) incurred at least once a year relating to maintenance of the unit title development".

Confused?  Hang in there.  It gets easier. Because the next section of the Regs gives the body corporate enough flexibility to do what it wants.

(9) Regs S30(1)(b). A long term-maintenance plan must identify those items that the body corporate may decide by ordinary resolution not to maintain for any period during the lifetime of the plan. 

So reading UTA S115 and 116 together, the Operating Account is to be used for all maintenance that is expected to re-occur at least once a year, while the LTMP is for the rest - unless you want to use the provisions of Regs S30(1)(a)(ii)  and include items in the LTMP that might normally have been included in the Operating Budget.  

To summarise all of this in one paragraph, this is our take on it.

All common property, building elements and infrastructure that will require maintenance on a frequency of less than once a year must be “covered” in the LTMP - but you can opt out of any of these items - and you can include any other items.

Basically when you're trying to decide what to include, you can do just about anything that works for your body corporate. 

We hope that clarifies the situation and to help you manage this area, we have provided the Variations and Exceptions section on the editing page.  If you want to opt-out of maintaining an item - or inlcude an item that would otherwise be excluded - just create a new item in this section, explain it clearly and when your plan is adopted by the meeting, your LTMP should be compliant in this area.

We talk about this more in the help sections relating to setting up items and variations and also give examples.  We have also given our thoughts on the term "cover" used in the Regs in the help pages for setting up items.

The period covered by the plan.

(10) Regs S30(1)(c).  A LTMP must state the period covered by the plan.  

No explanation required.

Age, life and costs of repair and replacement

(11) Regs S30(1)(d).  A LTMP must state the estimated age and life expectancy of each item covered by the plan, and

(12) Regs S30(1)(e).  A LTMP must state the estimated cost of maintenance and replacement of each item covered by the plan. 

In Plan Heaven you can enter the cost of maintenance of each item in the job cost section and the age, life and replacement cost in the (of course) age, life and cost of replacement section.

Long-Term Maintenance Fund

(13)(14)(15) There are three subsections to UTA S117 that define what you can do with a LTMF.

If we take a look at S117  we will see that the body corporate must have a fund - but it can also opt out.  Opting out must be resolved by special resolution and if you do decide to opt out - and there are some very good reasons why you might choose to do that - we have provided a section on the editing page where this opting out and when it was resolved, can be recorded in your LTMP. 

But we recommend that the first time this is resolved, that it is by way of a separate motion on the agenda of your AGM.  That way you can ensure that it is resolved by special resolution and the resolution is recorded in the minutes.  Then you record the date of the meeting in the LTMP and you won’t have to visit this again unless the body corporate changes its mind.

When it comes to presenting a cashflow forecast, whether or not you have a fund, the funding table in Plan Heaven is where the opening balance of the fund (or reserve) is reported along with the annual contribution to the fund (or reserve) and the annual estimated closing balances.

Note, in Plan Heaven the funding table has a neutral name and can be used for a long-term maintenance fund as defined in the UTA, or a reserve, or whatever you want to call it.  However, if you opt out of using a long-term maintenance fund we suggest you don’t actually use the word “fund” in any of your other body corporate documentation to avoid confusion.

Note also that we are not advocating you don't build a fund or reserve for long term maintenance.  On the contrary we regard it as essential.  But you should think carefully about what you call this reserve of cash and whether or not you need to be restricted by the provisions of UTA S117, which puts constraints on what you can do with that cash if you don't opt out.  Read the clause  and you will see what we mean.

The plan Administrator

(16) Regs S30(1)(h).   A LTMP must state who prepared the plan.  

We have presumed this to mean “the person who prepared the last iteration of the plan”.  To achieve this we have provided that there be only one person, at any one time, who is able to create and edit (prepare?) the plan.  This is the Primary Administrator and their name is then recorded in the plan as required.

Then (logically) we have also provided for the Primary Administrator to be changed from time to time and then the new person will have his or her name on the plan.  We have also provided and option for anyone to be an "Administrator" - different to the Primary Administrator - so that more than one person can share the duty of editing.

We can see that there might be some issues around this change of administrator and who "prepared" the plan or who last edited it so we created a update feature whereby the last person who edited the plan is recorded in the plan, along with the date and time etc. 

But we expect that any person taking over the role of Primary Administrator would have to be satisfied with the content of the current plan, before they agreed to accept the role and common sense will prevail.

We have more information and thoughts in the help section on the approval process but if you have any thoughts on this we would appreciate your feedback.

Reviewing your plan

(17) Regs S30(2).  A body corporate must carry out a review of its plan at least once every three years.  

(18) Regs S30(3).  Subject to subclause (2) a body corporate may carry out a review of its plan as frequently as it considers necessary.

At Plan Heaven we believe that is makes sense to carry out a review of the plan every year at the same time the operating budget is reviewed and levies are struck.  We hope that what we have provided allows for this annual review to be achieved with relative ease and at a reasonable cost.  See our help page on dates for more information on this annual planning cycle.

That's all.  Congratulations if you are still reading and have made it to the end of this very dry subject.

If you have any feedback or questions please use the feedback form.

The Plan Heaven team.

Disclaimer. Plan Heaven is not qualified in law and any comments made on this website should not be regarded as legal advice. Our comments are merely providing some thoughts on how the legislation might be interpreted and how we went about attempting to meet its requirements. You should not rely on this information in isolation and do you own homework and at all times if you wish to be sure of your position relating to legal matters you should seek advice from a suitably qualified lawyer.