Multi-tier governance arrangements
Smart scheme governance happens when the right people are making the right decisions.
Community schemes have been designed with this in mind, as they provide for the most efficient, appropriate decision-making to occur across the multiple tiers of the scheme.
Each community titles scheme in the community scheme has its own community corporation.
A community corporation is the body corporate that manages the scheme by-laws, common property and finances of the community titles scheme. Learn more on the role of community corporations.
Through this framework, decision-making can occur on matters that affect all owners in the community scheme, while still allowing autonomous decision making for owners on matters that are specific to their community titles scheme.
It's anticipated that this capability of community schemes will hold strong appeal for those who will own or occupy this new style of development.
Learn more on the multi-tier governance framework
A community scheme may have up to three tiers of community titles schemes.
Each individual scheme within a community scheme is called a community titles scheme.
- The initial scheme that subdivides the land is the tier 1 scheme.
- A scheme that subdivides a tier 1 lot is a tier 2 scheme.
- A scheme that subdivides a tier 2 lot is a tier 3 scheme.
As depicted below through a sample structure of a community scheme:
- The tier 1 scheme will have a community corporation which is the overarching management body for the community scheme.
- Each tier 2 and tier 3 scheme in the community scheme will also have its own community corporation to govern and manage relationships and the common property in that community titles scheme. It is that community corporation that will represent its members and vote on their behalf at meetings of the community corporation of the scheme to which that tier 2 or tier 3 scheme belongs.
The tier 1 scheme is the first community titles scheme to be created and provides the overarching governance for all the tier 2 and tier 3 schemes which will eventually belong to it.
As defined in the Community Titles Act 2018 (CTA), a tier 1 scheme is a scheme for the creation of community titles on registration of the scheme so as to:
- Effect a physical division of a parcel of land into two or more lots, or two or more lots and common property.
- Allow for the lots to be owned and sold or otherwise dealt with separately (except for any lots that are subdivided by tier 2 schemes).
- Require the common property to be administered by a community corporation that comes into existence under the CTA on registration of the community titles scheme.
- Limit how the common property may be dealt with.
A parcel of land subdivided by a tier 1 scheme is referred to as a tier 1 parcel.
A tier 2 scheme subdivides a tier 1 lot into lots and common property or just lots. A tier 2 scheme belongs to the tier 1 scheme.
As defined in the CTA, a tier 2 scheme is a scheme for the creation of community titles on registration of the scheme so as to:
- Effect a physical division of a tier 1 lot into two or more lots, or two or more lots and common property.
- Allow for the lots to be owned and sold or otherwise dealt with separately (except for any lots that are subdivided by tier 3 schemes).
- Require the common property to be administered by a community corporation that comes into existence under the Act on registration of the community titles scheme.
- Limit how the common property may be dealt with.
A tier 1 lot subdivided by a tier 2 scheme is referred to as a tier 2 parcel.
A tier 3 scheme is created when a tier 2 lot is subdivided into a community titles scheme and is the highest level of tier that can be created. The tier 3 scheme belongs to the tier 2 scheme from which it is created and to the tier 1 scheme first created.
As defined in the CTA, a tier 3 scheme is a scheme for the creation of community titles on registration of the scheme so as to:
- Effect a physical division of a tier 2 lot into two or more lots, or two or more lots and common property.
- Allow for the lots to be owned and sold or otherwise dealt with separately.
- Require the common property to be administered by a community corporation that comes into existence under the Act on registration of the community titles scheme.
- Limit how the common property may be dealt with.
A tier 2 lot subdivided by a tier 3 scheme is referred to as a tier 3 parcel.
Fair approach to common property
The multi-tier framework of a community scheme supports a common-sense, flexible approach to how common property can be owned and managed across a mixed-use scheme.
It enables common property to be owned and managed in a way that is more equitable and targeted to the uses of its various community titles schemes.
This is possible by allowing the lot owners of each community titles scheme to focus on managing, maintaining and contributing to the common property that relates to their scheme – which might be residential, retail, commercial or industrial.
For example, within a community scheme this clarity around common property could allow the lot owners in a residential scheme to share ownership, management and costs of a pool, but not in a loading bay, which would instead be owned and managed by a commercial scheme.
In instances where all schemes have a shared interest in common property within the community scheme - such as a common driveway - the owners of lots in each scheme will own a proportionate share in such common property and be required to contribute to the maintenance and management of that common property.
Find out more
Visit Community titles support and resources for more detailed information on this topic.