Rules And Regulations: What Your Responsibilities Are As Apart Of The Owners Corporation

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Buying property is an exciting investment made even more exciting if you form part of the owners corporation. An owner’s corporation (formerly known as a body corporate) is something that applies to apartments or village complexes and is concerned with the shared spaces and environment of that property. If you’re about to invest in such property or have always wondered what responsibilities sit with an owner’s corporation, read on to get the full picture.

How involved is the owner’s corporation commitment?

Being a member of a body corporate is not just a title, there are responsibilities that you must abide by if you form part of that group – just ask owners corporation managers in Melbourne. For example, if you’re a  if a discussion or resolution is needed on a decision relating to the property complex, every member of the owner’s corporation must follow a process to arrive at a solution. Only then will a decision or work be carried forward.

This owners corporation action will typically looks like this:

  • A town hall meeting (usually annually)
  • A special general meeting (for dedicated issues)
  • A ballot voting process to decide on a solution

Decisions cannot be made on a whim and they are the responsibility of each member of the owner’s corporation, with a strata management company acting as the third party to qualify the decision and keep things above forward. They will also be the entity that sends out communications to the owner’s corporation and managed other administrative tasks.

Is the strata management company inherited, or is there the option to choose a provider?

The strata management company serves the owner’s corporation and is appointed by the owner’s corporation. That means that if the group is not satisfied with the current provider then a new group can be chosen if the consensus votes as such. Contrary to belief, there is quite a variance in the quality of the service offered by each strata management. There are some who have dedicated property management experience and qualifications, and other entities are spread thin and unqualified in their direction. Changing companies will need to be formally completed through applications and with support from Land Use Victoria (or your specific state-based corporation).

What issues fall under the control of the owner’s corporation?

It can be pretty confusing to understand what falls under the control of the owner’s corporation and what is beyond. An owners corporation in Australia will not be responsible for assessing rental applications, but they will have a say over the presentation of the complex that the renter sees.

If a public area is damaged or unsafe, then it is up to the owner’s corporation to decide on how to fix that issue. Raised concerns during an owners corporation meeting would be actioned by the strata management company, facilitating this works and managing the budget and tradesmen carrying out the works.

There will typically be a fund, often referred to as the sinking fund, which owners will contribute to during the year and that will pay for the complex maintenance that occurs. These improvements can include a wide breadth of things, including lift repairs, new stairs, new concrete laying, enhancing security measures and many more upgrades and maintenance. Any and all common areas are the responsibility of the owner’s corporation.

Are there set rules for the owner’s corporation?

The owner’s corporation will not have 100% control of the common property, and there is typically a set of rules that govern the management, administration and general use of the common areas. These rules must abide by the set of rules that are outlined in schedule 2 of the Owner’s Corporations Regulations 2018 (Victoria). When the development is in the planning and design stage, the developer will usually set out rules for the owner’s corporation, although there are instances where the rules are created once the development has been completed.

If an owner’s corporation would like to add new rules to a property complex, they must make an application to Land Use Victoria to seek approval and have these rules recorded.

What happens if there is an owner’s corporation dispute?

In the event that there is a dispute or insurance issue within the owner’s corporation, then there is a governing body that will act as an intermediary. In Victoria, this is Consumer Affairs Victoria. They will listen and preside over any disagreements or roadblocks and advise on a course of action. This may occur if an owner’s corporation has decided to make an improvement to a common space and the work has not been done correctly under their judgement, but the strata are not willing to complete more work.

The owner’s corporation is a complex issue to understand if you do not have experience in this space. If you are about to purchase into a property complex, then be sure to understand what your expectations are and how those rules and regulations will influence your decision-making process.

 

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