Multi Scheme Staged Mixed Use Developments – Building Management Statements

By |2022-06-28T15:14:03+10:0011-5-22|

There are many different ways in which multi stage mixed use projects can be developed in terms of titling structure. Ultimately, the preferred titling structure chosen depends upon numerous factors including:

  1. Development approval;
  2. Timing between stages;
  3. The substance, location and timing of the construction of shared facilities;
  4. Whether there are non-residential components in the project;
  5. Caretaking and Letting Agent rights considerations;
  6. The need to use areas constructed in a prior stage to construct or access a later stage;
  7. Whether there is a mix of short-term and long-term residential uses;
  8. Construction funding considerations.

This list is far from exhaustive. No two projects are ever the same and the weighting given to considerations regularly differs.

When structuring a staged mixed use project it is always critical to give consideration to:

Contract Risk: The risk that any change in the project (especially in a later stage in terms of timing of that stage or content of a stage) may have on the information that has been disclosed to earlier stage buyers in their off-plan contract and disclosure documents.

Development Risk: The risk that the developer faces in respect of the remainder of the stages of the development, after one of earlier stages have been created.

Staged Developments, subject to their size and market conditions, can regularly take many years to complete all stages. Despite all best intentions, there may be significant delays between stages from many different causes. The market may slow, building expenses may take a sharp unexpected jump, or one of many other reasons that can (and will commonly) arise in most projects.

Many large projects share basement access. The basement may be built early at stage 1, or built in stages. Often there are very large common facilities built in early stages. These include pools, gyms, multi-purpose rooms, shared dining rooms and numerous other facilities. If these facilities are built in an early stage, it is imperative that the Developer controls those areas so the developer can ensure they are maintained and improved to the standard the developer considers is commensurate with future stage apartments and future buyer expectation. If those facilities are controlled by an early stage Body Corporate, then that committee may have an entirely different view of the standard to which those facilities must be maintained.

If land that is to be developed in a later stage is within scheme land of an earlier stage scheme, then resolutions of that scheme may (and will likely) be required, even if a detailed schedule B (Development of Scheme Land) has been used as to the staging of that scheme. Within a staged scheme, especially one where later stages occur beyond the 12-month validity of Powers of Attorney, voting control of the scheme can be complex and any change to development can be problematic. These issues can arise even when a detailed schedule B is contained within the recorded Community Management Scheme (CMS).

In these circumstances there may be benefit in:

  1. Careful consideration of the creation of underlying land lots and the use of volumetric lots preceding building format lots;
  2. The use of a Building Management Statement in relation to the Site.

Orange and white apartment block

Building Management Statement (BMS)

A Building Management Statement and careful staged subdivision of lots can provide a developer with many preferred options in staged projects. These include:

  1. Retaining ownership of all project land that is not specifically required to be created within an earlier stage building;
  2. Retaining ownership and control of significant shared facilities while still permitting use of those facilities by earlier stage occupants and recovering costs of the facilities from those users;
  3. Providing registered on title security to buyers and mortgagees of lots in earlier stages as to the ongoing use and enjoyment of shared facilities;
  4. More fairly allocating expenses of shared facilities between stages;
  5. Allowing each stage to have equal voting rights at BMS meetings, despite one stage perhaps being a larger building than another stage;
  6. Significantly reducing development risk in terms of existing off plan sales and proposed future sales;
  7. Reducing risk associated with the Body Corporate and Community Management Act (BCCMA) Commission jurisdiction and decisions;
  8. Maintaining standards of built shared facilities;
  9. Reducing risk to the project from litigation that might arise between the Body Corporate of an earlier stage and its contractors or amongst owners or other claims;
  10. Allowing flexibility in terms of creation and sale of Management Rights for each stage;
  11. Better allowing the Developer to actually deliver the staged project in the manner that they have represented to buyers by ensuring they maintain control of key assets, land, decisions and costs.
  12. Allowing commercial components to be titled separately and not part of any residential Scheme, and to provide costs allocation and voting rights as determined;
  13. To better detail and control the preferred operation of the Site as a whole, including security management, car parking management, signage across the site, cleaning and maintenance, insurances, power supply and charging, and essentially all matters generally.

A very well considered and crafted subdivision and BMS structure can and should result in:

  • A multistage project being delivered in the manner the Developer intends;
  • Buyers and buyer’s lawyers, lenders and valuers being satisfied with the structure; and
  • Ultimately, during the completion of the staging of the project, and once all stages have been completed, the preferred and most efficient operation of the all components of the Site into the future.

We have assisted many developers together with other consultants, to successfully deliver scores of large staged projects containing thousands of apartments, retail and commercial lots over many years.

Please contact Matthew Weaver for a no obligation discussion in respect of your proposed project at any time.

Matthew can be contacted at mpw@nicholsons.com.au or call (07) 3226 3944.

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