Owners Corporations FAQ
Please see below a list of questions we are often asked by our clients in respect to owners corporations and strata.
Tisher Liner FC Law advises Owners Corporations for apartment buildings throughout Victoria. We provide quality and practical legal advice to Owners Corporations and their Committees on an ongoing basis to assist with compliance and reduce the likelihood of future disputes.
What is an Owners Corporation?
An Owners Corporation is a statutory body created on the registration of a plan of subdivision.
What is the membership of an Owners Corporation?
The registered owners of the lots in a plan of subdivision are the members of the Owners Corporation. Membership is not optional.
What are the Owners Corporation’s functions?
As a statutory body, an Owners Corporation can only carry out the functions and powers in accordance with the legal procedures prescribed under the statutes and regulations governing it. Under section 4 of the Owners Corporations Act 2006, an Owners Corporation’s functions include managing and administering, repairing and maintaining the common property and chattels, fixtures, fittings and services related to the common property, maintaining insurance required by law, keeping an Owners Corporation register and providing Owners Corporation certificates.
What are a Lot Owners obligations?
Lot owners, who are also members of an Owners Corporation, also have obligations under Owners Corporation legislation. Lot owner obligations include the duty to properly maintain any service that serves their lot exclusively and any part of their lot that affects the outward appearance of the lot or the use or enjoyment of other lots or the common property.
What is common property and private lot property in a plan of subdivision?
The plan of subdivision determines the legal boundaries of common property and lot property for a particular property. There are no generally applicable rules for such legal boundaries in Victoria. Therefore, legal advice is often required on a case by case basis. We recommend all Owners Corporations invest in a legal interpretation of their plan of subdivision which can be kept on the Owners Corporation’s records for future reference when considering significant repairs and maintenance.
How does an Owners Corporation make decisions?
The Owners Corporations Act 2006 sets out the kinds of decisions an Owners Corporation can make and what type of resolution is required to formally make certain decisions. Owners Corporation decisions may be open to challenge if the legal processes required under the law are not followed. Therefore, taking legal advice on appropriate compliance before making important or complex decisions often reduces the risk of disputes in future.
How do I join my Owners Corporation Committee?
If you have recently bought into an apartment building in Victoria, congratulations you are now a member of an owners corporation! If you want to be involved in the decisions about how your building is run, the best way to become involved is to become a member of your owners corporation’s Committee.
Apartment owners, especially in larger buildings, are often frustrated by the lack of available information on who is running their owners corporation and what action is being taken to address various problems in their building. Joining your owners corporation’s Committee means you will be part of the body that makes most of the day-to-day decisions about how your building is managed during the year including how the owners corporation’s money is spent and what steps are taken to address various problems in your building.
By law, there must be an election for the owners corporation Committee at each Annual General Meeting for owners corporations with more than 13 apartments (s.100 of the Owners Corporations Act 2006).
Does my Owners Corporation require a Maintenance Fund plan?
Section 36 of the Owners Corporations Act 2006 places a strict statutory duty on ‘Prescribed’ Owners Corporations in Victoria to prepare a maintenance fund plan for the property. It is responsible for setting out the major capital items anticipated to require repair and replacement within the next 10 years and a variety of other matters.
But although the intent of the Owners Corporations Act 2006 may be for Prescribed Owners Corporations to have approved maintenance plans, the wording of Section 36 which says a Prescribed Owners Corporation must “prepare” a maintenance plan appears to leave Section 36 open to an interpretation that as long as the Owners Corporation simply prepares the maintenance plan, it has complied with its duty under Section 36.
Approval of the maintenance plan (by ordinary resolution) triggers the Owners Corporation’s obligation to comply with the legal restrictions on dealing with Maintenance Fund monies as set out in Sections 40 to 45 of the Owners Corporations Act 2006. Hence why some Owners Corporations may currently decide not to formally “approve” the maintenance plan they have prepared in accordance with their Section 36 duty.
The wording of Section 36 may well be something that legislators review in future.
What is the Common Seal for?
The Owners Corporation executes documents by using its Common Seal (s.10 of the Act). Ensuring the Owners Corporation’s Common Seal is only applied in accordance with the prescribed statutory procedure ensures the integrity of contracts, agreements and other documents that the Owners Corporation enters into in the course of exercising its functions and powers under the Owners Corporations Act 2006.
What must the Common Seal look like?
The Common Seal must include the Owners Corporation’s legal name and Plan of Subdivision Number (s.19 of the Act).
When can the Common Seal be used?
The Common Seal can only be used if it has been authorised by:
• The Owners Corporations Act 2006;
• The Owners Corporations Regulations 2007; or
• An Owners Corporation resolution recorded in the minutes of a general meeting and in the Owners Corporation’s common seal register (if one is kept).
VCAT Case Quote regarding Common Seals:
“…Sections 19 – 21 of the Act show the seriousness with which the common seal is held. Section 20 says that the seal must not be used on a document unless its use for that purpose has been authorised by the Act or regulations, or by a resolution of the owners corporation. Any such resolution must be recorded in the minutes of a general meeting…”
Owners Corporation SP26824D v Saponja (Owners Corporation)  VCAT 2402 (20 December 2011)
Who must witness the Common Seal?
The application of the Common Seal must be witnessed by at least two persons who are owners of separate lots and are members of the Owners Corporation (s.21 of the Act) and each lot owner must sign and write their full name and address and include a statement that they are a lot owner and a member of the Owners Corporation. Exceptions apply to sealing Owners Corporation Certificates under s.151 of the Act which may be witnessed by the registered Manager or the elected chairperson.