Owners Corporations FAQs

As Owners Corporation Lawyers, 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.

 

General Questions

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. Whilst there are regulations that govern the interpretation of plans of subdivisions, each surveyor may define different parts of a building and lot differently. 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.

 

Meetings and decisions of Owners Corporations

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.

Some decisions can be made by a simple majority vote (i.e. 51% or more), others must be made by a special resolution (i.e. 75% or more) and other important decisions are reserved for unanimous decisions (100%). Sometimes it is not clear what type of resolution is required. Therefore, you must always consider the Owners Corporations Act 2006 and the regulations and consult and expert owners corporation lawyer, such as Tisher Liner FC Law for advice if needed.

 

Who chairs a general meeting?

The lot owners present at a general meeting may elect a lot owner or the manager of the owners corporation to chair the meeting. If no election occurs, then the chairperson of the owners corporation should chair the meeting.

 

How are votes cast at a general meeting of an owners corporation?

Voting on a resolution at a meeting is by a show of hands (or under the regulations by completing a form with prescribed information) with each lot owner/proxy having one vote for each lot. An owners corporation may resolve to vote in another way. If any lot owner or proxy calls for a Poll, the vote of the owners corporation must be conducted by a Poll and the original vote is set aside.

 

What is a Poll in an owners corporation?

A poll is a vote of the owners corporation which is in writing and counts one vote for each unit of lot entitlement. So if there are 10 lot owners where 8 of them have 10 units of lot entitlement and 2 of them has 20 units of lot entitlement, then if there is a vote by a show of hands, 6 out of the 10 must vote in favour of an ordinary resolution. However, if there is a poll, if 2 of the lot owners who have 20 units each vote in favour then they only need 3 extra lot owners to pass the resolution (being a total of 5 lot owners). Therefore, care must be taken to decide whether a poll is taken. If any lot owner or proxy asks for a poll, a poll must be taken. A request for a poll can be made at any time before the meeting is concluded.

 

Does the Chairperson have a casting vote in an owners corporation?

Yes, if the voting result is equal and the chairperson is a lot owner or authorised to vote on behalf of a lot owner as a proxy they have a casting vote (second vote) and their vote will decide the vote.

 

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).

 

Maintenance Plans and Repairs and Maintenance obligations of Owners Corporations

 

How are repairs and maintenance for an owners corporation paid for?

An owners corporation pays for repairs and maintenance through annual levies or one off special levies. If an owners corporation has a maintenance fund, repairs and maintenance for items covered by that fund can be used. Where there is a shortfall, annual levies can be used. However, if a repair or maintenance item is for the benefit of one or more of the lots but not all of the lots, the owners corporation needs to consider whether the benefit principle applies.

 

What is the benefit principle?

Section 49 of the Act provides that where costs of repairs, maintenance or other works carried out wholly or substantially for the benefit of one or some, but not all, of the lots affected by the owners corporation must be payable by the lot owners calculated on the basis that the lot owner of the lot that benefits more pays more. It is important where the amounts are substantial that the owners corporation obtains legal advice as to the application of the benefit principle.

 

Does my Owners Corporation require a Maintenance Fund plan?

Section 36 of the Owners Corporations Act 2006 places a strict statutory duty on Tier one (an OC with more than 100 occupiable lots) and Tier two (an OC with between 51 and 100 occupiable lots) Owners Corporations in Victoria whom must 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. Maintenance plans for other owners corporations is optional. If Tier two OCs do not yet have a maintenance plan they have until 1 December 2023 to get one.

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 (other than Tier one or Tier two) may currently decide not to formally “approve” the maintenance plan they have prepared in accordance with their Section 36 duty.

 

What must a maintenance plan have?

A maintenance plan must set out:
(a) the major capital items anticipated to require repair and replacement within the next 10 years; and
(b) the present condition or state of repair of those items;
and
(c) when those items or components of those items will need to be repaired or replaced;
and
(d)the estimated cost of the repair and replacement of those items or components; and
(e) the expected life of those items or components once repaired or replaced; and
(f) any other prescribed information.

Major capital items includes lifts, air conditioning plants, heating plants and other prescribed items.

 

Executing Contracts with Owners Corporations

 

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. In accordance with Section 18A, an Owners Corporation can by ordinary resolution resolve to destroy the common seal and not use it.

 

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) [2011] VCAT 2402 (20 December 2011)
If the common seal has been dispensed with under Section 18A, the seal must not be affixed to any document.

 

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.

 

Need Further Assistance?

Please contact Phillip Leaman or a member of the Owners Corporations team for advice and assistance. For more information see our general Owners Corporations page here.