Frequently asked questions about owners corporation & common property

1. Who is a ‘prescribed’ owners corporation?

A prescribed owners corporation is an owners corporation which levies annual fees in excess of $200,000 in a financial year or consists of more than 100 lots.

2. Can there be an owners corporation on a plan of subdivision which has no common property?

Yes, an owners corporation can be created on any plan of subdivision and there is no requirement that common property be created on that plan. If, however, common property is created on the plan then there must be an owners corporation.

3. What do you need to do to create an owners corporation?

The only way that an owners corporation can be created is by a plan of subdivision. This can be done at the time the plan of subdivision is being registered by attaching an owners corporation schedule to the plan. An owners corporation can be created subsequent to registration of the plan of subdivision by registering a plan for creation of an owners corporation.

4. How do you work out where the common property is?

In most plans of subdivision the common property is all the land in the plan except that which is contained in the lots. To ascertain where the common property is, the boundaries of the lots must be located and whatever is outside those boundaries is common property.

5. Is a maintenance plan required?

Only if you are a prescribed owners corporation are you required to prepare a maintenance plan and establish a maintenance fund.

6.    Many plans do not indicate which part of the walls are the boundary. How do you know whether it is the interior face, the exterior face or the middle of the wall?

Generally, where a plan does not define which part of the structure is the boundary, then it is to be taken to be the middle of that structure.

7.    What is a limited owners corporation?

A limited owners corporation is an owners corporation which has a particular function which is ancillary to a main, or unlimited, owners corporation.

8.    Can there be more than one owners corporation on a plan of subdivision?

Yes, a plan can create more than one owners corporation. A lot on a plan cannot, however, be affected by more than one owners corporation unless one of the owners corporation is an unlimited owners corporation and all other owners corporation affecting it are limited owners corporations.

9.    Do lot liability and entitlement for an owners corporation need to be the same?

No, they do not. Lot entitlement should reflect the relative value of each lot and lot liability should be based on the reasonable apportionment of owners corporation expenses between lots.

10.  How do I find out what the rules of an owners corporation are?

A copy of the plan of subdivision can be obtained from Land Victoria. If no special rules have been lodged, then the relevant rules are those contained in the model rules. If these have been changed, then special rules will have been lodged at Land Victoria.

11.  To which address is mail for the owners corporation to be sent?

An owners corporation is required to have a separate letter box at the address of the property. This is unless one of the lot owners is nominated to receive mail or an owners corporation manager has been appointed.

12.  How does a person intending to buy a lot affected by an owners corporation obtain information about that owners corporation?

Any person may apply to the owners corporation for a certificate containing particular information. The applicant for registration of a plan of subdivision that provides for the creation of an owners corporation must establish an owners corporation register. The owners corporation on request by an owner, mortgagee or purchaser, must make the register available for inspection at any reasonable time, free of charge. Copies of records must be provided upon payment of a reasonable fee.

13.  Who is entitled to inspect the owners corporation records?

An owners corporation is required to keep minutes of meetings, records of postal ballots and books of account, and an owners corporation register and make these available for inspection by any lot owner, a mortgagee of a lot or a representative of either of these.

14.  How does an owners corporation execute documents?

The owners corporation is required to have a common seal in much the same way as a company. The way it executes things is by affixing the common seal and having that witnessed by either two members of the owners corporation or the managing agent.

15.  If one lot owner obtains a greater benefit from spending by the owners corporation, can that lot owner be required to contribute an amount in excess of lot liability?

A lot owner that obtains a substantial benefit from certain owners corporation expenditure can be required to make contributions based on benefit rather than lot liability. There is, however, little guidance on what does constitute a substantial benefit.

16.  Can an owners corporation do work on the property of a lot owner?

Normally not. If, however, a lot owner has been notified of the need for works to be done and that lot owner has not done those works, then the owners corporation may attend to the work.

17.  If the eaves of a unit are located in common property, is the owners corporation responsible for maintaining them?

No. Over-hanging eaves and guttering are the responsibility of the lot owner even though they are located in common property.

18.  If the boundary of a unit is the interior face of the wall, then the wall effectively belongs to the owners corporation. Does the owner need to get the consent of the owners corporation before doing anything to the interior wall?

No. The boundary is the interior face of a wall then the owner has the right to attach fittings to the wall and specifically can carry out such work as curtaining, painting, wall papering, installing floor coverings, light fittings and other chattels.

19.  Is a special resolution required to charge penalty interest on arrears?

A resolution is not required, and the owners corporation may charge interest which is set by the Penalty Interest Rates Act 1993.

20.  Does the owners corporation have to have meetings?

An owners corporation is only required to have meetings if it receives or pays out money during any financial year.

21.  Can a member of the owners corporation appoint someone else to attend meetings and vote on their behalf?

Yes. A member may appoint a proxy to attend meetings and vote on their behalf.

22.  What can an owners corporation do if it cannot get enough members to a meeting to form a quorum?

A quorum for a general meeting is at least 50 per cent of the total votes or if 50 per cent of the total votes is not available the quorum is at least 50 per cent of the total lot entitlement. Should there be no quorum, the general meeting may proceed but all resolutions are interim resolutions.

23.  Can a member who has not paid their owners corporation fee vote at meetings?

A non-financial member is not entitled to vote at owners corporation meetings unless an unanimous resolution is required.

24.  Does an owners corporation have to have a committee?

The only time that an owners corporation is required to appoint a committee is where there are 13 or more members of that owners corporation.

25.  Can an owners corporation remove a managing agent?

An owners corporation may remove a managing agent at a general meeting of the owners corporation. This is, however, subject to any contractual arrangement between the owners corporation and the managing agent.

26.  Is it compulsory for an owners corporation to take out insurance for public risk and building?

It is only compulsory for an owners corporation to insure in the case of multi-storey developments. In all other cases, the owners corporation can elect not to insure.

27.  If there is an owners corporation dispute, is there a tribunal or other government body that deals with these disputes?

Yes, the Victorian Civil and Administrative Tribunal (VCAT) can hear owners corporation disputes.

28.  Can lot entitlement and liability be changed?

These can be changed, but only with the unanimous resolution of the owners corporation.

29.  Can the rules of the owners corporation be changed?

New owners corporation rules can be made and existing ones changed if there is a special resolution of the owners corporation. Before being effective, the rules must be lodged at Land Victoria.

30.  Is a two-lot subdivision bound by the Owners Corporations Act?

Yes but there are exemptions from:

•     power to bring legal proceedings

•     requirements for notices of fees

•     requirements for final notice

•     accounts and audits

•     maintenance plan

•     maintenance fund

•     reinstatement and replacement insurance

•     public liability insurance

•     insurance for lots in multi-level developments

•     owners corporation may have additional insurance

•     first meeting of owners corporation

•     annual general meeting

•     special general meeting

•     procedure at general meetings

•     ballot

•     chairperson’s casting vote

•     voting if fees are unpaid

•     unanimous resolution

•     special resolution

•     interim special resolution

•     keeping records and an owners corporation register

•     procedures for meetings and decision making

31.  Is a tenant required to be provided with a copy of the owners corporation rules?

A tenant should be provided with a copy of the rules as they are binding on:

•     the owners corporation

•     lot owners

•     a lessee or sub-lessee of a lot

•     an occupier of a lot.