Vic Owners Corporation Act

The Owners Corporations and Other Acts Amendment Bill 2019 amends the Owners Corporations Act 2006, Retirement Villages Act 1987 and Part 5 of the Subdivision Act 1988 to implement the outcomes of a public review which considered that legislation. The review was part of a wider public review of the consumer property legislation for which the Minister for Consumer Affairs, Gaming and Liquor Regulation is responsible. The proposals that emerged from the review seek to make buildings governed by owners corporations ​better governed, more financially responsible and sustainable and, generally, more liveable​, taking into account stakeholders’ experiences and industry developments since the Owners Corporations Act 2006 commenced in December 2007. The amendments seek to— ​rationalise the regulation of owners corporations; improve the quality of owners corporation managers and enhance protection for owners corporations; expand and improve developers’ duties to the owners corporations they create and enhance protection for owners corporations; improve the governance and financial administration of, and internal relations in, owners corporations; improve and rationalise the regulation of owners corporations in retirement villages​.

The new section, previously known a “prescribed owners corporation”, provides for 5 tiers of owners corporations, to allow for different regulatory requirements based on the number of occupiable lots that form the owners corporation.

The 5 tiers are as follows—

Tier Composition
1 More than 100 occupiable lots, and not a services only owners corporation
2 51 to 100 occupiable lots, and not a services only owners corporation
3 10 to 50 occupiable lots, and not a services only owners corporation
4 3 to 9 occupiable lots, and not a services only owners corporation
5 A 2-lot subdivision or a services only owners corporation

 

Each tier will determine different requirements for committees, financial reporting, and will help define management plans.

Where an owners corporation consists of less than 10 occupiable lots and more than 50 non-occupiable lots, the tier into which the owners corporation falls is to be determined based on the number of non-occupiable lots.

Where an owners corporation consists solely of non-occupiable lots (e.g. a strata carpark), the tier into which it falls is to be based on the number of non-occupiable lots.

Bigger owners corporations will have to undertake more stringent requirements than the smaller owners corporations.

 

New changes for managers of an owners corporation

A contract of appointment of the manager of an owners corporation must not include:

(a) a term which imposes procedural restrictions on the revocation of the manager’s appointment (i.e. requiring any resolution other than a simple majority of votes, requiring a general meeting to be convened, or requiring any other procedural step)

(b) a term which enables the manager to renew the contract of appointment at their option

(c) a term requiring a tier one owners corporation or a tier two owners corporation to give 3 months or more notice of its intention to revoke the manager’s appointment

(d) a term requiring a tier three owners corporation, a tier four owners corporation or a tier five owners corporation to give one month or more notice of its intention to revoke the manager’s appointment

(e) a term providing for the automatic renewal of the contract of appointment if the owners corporation fails to give notice of its intention not to renew the contract

(f) a term that restricts the ability of an owners corporation to refuse consent to the assignment of the contract of appointment to a person appointed as the manager, other than one which provides that such consent must not unreasonably withheld.

If in the event the owners corporation does not give notice of it’s intention to renew the contract, it is terminated.

And, if an owners corporation withholds consent to the assignment of the contract of appointment to a person who is appointed as manager and is a full member of a professional body or association approved by the Director, the owners corporation is taken to be unreasonably withholding consent, and thus is void.

 

Other duties now required by managers include:

  • taking reasonable steps to ensure that goods or services procured by the manager on behalf of the owners corporation are procured at competitive prices and on competitive terms
  • not exerting pressure on any member of the owners corporation in order to influence the outcome of a vote or election
  • disclosing any commission, payment or other benefit, in accordance with section 122B of the Act, before entering into a contract for the supply of goods or services to an owners corporation under which a manager is entitled to receive a commission, payment or other benefit
  • Disclosure of any beneficial relationship the manager has with a supplier of goods or services
  • Disclosure by a manager of an owners corporation, of commissions, payments or other benefits to be received under a contract for the supply of goods or services to an owners corporation
  • if the contract is an insurance contract and the commission the manager is entitled to receives is a percentage of the premium payable, the manager must provide written notice to the chairperson of the owners corporation disclosing the percentage of the premium to be received rather than the actual amount of the commission
  • Reporting annually to the owners corporation must be increased

The eligibility of a registration of a manager has changed, in that a person must have Professional indemnity insurance. A person is automatically cancelled 30 days after the person is convicted or found guilty of an offence of the type. In addition, a person that has been convicted or found guilty of an offence within the past 10 years, will also be excluded.