The One & Two Year Body Corporate Penalties – How Does It Work?

The One & Two Year Body Corporate Penalties –
How Does It Work?

The BCCM legislation has key sections that outline the periods and costs if you, as a management & letting rights operator, decide to sell your business within either the 1st or 2nd years of your ownership.

Note that this charge is over the business component only and does not include any associated real estate within the transaction.

Those relevant Sections are sections 137 (Accommodation Module) and 147 (Standard Module).

Both refer to a fee & timing, payable at settlement, to the Body Corporate, as a transfer fee and the prescribed period.

The transfer fee is payable, under both Modules, if the day on which the body corporate approves the transfer (the approval day) is not more than 1 year after the initial contract date for the engagement or authorisation of the transferor (a reference to you at the time when you bought and the day you were approved by the committee).

Within 1 year you will pay 3% of the amount representing fair market value (this is normally your final management rights business contract figure).

If you sell after year 1 but before year 2 concludes, you will pay 2% of fair market value.

Where you don’t pay is if your bank were to exercise a power of sale over your business and real estate, OR where there is a genuine hardship case that arose in the time period and one that you never saw coming e.g. a serious health issue.

The transfer fee payable under the Act must be paid into the body corporate’s sinking fund.

Listed below are the two google search references if you would like to read this in
more detail:

Accommodation Module link:
https://pinpoint.cch.com.au/360document/legauUio3325900sl1193002280/section-137-amount-payable-on-a-transfer-within-the-prescribed-period-act-s-122-sm-s-147/overview

Standard Module link:
https://pinpoint.cch.com.au/360document/legauUio3326250sl1206697675/section-147-amount-payable-on-a-transfer-within-the-prescribed-period-act-s-122/overview

In closing, I’d like to thank Peter Spranklin, from Spranklin Legal for his direction to
the relevant sections within this rather obese Act.

Whilst this question is fortunately an uncommon one, I have been asked a few times
of late and felt that a permanent reference within our Library and Blog, was a good
thing to accomplish.

My Disclaimer: Keep in mind that this information is correct at the time of writing (13
April 2021) and with Governments being Governments, this may not always prove to
be the situation. Therefore we suggest that you always confer with your Industry
Lawyer regarding such matters.

Greg Jorgensen
Founder & Director
0407 721 335