An Introduction to Community Management Schemes

Purchasing a unit and don't understand what a CMS is? It is important that Lot Owners familiarise themselves with their CMS to ensure that they adhere to the requirements and obligations set out therein.

Why have a community management scheme (CMS)?

A CMS is an important part in helping to regulate the body corporate. When people live so closely together and are sharing common areas such as swimming pools, lifts and car parks it is important that the rights and obligations of property owners are recorded.

A CMS is a system where a “Body Corporate” holds and manages “Common Property” for the use and benefits of the Lot Owners. In return for this, each Lot Owners agree to:

  • pay “Levies” or “Special Levies” to the Body Corporate to cover the Body Corporate’s costs; and
  • adhere to the “By-Laws” of the scheme to ensure that all Lot Owners can enjoy the Common Property.

Body Corporate 

A body corporate is a legal entity which is created when land is subdivided and registered to establish a community titles scheme. All of the owners in a community titles scheme are automatically members of the body corporate when they purchase their property,

The role of a body corporate is to administer common property and body corporate assets for the benefit of all of the owners, and to undertake functions required under body corporate legislation.

Common Property 

The Common Property is the shared land, buildings, plant and equipment that the Body Corporate manages for the use of the Lot Owners. 

Exclusive Use Areas 

A community management scheme specify that only certain Lot Owners can use specific parts of the Common Property such as car parking spaces reserved for the exclusive use of a specific Lot Owner.  The by laws will often specify any obligations of the Lot Owner entitled to the exclusive use.

Levies 

Each lot owner must pay a share of body corporate expenses. A Body Corporate must budget for expenses and then levy each owner in the scheme for the money required to meet those expenses. The CMS will set out the percentage of the budget that each Lot Owner must contribute. The contributions levied on the owner of each lot must be based on the contribution schedule lot entitlements, unless the legislation says otherwise.

Special Levies 

A Special Levy is a levy each Lot Owner must pay to contribute to the extraordinary or unforeseen expenses that a Body Corporate may incur such as legal fees, emergency repairs or a significant works. 

By-Laws 

By-laws are a set of rules that a body corporate makes to control and manage:

  • the common property;
  • body corporate assets;
  • services and facilities provided by the body corporate; and
  • the use of lots.

It is important that Lot Owners familiarise themselves with their CMS to ensure that they adhere to the requirements and obligations set out therein.