What is an Owners Corporation?

An Owners Corporation is automatically created when a plan of subdivision containing common property is registered at Land Use Victoria. An Owners Corporation is responsible for managing the common property. A purchaser of a lot that is part of an Owners Corporation automatically becomes a member of the Owners Corporation when the transfer of that lot to the purchaser has been registered with Land Use Victoria.

If you buy into an Owners Corporation, you will be purchasing not only the individual property, but also ownership of, and the right to use, the common property as set out in the plan of subdivision. This common property may include driveways, stairs, paths, passages, lifts, lobbies, common garden areas and other facilities set up for use by owners and occupiers. In order to identify the boundary between the individual lot (for which the owner is solely responsible) and the common property (for which all members of the Owners Corporation are responsible), you should closely inspect the plan of subdivision.

How are decisions made by an owners corporation?

Lot owners are required to make financial contributions to the Owners Corporation, in particular for the repair, maintenance and management of the common property. Decisions as to the management of this common property will be the subject of collective decision making. Decisions as to these financial contributions, which may involve significant expenditure, are decided by a vote.

Should we self-manage or appoint a professional Owners Corporation Manager?

Professional Owners Corporation managers play a vital role in an increasingly complex environment by assisting Owners Corporations to be compliant with their legal responsibilities and to efficiently and effectively protect and maintain the owners’ assets and plan for the future.

The effective operation of an Owners Corporation is largely determined by the willingness of members to engage with, and assume responsibility for, the operations of the Owners Corporation.

The process and effective operation of Owners Corporations is facilitated and enhanced when a professional manager is appointed. It is often the case that a professional manager is appointed to solve intractable problems and relationship breakdowns in previously self-managed properties.

Owners Corporations have legal responsibilities for matters including financial management, record keeping, dealing with complaints and meeting procedures. Many Owners Corporations use professional managers to assist with finances, insurance, administration, meetings and maintenance functions. There are two key trends evident and growing, namely:

• the level of investment in properties subject to Owners Corporations is significant and increasing
• the significant number of properties with a large number of lots and complex services, such as can be found in high rise or mixed use developments.

Both trends make the self-management of properties extremely problematic and pose significant risks for owners who may not be informed of the complexities associated with the management of their common properties.

Ask the right questions

Even in a small or ‘simple’ Owners Corporation the decision to self-manage or appoint a professional manager needs to consider the issues. If no professional manager is appointed:

• Who will prepare the annual budget and then arrange to collect the fees?
• If an Owners Corporation certificate is required to be issued for a Section 32 statement of contract of sale, who will prepare that document?
• Who will establish and maintain the Owners Corporation Register?
• If an owner does not pay their share of costs, who issues notices for failure to pay fees and charges and manages the debt recovery process, and/or who pays that owner’s share of costs initially so that bills are paid?
• Who will obtain quotations for the various jobs that need to be done at the property, even such small items as ensuring that public lighting is operating satisfactorily?
• Who will arrange for the preparation of a maintenance plan?
• Who arranges for contractors to correctly follow OH&S practices and procedures?
• Who arranges on a non-prejudicial basis for the Owners Corporation regulations and rules to be followed by all owners, particularly regarding parking, noise and animals?
• Who issues notices to rectify breaches?
• Does the person conducting the affairs of the Owners Corporation have indemnity cover, particularly in these days of litigation?

What qualifications does an Owners Corporation manager need to have?

Professional managers are required to be registered with the Business Licensing Authority and it is an offence to carry out any function as the manager for fee or reward unless the person is registered under Part 12 of the Owners Corporations Act 2006.

An Owners Corporation manager must have Professional Indemnity insurance covering claims up to $2,000,000. To be able to arrange insurance on the instructions of the Owners Corporation, the manager must either be an Authorised Representative of an insurance company or broker or hold an Australian Financial Services Licence.

If you appoint a manager that is a member of SCA (Vic), the manager will have had a police record check and must comply with the industry’s Code of Professional Conduct. Although there are currently no formal educational qualifications required in Victoria relating to Owners Corporation managers, SCA (Vic) members have to comply with the Continuing Professional Development program to be awarded post-nominals.

Is there an industry standard Contract of Appointment?

Yes, SCA (Vic) has an endorsed Contract of Appointment – Owners Corporation Manager. All SCA (Vic) members are entitled to use the SCA (Vic) endorsed Contract of Appointment. This has been developed to take into account the changes to the regulatory environment brought about by the operation of the Owners Corporations Act 2006 and the approved form published by Consumer Affairs Victoria.

We are not happy with our Owners Corporation manager. How do we change managers?

The Owners Corporation, the committee or a delegate can remove a manager, but this can involve complex legal and contractual issues. An Owners Corporation removing a manager should make and minute this decision at a general meeting.

A manager whose appointment is terminated has 28 days to return all funds and records to the Owners Corporation.

It is also important to consider the Contract of Appointment your Owners Corporation has with the current manager. Be sure to check if there are details of notice periods and the length an appointment was signed for.

I don’t know who the other members of the Owners Corporation are. How do I get their contact details?

If your Owners Corporation has appointed a manager, the manager will have the contact details of the owners.

If an Owners Corporation manager has not been appointed there should be an Owners Corporation letterbox where a request for the contact details can be delivered.

Your municipal council may be able to assist you in providing owner details.

How often does the Owners Corporation have to meet?

An Owners Corporation must have an annual general meeting if it receives or pays out money in any financial year. The time between those annual general meetings must not exceed 15 months.

What are the benefits of using the services of a professional SCA Owners Corporation Manager?

<<DOWNLOAD brochure – The Benefits of Using the Services of a Professional SCA Strata Manager>>

What are the rights and duties of a resident of an Owners Corporation?

Consumer Affairs Victoria has published a Guide to owners corporations: Owning, managing and living in a unit or apartment which is the summary statement, approved by the Director of Consumer Affairs Victoria, of the rights and duties of a resident under the Owners Corporations Act 2006.

<<DOWNLOAD publication – Guide to owning, managing and living in an owners corporation>>

<<DOWNLOAD publication – Guide to owning, managing and living in an owners corporation>> (Simplified Chinese version)