What is Owners Corporation Management?

What is Owners Corporation Management?
  1. Do I have to be Part of an Owners Corporation?

  2. Owners Corporation / Body Corporate Management Fees

  3. Maintenance & Repairs

 

  1. Do I have to be part of an Owners Corporation?

If you own a property affected by an Owners Corporation (formerly known as Body Corporate) then you automatically become a member of that Owners Corporation. Most owners corporations in Melbourne and across Victoria will often elect to employ an owners corporation management company.

Flat, apartments, units, townhouses, and commercial estates generally involve an Owners Corporation and owners of such property are usually members of an Owners Corporation, previously known as a ‘Body Corporate’. All Bodies Corporate became known as Owners Corporations on 31 December 2007, when the Owners Corporations Act 2006 [Victoria] came into force. This law sets out the duties and powers of Owners Corporations Management Melbourne.

An Owners Corporation is automatically created when a plan of subdivision containing common property is registered with Land Victoria. Examples of common property may include gardens, swimming pools, tennis courts, passages, walls, pathways, driveways, lifts, foyers, and fences.

As a member, you have legal and financial responsibilities to the Owners Corporation.

 

What is a Body Corporate or Owners Corporation?

An Owners Corporation is a body that collectively manages a multi-occupancy subdivision of a building or land. An Owners Corporation 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 [Victoria] came into effect on the 1st of 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 Owners Corporation existed to represent the interests of lot owners.

Functions of an Owners Corporation Management

The standard functions of an OC include:

  • Repair and maintenance of the common property, fixtures and services;
  • Maintain correct insurance, including compulsory public liability insurance;
  • Provide general management and administration of land and buildings;
  • Enforcing the Regulations and Rules of the OC; and

Provide statutory certificates to owners or prospective purchasers (Form 4 certification).

 

Owners Corporation Rules

The Act includes rules governing meetings and resolutions, the 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

Decisions or resolutions of the Owners Corporation fall into 3 categories or levels. The nature of the item being decided upon will determine whether the resolution will be an Ordinary Resolution, Special Resolution or Unanimous Resolution.

 

Type of Resolution Majority Purpose

Ordinary Resolution is resolutions of the Owners Corporation whereby 50% of eligible votes are required to pass the resolution.

Special Resolution is resolutions of the Owners Corporation whereby 75% of eligible votes are required to pass the resolution. A Special Resolution is generally needed for deciding on matters such as setting annual fees, extraordinary expenditure, additional fees, leasing or licensing of common property etc.

Unanimous Resolution are resolutions of the Owners Corporation whereby 100% of eligible votes Includes: selling or buying common property; altering boundaries; altering lot entitlement or liability.

 

  1. Owners Corp / Body Corporate Management Fees

An Owners Corporation is entitled to set Annual Fees or Levies to cover the costs associated with the operation of the Owners Corporation. Additionally, the Owners Corporation has the power to raise Special Levies if needed.

The Owners Corporation can dictate the method and date of payment.

Annual Fees or Levies cover general administration, maintenance, insurance, and other on-going costs. Lot owners are charged their share of annual fees according to their lot liability.

Special Fees or Levies cover extraordinary or unexpected expenditure such as to urgently repair the building or to cover the cost of legal action against the Owners Corporation. Lot owners are charged special fees according to their lot liability unless works are being undertaken that will only benefit one, or some (but not all) lots. In such a case, special fees are charged using the ‘benefit principle’ which means that those who benefit more, pay more.

If the amount of proposed special fees is more than double the amount of the owners corporation’s annual fees, it must be approved by a special resolution of the Owners Corporation.

 

Overdue and Unpaid Fees

Owners cannot vote on ordinary resolutions if they owe fees to the owners corporation. An owners corporation can pass a resolution to charge the penalty rate of interest on unpaid fees (this rate is set by law and published on the Department of Justice website).

An owners corporation or its manager cannot charge a lot owner any other fees or charges, such as an ‘administration fee’, for overdue owners corporation fees. However, the Owners Corporation can take action to recover unpaid fees in the Magistrates’ Court of Victoria or at VCAT.

 

Why Are Body Corporate Management Services Important?

If you live in a flat, apartment, or a unit, you are most likely to be a member of a body corporate. A body corporate comes into play when a plan of subdivision contains common property like driveways, external walls, foyers, boundary walls, the upper surface of the floor, under the surface of the ceiling etc. Most properties may also share pipes and electrical wiring.

To avoid any disputes and differences among the owners to maintain these common areas, a body corporate company (also known as owners corporation management company) is hired. They maintain and manage the common property on behalf of all the owners. In return, the owners pay a body corporate fee which is charged annually, half-yearly, or quarterly.

Usually, a body corporate management company in Melbourne spend these funds on public lighting, exteriors of the building, security gates, intercoms, car parks, insurance costs etc. Body corporate management services can be for residential, commercial, retail, or even for industrial properties.

 

Professional Body Corporate Managers Ensure Better Body Corporate Management

Body corporate management is an essential service for any strata community. Your body corporate (which is now known as owners corporation) delegate duties to a body corporate manager- who is your one-point contact.

The good part is, your body corporate committee holds the right to decide who will be the body corporate manager.

The body corporate manager will be solely responsible for handling day-to-day affairs and other body corporate management services. He/she will also be responsible for coordinating the fees, property maintenance, and insurance for your common property. So, it is extremely important to have a professional body corporate manager.

 

How We Work- Our Role and Costs

We will take care of all the legal formalities and contractual obligations involved in changing your body corporate manager. But we don’t charge anything from property owners or the body corporate committee. The new body corporate management company covers our cost.

 

  1. Maintenance & Repairs

The Owners Corporation is responsible for the maintenance and repair of the common property. The Owners Corporation 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 Owners Corporation.

Lot owners are responsible for the upkeep of their individual lots to the same standard of ‘good and serviceable repair.’ If the Owners Corporation Management 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 Owners Corporation is entitled to carry out the repairs and charge the lot owner for the expenses incurred.

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.
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