Legislation
Changes to the Owners Corporations Act 2006 Amendments to the Owners Corporations Act 2006 commencing 1 December 2021 are comprehensive and significant. They aim to balance the interests and requirements of different size complexes as well as strengthen the regulatory responsibilities of developers, managers, decision-making processes, and dispute resolution. Control of the common property within a plan of subdivision will be fairer, more efficient and transparent. Snapshot • These amendments reflect a genuine effort for widespread consultation to produce a more liveable environment for communities affected by owners corporations. • The introduction of previously unavailable consumer legislation will curb the undesired elements of developers and managers and make their accountability more prominent. • Owners and occupiers may be able to enjoy a fairer, more efficient, secure, and transparent delivery of processes and services.
A major reform of owners corporations legislation in Victoria The revised Owners Corporations Act 2006 (“Act”) to commence on 1 December 2021 is a successful accumulation of diverse opinions from a wide field dedicated to the goal of creating an equitable and effective regulatory environment for communal living. This article presents the main features plus concomitant amendments to other Acts that affect an owners corporation (“OC”) including OCs in retirement villages, and the Subdivision Act methodology of setting lot entitlement and liability.
Functions and powers The concept of a prescribed OC¹ has been replaced with five tiers of OCs: tier 1 comprising more than 100 occupiable lots, tier 2 comprising 51 to 100 occupiable lots, tier 3 with 10 to 10 | The Estate Agent – APRIL 2022
50 occupiable lots, tier 4 with 3 to 9 occupiable lots, and tier 5 being a 2-lot OC or a “services only” OC². Whereas a special resolution was previously required for an OC to commence legal proceedings in the Magistrates’ Court of Victoria or the Victorian Civil and Administrative Tribunal (“VCAT”), an ordinary resolution is now sufficient. A special resolution is still required to commence legal proceedings in the County Court or higher. An OC is no longer required to have or use a common seal. An OC may dispose of goods abandoned on the common property under specified sections of the Australian Consumer Law and Fair Trading Act 2012.
Financial management If an OC incurs additional costs arising from the particular use of a lot by the lot owner, it may levy additional annual fees on that lot owner. For example, increased insurance premiums due to the risk associated with short-stay residential accommodation or a change of commercial tenancy.
a maintenance plan for its common property. Such plan may be amended by ordinary resolution and levies struck must be adequate to fund the plan. By special resolution, moneys may be drawn from the maintenance fund for other purposes.
Insurance A 2-lot plan of subdivision continues to be exempt from having public liability insurance on common property and now this will also apply to a ‘services only’ OC. This appears to be an important omission. All OCs (other than a tier 5) must obtain building valuations every 5 years or earlier. Public liability insurance for common property must not be less than $20 million. Large multi-level buildings with separate OCs on the same plan of subdivision, must now insure separately and be valued separately. An OC on a plan of subdivision for multiple single dwellings with common property may, by unanimous resolution, resolve that the lot owner of each single dwelling is responsible to insure their lot. In certain circumstances, an OC can pass on an insurance excess to an individual lot owner. Presently, annual administration fees comprise insurance and other recurrent expenses which must be levied based on lot liability. In OCs where lot liability and lot entitlement differ, the amended Act allows insurance to remain part of annual recurrent expenditure, levied on lot liability, but the OC may also elect to levy insurance separately based on lot entitlement. This will impose an equitable balance in situations where larger lots with greater entitlement often have similar lot liability compared with much smaller lots.
Tier 1 OCs must have their financial statements audited whereas a tier 2 OC’s accounts must be reviewed by an independent authorised accountant. Neither an audit or review is required for a tier 3, 4 or 5 OC, but it is optional.
Meetings and decisions
Only a tier 1 or tier 2 OC must prepare
The initial owner of land affected by
The applicant for registration of the plan of subdivision must disclose any relationship with the manager of the OC as well as any commission, payment, or benefit from that relationship.
