Recognising the Different Types of Owners Corporations
The Owners Corporation Act 2006 makes provision for four categories of Owners Corporation, these being Prescribed and Non-prescribed, and Limited and Unlimited.
The differences between these categories are subtle, however it is important for anyone dealing with Owners Corporations to be able to recognise what type of Owners Corporation it is dealing with to ensure that it is complying with its corresponding legal obligations under the Owners Corporation Act 2006.
Unlimited and Limited Owners Corporations
If there is more than one Owners Corporation within a Plan of Subdivision, there will be one Unlimited Owners Corporation which affects all lots, and the others will be Limited Owners Corporation, which affect only some of the lots in the Plan of Subdivision. As a general rule, the Owners Corporation identified as Owners Corporation No.1 will be the Unlimited Owners Corporation.
In terms of statutory rights and responsibilities, the difference between the two is that sections 48-51 of the Act do not apply to Limited Owners Corporation, so that the Owners Corporation does not have the right to serve a notice to repair or maintain on the lot owner, enter the property to undertake the repairs, or recover the cost of doing so from the lot owner.
It is also important to be aware of which Owners Corporation is an unlimited Owners Corporation when reading the Plan of Subdivision to determine not only which part of the property is private property, but which parts of common property must be managed by which specific Owners Corporation. This is important to bear in mind when raising levies for works and maintenance which are only done to some portions of the property.
Prescribed and Non-Prescribed Owners Corporations
A Prescribed Owners Corporation is either an Owners Corporation which consists of more than 100 lots, or which levies ordinary fees in excess of $200,000.00 in a financial year. It is important for Owners Corporation Managers to be aware of this when setting the annual budget for an Owners Corporation, as the definition means that properties can dip in and out of this category from year to year.
If an Owners Corporation is a Prescribed Owners Corporation it has additional financial reporting obligations, of greatest significance being the obligation to have the financial records of the Owners Corporation audited every financial year.
Prescribed Owners Corporations must also prepare a Maintenance Plan, and if it is approved by ordinary resolution, must establish a maintenance fund. The Act does not impose an obligation to adopt a maintenance plan, only to prepare one. For more information on this issue please see our article ‘Maintenance Fund Plans.’
For strata or owners corporations advice please contact a member of our Owners Corporation team.
