Transfer Fee Update
Definition of the “contract date” for imposing and calculating a transfer fee
Section 83 of the Accommodation Module and Section 85 of the Standard Module provide for the imposition of a transfer fee:
“if the date (approval date) on which the body corporate approves the transfer is not more than three years after the date (the contract date) on which the engaged or authorisation was entered into, or on which the term of the engaged or authorisation was extended”.
Establishing the contract date is vital to ascertain if any transfer fee is payable, or whether 3%, 2% or 1% of the transfer price is payable to the body corporate.
Prior to February 2006, the contract date was generally taken to mean the original date of the agreements, however in February 2006 (in the decision of Whitsundays Water Resort), the adjudicator determined that the calculation of the relevant three year period should be determined from the date of the last assignment of the management rights.
The decision was appealed to the District Court and on Friday 13 April 2007 the District Court delivered its decision . It held that the contract date is “the original contract date for the relevant engagement or authorisation”, NOT the date of the assignment to the outgoing caretaker.
The decision, in effect, returns the practice of the industry back to what was occurring pre February 2006.
Any Caretaker who has recently received an adverse decision from an Adjudicator, and is still within time to file an Appeal, should immediately consider filing an Appeal.
Definition of the “contract date” for considering if genuine hardship was reasonably foreseeable – 86(3)(b) AM & 85 (6)(b) SM
The Court’s decision to define “the contract date” as the date of the original contract also assist the Caretaker when seeking to avoid a transfer fee by reason of unforeseeable genuine hardship. The definition confirms that the Caretaker only has to show that its key people were in good health at the contract date, which could have been years before they purchased the management rights, NOT when they purchased the Management Rights. Again, this in effect, returns the understanding and practice of the industry back to what was occurring pre February 2006.
The amendments to the Act which have just been approved by Parliament do not affect these sections.
To date we do not know whether the district court decision will be appealed, but for the moment, the industry can return to the interpretations that have been accepted since the Body Corporate and Community Management Act commenced in 1997.
If you have any queries please contact Frank Higginson, Partner or Amy O’Donnell, Special Counsel, on 07 5504 9999.
Document: 
1. TB - Transfer Fee Update - May 07.pdf
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