Understanding community schemes
A community scheme enables a single parcel of freehold land to be subdivided into up to three tiers of schemes called community titles schemes. The title to the land comprised in a lot, within a community titles scheme, is called a community title.
There are two types of community titles schemes - a community titles (building) scheme and a community titles (land) scheme. Both types can exist within the same community scheme, providing for a mix of development types and land use within the scheme.
Each community titles scheme will have its own community corporation established on registration of the scheme, its own set of scheme by-laws to govern the scheme, and most likely, its own common property.
Each community scheme will have a community development statement - a new planning instrument that will set out how the community scheme is to be subdivided and developed, including staging and management.
Community schemes will only be available to new planning proposals – a community title cannot be applied to an existing scheme. This means, an existing strata or survey strata scheme cannot be combined with a community scheme, and community schemes cannot include leasehold strata schemes.
How are they different to strata titles schemes?
The key difference between a community scheme and strata titles scheme is that strata titles allow only one scheme to be created on a single parcel of freehold land. A strata titles scheme can be further subdivided by changes to lot boundaries and common property, but this does not include subdividing a lot to create another scheme.
Community schemes allow the same land to be subdivided in a way that creates several individual schemes (community titles schemes) in a single community by allowing a lot in a scheme to be subdivided to create another community titles scheme.
Scheme types, by-laws, the management of common property, planning requirements and the body corporate are also different between community titles schemes and strata titles schemes.
Two types of community schemes
Community titles schemes can either be ‘building’ schemes (like strata) or ‘land’ schemes (like survey strata).
1. A community titles (building) scheme
- Lots are defined on a scheme plan with defined upper and lower boundaries as well as lateral boundaries, with at least part of each lot defined by reference to a building shown on the scheme plan.
- Can exist at any tier level within a community scheme.
2. A community titles (land) scheme
- Lots are defined on a scheme plan by reference to an area of land, regardless of whether there are buildings on the land.
- Can exist at any tier level within the community scheme; however, a community titles (land) scheme cannot be created from a lot in a community titles (building) scheme.
Up to three tiers of community schemes
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.
How a tier 1 scheme works
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 Act, 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 Act 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.
How a tier 2 scheme works
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 Act, 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.
How a tier 3 scheme works
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 Act, 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.