Buying Off-The-Plan: 5 Owners Corporation Facts You Should Know

Buying off-the-plan can be an exciting way to secure a new, modern property, whether you’re a first home buyer, investor, or downsizer.

But when you purchase into a strata development in Victoria, you’re also joining an Owners Corporation (OC), a legal entity with rules, fees, and shared responsibilities.

The problem? Many buyers only discover how powerful the OC is after they’ve signed the contract.

To help you avoid surprises, here are five essential OC facts every off-the-plan buyer should know so you can buy with confidence and protect your future investment.

1. You’re automatically part of an Owners Corporation

What is an Owners Corporation? An Owners Corporation (sometimes called a body corporate) is a legal entity created under the Owners Corporation Act 2006 (Vic) whenever a property has shared areas,  like driveways, foyers, stairwells, or gardens. Every lot owner is automatically a member.

Under the Owners Corporation Act 2006 (Vic), if your property has shared areas such as driveways, foyers, or gardens, an OC must be created, and you automatically become a member at settlement.

This gives you legal obligations (paying fees, following rules, attending meetings/AGM) and legal rights (voting, accessing records, challenging decisions).

It is reported that one in four Victorians live in a property overseen by an Owners Corporation, yet many buyers don’t realise they’re entering a legal entity with ongoing responsibilities, not just purchasing a standalone property.

Understanding this early helps you avoid surprises and ensures you’re ready to take part in how your building is run.

2. You’ll inherit the developer’s OC setup

When you purchase off-the-plan, you take on the developer’s framework from day one. The developer establishes the initial budget, rules, and often appoints an OC manager before any owners have a say.

That setup can have hidden risks:

• The developer-appointed manager may favour the developer/builder’s interests, not yours.
• It’s not unusual for the initial budgets to be artificially low to make payments look attractive to buyers.
• Disagreements or defect claims may be handled slowly; under Section 134 of the Building Act 1993 (Vic), you only have 10 years to bring a building defect claim.
• Recent amendments to the OC Act 2006 (Vic) demand clearer accountability from developers, reducing their ability to unduly favour themselves through setup terms.

Your best safeguard? Before signing, review the OC certificate, any management contracts, budgets, and reserve fund assumptions. That’s your opportunity to identify imbalanced clauses and be prepared for how the OC will operate well before settlement.

3. Strata fees may increase after settlement

The developer is responsible for preparing the first OC budget, and they typically do this with a manager they appoint before any owners are involved.

These budgets often underestimate the real costs of insurance, cleaning, lift servicing, gardening, and long-term maintenance. Once the building is occupied and the OC takes control, the fees must be adjusted to reflect reality, so it’s common for strata fees to jump by 20–50% within the first two years.

In more serious cases, owners may also face special levies relating to:

• building defects
• compliance upgrades
• safety works
• unexpected repairs
• underfunded maintenance obligations

Before buying, it is important to look beyond the first-year fee estimates.

Buyers should review:

• the Owners Corporation certificate
• proposed maintenance plans
• sinking fund contributions
• insurance assumptions
• long term maintenance projections

If the numbers appear unusually low or unrealistic, it may indicate future fee increases or funding shortfalls.

A small step before settlement can prevent bigger issues later

Many off-the-plan buyers focus on the apartment finishes and inclusions, but the long term experience often depends just as much on how the Owners Corporation is structured and managed.

Reviewing the Owners Corporation setup before settlement may help identify unrealistic budgets, restrictive contracts, or management concerns before they become expensive problems.

4. Rules and restrictions apply from day one

When you buy into an Owners Corporation, you agree to follow its rules from the moment you settle, even if you didn’t read them. These rules are legally binding and form part of your contract under the OC Act 2006 (Vic).

OC rules often cover everyday things such as:’

• pets (approval required or size limits)
• renovations or cosmetic changes
• parking and visitor spaces
• noise and use of common areas
• short-stay rentals like Airbnb

Some developments have very strict rules, and breaching them can lead to warnings, fines, or disputes with neighbours or the Committee.

Before you buy off-the-plan, read the OC rules in the contract carefully. Make sure they align with how you plan to live, use, or rent out the property because once you settle, you’re bound by them from day one.

5. Changing strata managers isn’t always easy

Developers often appoint the first OC manager long before any owners have even moved in. While this may create continuity, it can also sideline your interests: the manager may favour contracts aligned with the developer, not the future owners.

In a 38-lot Brunswick building, the developer-appointed manager had locked in inflated service contracts and long-term fees. Within the first year, OC fees jumped from around $2,400 to over $4,500 per lot, and when owners tried to take back control, the contract made it extremely difficult to terminate the manager.

Strata Consultants stepped in, guided the Committee through the termination process, and helped exit the unfair contract, ultimately reducing costs and restoring control to the owners.

Owners do have legal paths to replace or terminate a manager, for example, passing an ordinary resolution at a general meeting or applying to VCAT. But poorly drafted contracts, long lock-in periods, or auto-renewals can complicate the process.

What you can do before signing the contract

Before committing to an off-the-plan purchase, a little due diligence can save you from years of financial or legal headaches.

1. Ask your conveyancer to review the OC certificate and rules

The OC certificate outlines budgets, fees, insurance, and any existing contracts. The rules tell you what you can and can’t do (pets, parking, renovations, Airbnb, noise, etc.). Make sure your conveyancer explains how these will affect your lifestyle and costs.

2. Get a strata review or second opinion

A legal review is good, but a strata specialist can spot red flags like unfair management contracts, unrealistic budgets, or developer-friendly clauses that lawyers may miss.

3. Ask the developer or agent the right questions

To avoid hidden risks later, make sure you get clarity from the developer or agent. Ask questions like:

As a future owner, you have the right to know start with these questions:

• Who is the initial strata manager, and how long is their contract?
• How was the OC budget calculated?
• Are there any major maintenance items forecast in the first 5 years?
• Can owners change the manager after the settlement?

Navigate strata issues with Strata Management Consultants

Buying off-the-plan is exciting, but the Owners Corporation you inherit can make or break your experience. If you’re unsure about the contract, fees, rules, or the strata manager, it’s best to get expert support early.

At Strata Management Consultants, we’ve helped countless owners and Committees take control of their OC by reviewing contracts, spotting hidden clauses and unrealistic budgets, and removing developer-appointed managers when they don’t act in owners’ best interests.

If something doesn’t feel right with your OC, don’t wait until it becomes costly or stressful, call us on 03 9007 2618 and speak with a Strata Management Consultant.