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OWNERS
CORPORATIONS ACT 2006
MAJOR REFORM
OF BODIES CORPORATE LEGISLATION
The
legislation which presently governs bodies corporate in
Victoria has undergone a substantial reform with the passing
of the new Owners Corporations Act 2006 ("Act") on 14
September 2006. The Act is not operative until it is
proclaimed and will come into operation on 31 December 2007
unless proclaimed earlier. The regulations under the Act
have not yet been drafted.
IMPACT OF NEW
ACT
The Act
will change the structure, function, rights and obligations
of both existing and future bodies corporate. It will affect property owners,
managers and developers of residential, commercial,
office, industrial and mixed use developments and retirement
villages and shopping centres.
MAIN CHANGES
Some of
the main changes under the Act are as follows:
- all
bodies corporate will be known as “owners corporations”
("OC");
-
there will be a distinction between different types of
OC’s (probably based on the number of lots), such as 2
lot OCs and prescribed OCs (which are expected to
comprise the larger multi-lot developments). Prescribed
OCs will be determined under the regulations;
- an
obligation for an OC to carry out its functions and
powers honestly and in good faith and to exercise due
care and diligence;
- new
financial obligations for OC’s which are greater than 2
lots, such as the auditing of the financial accounts of
a prescribed OC;
-
imposition of new rights and duties for both lot owners
and occupiers;
- new
obligations on the initial owner/developer while it
continues to own a majority of the lots in the OC until
5 years after registration of the plan of subdivision;
- the
requirement for an OC with more than 2 lots to keep
specific information on an owners corporation register;
- an
OC with more than 2 lots must also keep specific
records, (which must be available to lot owners, a
mortgagee of a lot owner and purchasers for inspection)
for a period of at least 7 years;
- the
requirement for a prescribed OC to have a maintenance
plan;
- all
OCs (except for 2 lot OCs) must have reinstatement and
replacement insurance and public liability insurance for
common property for any developments with more than a
single storey;
- a
prescribed OC must also obtain a valuation of all
buildings it is required to insure at least every 5
years;
- new
requirements for paid managers to be registered and to
have professional indemnity insurance. Managers are also
required to act honestly and in good faith and to
exercise due care and diligence when performing their
obligations;
-
procedural changes concerning the holding of annual
general meetings, special general meetings and general
meetings and the passing of resolutions;
-
committees must have a chairperson and secretary and act
honestly and in good faith and exercise due care and
diligence;
-
changes to how proxies and powers of attorney will
operate. It will be an offence under the Act to require
or demand that a lot owner give a power of attorney or
proxy for the purpose of voting at a meeting or in a
ballot of an OC;
- when
selling a lot in an OC it will be compulsory for an OC
certificate to be attached to a vendor’s statement. Also
such a certificate must be provided by the OC within 10
business days of receiving an application for it and
payment of the OC certificate fee; and
- new
dispute resolution provisions (except for 2 lot OCs)
introducing a multi-tiered approach to resolving
disputes, which includes being able to make a complaint
to the Director of Consumer Affairs as well as
applications to the Victorian Civil and Administrative
Tribunal to resolve disputes where the resolution
process has failed. An OC must also have a dispute
resolution process or the dispute resolution process in
the “model rules” (to be set out in the regulations)
will apply.
The regulations, when made, will include "model rules", which will apply
unless the owners corporation has its own rules. Existing and future rules
are of no effect if inconsistent with law. The relevant model rules will be
automatically included in the owners corporation rules where any of the
model rules are not already covered by the owners corporation's own rules.
THE ACT AIMS
TO:
-
provide appropriate mechanisms for and better access to
dispute resolution (which is probably the most
significant change which the Act introduces);
-
clarify the rights, obligations, duties and
responsibilities of lot owners, occupiers, managers and
OC committees;
-
improve the financial management of OCs and the level of
protection of OC funds; and provide for long term
maintenance planning; and
-
promote professional standards for paid managers.
It is
important for all lot owners, developers and body corporate
managers who will be affected by the Act to be aware of
their new obligations and the extent of the changes that the
Act will impose. For further advice and information in
relation to the Owners Corporations Act 2006, please contact
Anne Nielsen, David Weil or Diane Ridgway. |
