The Owners Corporations and Other Acts (OC Act) Amendment Act 2021 will take effect from 1 December 2021. Much focus has been given to changes which affect the duties of Owners Corporation Managers and the obligations of Developers.
But beyond this, a range of provisions are set to come in which relate to the operation of an Owners Corporation and the Committee. We have outlined some of the key OC Act changes here.
A new tiered system.
As part of the changes, a new tiered system has been introduced which places more stringent regulations upon high density strata plans.
The tiered system is as below:
- Tier 1: >100 occupiable lots
- Tier 2: 51-100 occupiable lots
- Tier 3: 10-50 occupiable lots
- Tier 4: 3 – 9 occupiable lots
- Tier 5: 2 occupiable lots or a services only owners corporation
Preparation of a Maintenance Plan.
As well as changes to obligations regarding financial statements and auditing, under the new amendments Tiers 1 and 2 must prepare and approve a maintenance plan.
Previously, this only applied to prescribed Owners Corporations, or those with 100+ Lots or annual levies above $200,000.
While most changes are set to take effect from the 1 December, Tier 1 Owners Corporations will have an additional 12 months from this date to comply, or 24 months for Tier 2 Owners Corporations.
Requirements & Obligations for Committees.
Previously, an Owners Corporation affecting 13 or more lots was required to elect a Committee, this has been reduced to 10 lots.
The maximum number of members on the Committee must now not exceed seven (previously 12), unless the Owners Corporation resolves, by ordinary resolution, to increase this to the maximum of 12.
It worth mentioning also that a Tier 1 Owners Corporation must appoint a manager (unless it resolves otherwise via a special resolution) and Owners Corporations no longer need a common seal to execute documents.
Meetings & Resolutions.
Changes regarding resolutions, proxies and commencing legal proceedings will also come into effect.
If no Lot Owner is present at a meeting a resolution may be passed as an interim resolution, providing it is not a Manager passing an interim resolution that affects their contract of appointment or the annual budget.
Interim special resolutions can be passed at a general meeting where there is a quorum, and no one votes against the resolution.
When it comes to proxies and Powers of Attorney, a Lot Owner cannot be a proxy if they are in arrears, and a person cannot vote on behalf of:
- more than 1 lot Owner if there is <20 occupiable lots: or
- more than 5% of Lot Owners if there is >20 occupiable lots
Any finally, in the amendments, Owners Corporations only need an ordinary resolution to commence a civil proceeding in the Magistrates Court or VCAT, for matters up to $100,000.
Dealing with Lot Owners’ Property.
Occupiers are required to grant access to their lot, provided they have been given seven days’ notice, for the Owners Corporation to carry out repairs and maintenance on common and lot property.
Owners Corporations have also been empowered to relocate or dispose of goods which have been abandoned on common property, if notice has been given.
Owners Corporation Rules.
Rules can now be made regarding works which will alter common property or the appearance of a lot.
Rules can be designed to protect the quiet enjoyment of all lots for the duration of the works, and to protect the structural integrity of any building on the plan of subdivision. Rules can also be made to ensure that the market value of any other lot is not decreased by the works.
An interesting update is the requirement on occupiers to ensure their guests comply with the rules. Both the occupier and the guest are now jointly and severally liable for any breach.
An exception applies if the occupier provides the guest with a copy of the rules, but this exception does not apply to short stay operators.
Owners Corporations can also now make rules regulating or prohibiting the drift of tobacco smoke in a multi-level apartment complex, and they cannot unreasonably restrict the installation of ‘sustainability items’, namely anything which promotes the use of renewable energy.
Annual and Special Levies.
No longer do annual levies need to be calculated solely based upon lot liability.
Additional annual fees may now be levied on a lot Owner if the OC has incurred additional costs arising from ‘the particular use of the lot by the lot Owner’.
Furthermore, OCs may now levy an Owner to cover:
- excesses and increased insurance premiums resulting from a claim caused by ‘a culpable or wilful act or gross negligence’
- insurance excess if the claim solely relates to that owner’s lot
- fees to cover damage caused to common property by an Owner that is not covered by insurance, or where the damage is less than the excess.
Additionally, as an incentive for OCs to pursue unpaid amounts from Lot Owners in VCAT, an Owner can now be ordered to pay reasonable costs incurred by the OC during this process.
This is not an exhaustive list of all the OC act changes, and while there were some missed opportunities to protect Owners, namely in the short stay and long-term contract space, these changes will improve transparency and remove outdated red tape and compliance burdens for many OCs.