Home > News > Owners Corporation

Owners Corporation

Spread the love

What is an Owners Corporation?

An Owners Corporation (“OC”) is a body that collectively manages a multi-occupancy subdivision of a building or land. An OC is created when subdividing any property into two or more lots. This includes properties classed as residential, retail, commercial, industrial or mixed use.

The term Owners Corporation replaces the familiar concept of a Body Corporate. The Owners Corporations Act 2006 (Vic) (“the Act”) came into effect in late 2007. The Act introduced a new framework for the management of multi-occupancy subdivisions and introduced the term ‘Owners Corporation.’ The change of name was intended to bring the Victorian legislation in line with the terminology used in other states and to emphasise that an OC existed to represent the interests of lot owners.

Functions of an Owners Corporation

The standard functions of an OC include:

  1. Repair and maintenance of the common property, fixtures and services;
  2. Maintain correct insurance, including compulsory public liability insurance;
  3. Provide general management and administration of land and buildings;
  4. Enforcing the Regulations and Rules of the OC;
  5. Provide statutory certificates to owners or prospective purchasers (Form 4 certification).

Owners Corporation Rules

The Act includes rules governing meetings and resolutions, nomination of the committee and manager, duties and rights of lot owners and the prescribed dispute resolution process.

An OC may make additional rules by passing a special resolution (see below). These additional rules may then only be amended or revoked by special resolution.

If an OC does not make its own rules, the model rules apply as set out in Schedule 2 of the Owners Corporation Regulations 2007. The model rules are a brief outline of the responsibilities of the OC and lot owners.

Decision Making

The OC may make decisions by ordinary, special or unanimous resolution depending on the proposed resolution.

Type of Resolution

Majority

Purpose

Ordinary Resolution

50% of eligible votes

Most resolutions except those detailed below

Special Resolution

75% of eligible votes

Includes: setting annual fees; extraordinary expenditure; additional fees; leasing or licensing of common property.

Unanimous Resolution

100% of eligible votes

Includes: selling or buying common property; altering boundaries; altering lot entitlement or liability

Maintenance and Repairs

The OC is responsible for the maintenance and repair of the common property. The OC is only obliged to keep the common property and services in a state of ‘good and serviceable repair.’ Improvements to the common property and the associated cost must be approved by special resolution of the OC.

Lot owners are responsible for the upkeep of their individual lots to the same standard of ‘good and serviceable repair.’ If the OC determines that a lot owner is failing to keep their lot to the required standard they can issue a notice to repair. The repairs must be conducted within 28 days or the OC is entitled to carry out the repairs and charge the lot owner for the expenses incurred.

Owners Corporation Fees

An OC is entitled to charge fees to cover the general administration and maintenance, insurance and other common costs. The OC can dictate the method and date of payment.

Additional fees can be charged by the OC to cover extra expenditure for improvement works or renovations. If the amount sought is greater than double the normal annual fee then the additional fees must be approved by special resolution.

The Act sets out a structured approach to OC dispute resolution including the recovery of unpaid fees. The Act requires that disputes are handled by an internal dispute resolution process prior to commencing litigation. If the fees remain unpaid following the internal dispute resolution process, the OC may make an application to VCAT to recover the monies owed.

Conclusion

If you (a) are a Manager of an Owners Corporation; (b) are considering subdividing an existing property; (c) are purchasing a property subject to an OC; or (d) own a lot subject to an OC, then it is important that you seek specialist legal advice on your rights and obligations with respect to the OC to ensure that all rights and liabilities are being appropriately addressed. In the absence of such advice, you may fall victim to unexpected obligations both financial and otherwise.

Authors: Damien Schulze & Nick Rimington