How Are Lot Entitlements Calculated

In Victoria, owners corporations for the purposes of property ownership have a concept of Lot Liabilities and Lot Entitlements. For the most part (and on most OC reports that you obtain from Landata), Lot Liabilities will be the same as the Lot Entitlements – though they can sometimes differ.

Lot Entitlements are calculated largely based on the size (i.e. sqm) of the strata titled lot and are calculated by the land surveyor upon preparing the Plan of Subdivision.

The significance of understanding how Lot Entitlements are calculated and how they operate for property owners and developers is that it determines their voting power at owners corporation meetings.

What Are Lot Entitlements?

In the context of property ownership, Lot Entitlement dictate and determine a lot owner’s voting power at meetings. Whereas Lot Liabilities are the basis to calculate how much portion/share of owners corporation levies a particular lot owner pays/contributes to the owners corporation.

When it comes to shared spaces within a development, lot entitlements can and will play a role in determining the outcomes of voting on leases or licences over common/shared property.

Components of Lot Entitlements

The factor that contribute to the calculation of lot entitlements is for the most part based the size of the given strata titled lot. Potentially, other common elements such as property size, location, and amenities could play a role in the determination and calculation of lot entitlements.

Legal and Regulatory Considerations

The Subdivision Act 1988 (Victoria) and the Owners Corporations Act 2006 (Victoria) are the main legal frameworks and regulations that dictate the calculation of lot entitlements.

New property developments and the creation of new owners corporations are also governed by the local zoning laws, planning regulations, community input, and owners corporation rules.

Challenges and Disputes

The potential challenges that may arise during the lot entitlement calculation process for land surveyors are the outside pressures that can be placed on them by the developer. After more than a decade of working with and helping owners corporation Committees, we have seen many different Plans of Subdivisions.

We have certainly seen some unfair or inexplicable Lot Entitlements on the Plan of Subdivision i.e. where the Lot Liability (the share of costs) had a vast discrepancy and disconnect with the Lot Entitlement (voting power). Here are some examples:

Inevitably, in owners corporation living, disputes will arise over time. One of the most disputes is the sharing of OC costs and decision making powers. The Owners Corporations Act 2006 and Owners Corporations and Other Acts Amendment Act 2021 contain provisions that offer remedies to many of these disputes.

Committees should be guided by the professional owners corporation manager in navigating the legislative framework to find pragmatic solutions. On this point, if your Committee and owners corporations isn’t receiving the sound input of a professional OC management company – find out how we can help.

 

Conclusion:

Lot entitlements and their calculation are important factors to get right when setting up or creating any new owners corporation. The importance of lot entitlements is they dedicate the running of the owners corporation and how decisions are made.

In closing and as always – property owners, developers, and stakeholders should seek professional advice and engage in transparent communication to ensure fair and equitable lot entitlements.

 

The contents of this article or website are only intended to provide a general overview of the topics discussed. The author of this article makes no representations as to the accuracy or completeness of any information and the information is not intended to constitute investment, legal or professional advice. You should seek professional advice before acting or relying on any of the content. This article does not contain references to any specific company, organisation or individual, unless expressly specified.
Posted
March 08, 2024
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