Overview: The new Western Australian Community Titles Legislation - it's coming

1. What is the new community titles legislation in Western Australia?

The Community Titles Act 2018 (WA) (Community Titles Act) was passed by the Parliament of Western Australia in November 2018. However, the Community Titles Act is not yet in operation.

As set out further below, regulations associated with the Community Titles Act need to be prepared and passed before the Community Titles Act will become operative.

The current anticipated timeframe (as advised by Landgate, being the Western Australian Land Titles Office) is for the regulations to be finalised, and for the Community Titles Act to be operative, is during 2020-21.

2. Does the Community Titles Act replace the current strata titles legislation?

The Community Titles Act does not replace the current strata titles legislation in Western Australia, being the Strata Titles Act 1985 (WA) (Strata Titles Act). The Community Titles Act is stand alone and does not reference the Strata Titles Act. In particular, a strata scheme cannot form part of a community titles scheme. However, many of the concepts in the Community Titles Act are similar to those in the Strata Titles Act (for example the concept of lots, common property, unit entitlements, bylaws and strata companies).

Once the associated regulations are passed, the Community Titles Act and the associated regulations will include all the necessary features to facilitate the development and subdivision of lots (in the same way as strata lots can be created under the Strata Titles Act and its associated regulations).

3. What is the community titles legislation intended to do?

One of the key features of a community title scheme (as distinct from a strata scheme) is that it is possible to have ‘tiers’ (or layers) of community title schemes – ie it is possible to have ‘schemes within a scheme’. This is not possible under the Strata Titles Act. Each community title scheme will have its own:

• common property;
• community corporation (the equivalent of a strata company under the Strata Titles Act);
• scheme plan (the equivalent of strata and survey strata plans under the Strata Titles Act);
• bylaws; and
• unit entitlements.

Each scheme within an ‘umbrella’ community title scheme is called a community titles scheme. A maximum of 3 tiers of community titles schemes is permitted.

There are 2 types of community titles schemes:

• a community titles (building) scheme – which is a scheme comprising a subdivided building where lots are defined by reference to part of a building (being the equivalent of a built form strata titles scheme); and
• a community titles (land) scheme - which is a scheme comprising subdivided vacant lots where lots are defined by reference to part of land (being the equivalent of a survey strata titles scheme).

Below are diagrams to illustrate how a community titles scheme and the development of a community titles scheme may look.

Diagram – Layers of a community titles scheme – a maximum of 3 layers is possible

Step 1: Development site

Initially the developer will own a parcel of land (or an existing wholly or partially developed site or building) from which the community title scheme will be created.

Step 2: Creation of Tier 1 Community Title Scheme

The developer creates a community title scheme by registering the scheme at Landgate:

Step 3: Creation of Tier 2 of Community Title Scheme

The developer creates Tier 2 of the community titles scheme by subdividing Tier Lot 1 and Tier 1 Lot 2 into the Tier 2A and Tier 2B lots as shown below. Tier 2A comprises 2 lots on which schemes may be developed (being Tier 2A Lot 1 and Tier 2A Lot 2) and Tier 2B comprises 3 lots on which schemes may be developed (being Tier T2B Lot 1, Tier 2B Lot 2 and Tier 2B Lot 3).

Step 4: Creation of Tier 3 of Community Title Scheme

The end result of the above is a 3 tier community title scheme as follows:

4. What are the key benefits of a community titles scheme?

Some of the key benefits from the community titles regime are set out below.

4.1. Greater certainty for developers with staged developments

A community title scheme will require a ‘community development statement’ (CDS). The CDS shows the overall proposed subdivision and development of the scheme and is to contain similar information to that which is found in a local structure plan. Once approved, a CDS binds developers, planning decision makers (who must approve development and subdivision applications if the applications are consistent with the CDS) and owners of lots in the parcel (owners cannot object to development or subdivision if it is consistent with the CDS).

Therefore, the community titles regime will provide greater approval certainty with a ‘pre-approved’ planning regime for the site the subject of a community titles scheme.

At present, completing staged developments under the Strata Titles Act can be challenging. This is because the Strata Titles Act requires developers to have finalised building plans for each stage of the development at the start of the development. Minor changes to the development can then require the consent of all owners of units in earlier stages. This provides developers with little flexibility.

4.2. Better separation of schemes

The community titles legislation will provide for better separation of schemes with different uses. Under the Strata Titles Act, it is not possible to create different layers of schemes for residential, retail and commercial aspects of a development which are to share common property.

If a mixed use development is created in a single strata scheme, complications can arise when matters in one part of the scheme require the consent of all owners of units in the scheme (for example, a tenant fitout in the retail section of the scheme needing the approval of owners of residential lots within the scheme).

The community tiles scheme will allow ‘schemes within schemes’. For example, separate schemes can be create for the residential, retail and commercial areas of a development. This structure allows for better management of the scheme and for relevant owners to only having voting rights on matters which they should be concerned with.

4.3. Better sharing of common areas

Under the Strata Titles Act, it is not possible for separate schemes to share the use and upkeep costs of common areas without specific contractual arrangements being put in place. The relevant common property would often need to be located on one scheme, with the strata company for that scheme granting the other scheme contractual rights to use that common property. Such arrangements can get complicated.

A community titles scheme allows common property to be created at each tier level. For example, ‘Tier 1’ common property would be able to be used by all owners in the scheme and all owners would contribute to the upkeep of that common property. ‘Tier 2’ common property would be able to be used by all owners at the Tier 2 level and all owners at the Tier 2 level would pay for the upkeep of that common property.

4.4. Multi-layered schemes

Under the Strata Titles Act, it is not possible to create different schemes within a building. For example, it is not possible to have a 50 storey building where the first 20 levels are a commercial office scheme, levels 21-40 are a hotel scheme and levels 41-50 are a residential scheme. The Community Titles Act allows for this to occur. This will provide developers with much greater flexibility for multi-level built form schemes.

5. When does the community titles legislation come into effect and when can developers use it?

Regulations need to be prepared and passed before the Community Titles Act can become operative. The regulations will contain many of the forms and procedures required for the implementation of community title schemes. For example, the form of the CDS required and details of the disclosure requirements which developers will have to give to buyers.

Until the regulations have been passed, it will be difficult for developers to properly plan a development as a community titles scheme.