What are the changes to the Owners Corporation Act?
In December 2021, amendments were made to the Owners Corporations Act 2006. Significant changes in a range of areas addressed gaps in the original legislation. The main focus of these changes was:
Owners corporation structure
Instead of being prescribed or non-prescribed as in the days of body corporates, a new 5-tier categorisation of owners corporations was implemented. Based on which tier a corporation falls into, there are particular legal obligations such as appointing a manager, auditing financial records, maintenance plans and voting proxies.
Changes to legal proceedings
Instead of an owners corporation needing to authorise legal proceedings to follow up on debt recovery and rule enforcement, these matters can now be settled via VCAT or the Magistrates Court. Claims less than $100,000 can be brought to the Magistrates Court. Claims of over $100,000 require owners corporations to pass a special resolution before it can be heard by the County or Supreme Court.
More levies
Under the new laws, owners corporations can raise additional fees if lot owners face corporation costs greater than their lot liability figure. Owners corporations can raise levies if:
- The use of the property by the lot owner causes the owners corporation to incur costs or additional maintenance.
- An insurance claim occurs, and higher premiums apply due to the lot owner or their guest’s negligent conduct.
- Common property is damaged by a lot owner or tenant.
If a lot owner makes an insurance claim that only relates to their lot, the excess may also be billed to them.
Maintenance plans
Owners corporations that fall into tiers 1 or 2 must always have an approved maintenance plan. Corporations from tier 1 had until 1 December 2022 to adopt a plan, while tier 2 corporations have until 1 December 2023. Changes to maintenance plans can be made via an ordinary resolution. Amendments to the Act dictate that maintenance funds must meet the financial needs of the approved maintenance plan.
Meetings
Amendments to the Act state that a general meeting can still occur despite no lot owner attending either in person or via proxy. Any resolutions made will only come into force as firm resolutions 29 days after they are passed unless a special general meeting is called or held within that period. If the owners corporation manager cannot make an interim resolution if it is regarding:
- Their appointment contract.
- Amounts that are more than 10% of the annual budget if the budget has already been set.
- Amounts that are more than 10% of the annual budget for the last year.
Proxies
Changes to the Act state that a committee member can only provide their proxy to another member. Additional amendments restrict the number of proxies held by any member at a general meeting.
Committees
A committee must be elected where there are ten or more lots. The committee should have between three and seven members. But there is leeway for a committee to resolve to have as many as twelve members.
Rules
Owners corporations can make rules regarding proposed renovations or changes to the external appearance of lots. These rules must not prevent sustainability systems such as solar hot water, energy panels, or solar-absorbing roof colours from being installed.
However, they can offer preferences on colours, mounting, and location. Corporations can restrict how lot owners and occupiers access or use common property in the interests of collective quiet enjoyment, safety and security.
Insurance
It is still necessary for corporations to keep up to date with public liability insurance on common property. Still, there are special provisions within this legislation concerning plans of subdivision with one or more buildings that are multi-level buildings.
Contracts of appointment
The maximum term for an owners corporation manager is now three years. However, any pre-existing contracts made before 1 December 2021 that are over three years will still be honoured. A number of old terms in these new and existing contracts are now considered void.
Additional disclosure requirements
Corporation managers are now required to disclose any benefit they may receive (such as commissions) from dealing with third-party suppliers of services.
For customised advice ask P&B Law
These are just some of the amendments that have occurred in the Act. More details can be found on the Act legislation website. If you need help interpreting these new laws regarding owners corporations, contact our experienced team at P&B Law.