How community corporations work

Functions of community corporations

A community corporation’s principal function is to control and manage the common property in the community titles scheme for the benefit of its members.

If the scheme has other community titles schemes that belong to it, the common property must also be managed for the benefit of the members of the community corporations for those schemes.

In respect of common property, a community corporation has an obligation to keep common property in good and serviceable repair. The community corporation must also properly maintain and renew and replace common property (including its fixtures and fittings) as necessary because of damage or deterioration arising from fair wear and tear, inherent defects, or any other cause.

The community corporation also has a power to improve or alter the common property, and to use or allow the use of the common property for any lawful purpose (including a commercial purpose).

Members of the community corporation

(This example is based on a three tier community scheme).

The tier one community corporation comprises:

• The owners of the tier one lots.
• The community corporations of any tier two schemes.

The tier two community corporation comprises:

• The owners of any tier two lots specific to the tier two scheme.
• The community corporations of any tier three schemes that belong to their tier two scheme.

A tier three community corporation only comprises:

• The lot owners in the tier three scheme.

Relationship between schemes

A lot or common property is in or belongs to the community titles scheme under which it is created.

A community titles scheme is related to each community titles scheme to which it belongs or that belongs to it, and the community corporations are related in the same way.

This means that a tier two scheme belongs to the tier one scheme from which it was created, and a tier three scheme belongs to the tier two scheme from which it was created.

Unit entitlements

Community titles scheme unit entitlements are the main factor in the relative ownership of common property, the proportion of levies payable, and the relevant weight of a vote when it comes to a resolution.

This is similar to the role of unit entitlements in strata titles schemes.

Unit entitlement is set and certified by a licensed valuer and is an important aspect of the financial management of community corporations.