What is an Owners Corporation?

Do I have to be part of an Owners Corporation?

If you own a property affected by an Owners Corporation then you become a member of that owners corporation automatically. As a member, you have legal and financial responsibilities to the Owners Corporation.

What is an OC or Owners Corporation?

An Owners Corporation 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 is the new term for the old familiar Body Corporate. The Owners Corporations Act 2006 (Vic) came into effect on the 1st January 2008. 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 into 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

WARNING Please Read the OC Act Page on this site re changes affecting voting and proxies coming in to force as at 1 December 2021

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

Type of ResolutionMajorityPurpose
ORDINARY
RESOLUTION
50% of eligible votesMost resolutions except those detailed below
SPECIAL
RESOLUTION
75% of eligible votesIncludes: Commence legal proceedings, making or amending rules; providing a service or entering into an agreement to provide services to lot owners or occupiers of lots; extraordinary expenditure when the amount involved is more than twice the amount of the current annual fees; borrowing money if amount borrowed exceeds the amount of the current budget; opting out of appointing a manager if a Tier One OC.
UNANIMOUS
RESOLUTION
100% of eligible votesIncludes: Selling or buying common property; altering boundaries; altering lot entitlement or liability; where there is common property the lot owner of each single dwelling being responsible to insure their lot; where there is no common property each lot owner must arrange for the lot owner’s own insurance.

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 are considering subdividing an existing property, are purchasing a property subject to an OC or own a lot subject to an OC, then it is important that you seek 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. A pre purchase audit and property inspection to ensure you don’t get any unpleasant surprises is a good idea.

Visit the legal help page if you need legal advice.


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