A Building Management Statement, or BMS, effectively controls anything which ties one lot volumetric to another within a shared building or shared site.
This includes necessary services (water, gas), access to shared areas (stairwells and lifts), and any Body Corporate common property which is required to locate or install infrastructure essential to the operation of individual volumetric lots (firefighting equipment).
The purpose of using a BMS in a site is to create a clear distinction between the participant lots, such as separating retail out of a residential Body Corporate, two different types of participant lots which can easily clash.
One way to consider a BMS is to think of it as ‘an easement on steroids’ – controlling the rights and responsibilities parties have over parts of a strata scheme, even if they do not own that particular area. The BMS may take effect similarly to a contract, partnership or joint venture agreement, though it is none of these things.
A BMS is applicable where a scheme has at least one volumetric lot, and is most useful in developments which are mixed use, such as a building with retail, residential and commercial bodies.
These bodies comprise individual volumetric lots and one remainder lot or Standard Format Lot, making the owners of these lots parties to the BMS. A BMS is recorded on any participant lot title and if each volumetric lot, or the remainder lot, becomes further divided into more shops or residential units, or offices strata titled to different owners, any future owners of individual lots become parties to the BMS.
Section 54C of the Land Titles Act 1994 outlines mandatory and optional contents for a BMS.
Mandatory contents are supply of services, insurance arrangements, rights of support and shelter, and rights of access. Optional contents include establishing and operating a management group, property maintenance, rules for common services and facilities and future developments.
To create a good working BMS, it is imperative to spend time up from to get it right at the start.
The SSKB team is dedicated to this type of delivery – more time is spent consulting on a BMS than the Community Management Statement (CMS). This is to ensure there is no dispute on flow to participant lots attached to the BMS. BMSs are very rarely updated, as all parties must unanimously agree to changes.
This means anybody corporate scheme party to the BMS must pass a resolution without dissent at their general meeting level authorising their representative to consent to the changes in the BMS. This can be a difficult, lengthy and costly process, so it important to get it right, first time around.
Every BMS is different, as it must be tailored to suit stakeholders or users of the volumetric lots to ensure each lot can continue operating whilst not inhibiting by any other party. The BMS must consider how the development is shared between lots, meaning it is vital to confirm from the outset as to what titling structure applies to a particular development. It must be determined whether it involves retail, residential or commercial, or a mixed lot, and how and if these mixed lots can successfully coexist.
Structuring a BMS also requires attention to sharing of costs, as many BMS disputes often arise on cost issues. As there are no mandatory provisions under the Land Act for dispute resolution, BMS disputes run the risk of becoming costly legal processes.
If you are looking at creating a BMS for your development, talk to SSKB. With a real focus on ensuring every detail is covered, SSKB can structure your Building Management Statement to be as effective and future proofed as possible.