Owners Corporations Victoria Good Governance Guide
Owners corporations are responsible for the management of common property in residential, commercial, retail, industrial or mixed-use property developments. As the number of high rises and apartment living continues to grow in Victoria, the number of owners corporations continues to increase. With this increase comes greater awareness by lot owners of the rights and responsibilities of owners corporations and we are seeing a trend in lot owners reviewing and holding owners corporations to account.
This Guide sets out tips on good governance practices that all owners corporations should comply with.
Roles and Responsibilities
Depending on the size of the owners corporation, it may be appropriate for the owners corporation to have subcommittees and a larger executive team, including separate roles of chief executive officer, treasurer and secretary. In smaller schemes, those executive roles may merge into one role.
Subcommittees can be established for particular projects or otherwise to support the ongoing needs of the owners corporation (such as regulatory compliance and finance).
Maintenance of Records
The owners corporation should ensure that the owners corporation register is kept up to date and maintain records of financial statements and voting results. The register will contain a summary of all activities, undertakings and memberships. You must make this available to a lot owner upon request and it is important to have it ready to go.
You should ensure that the owners corporation keeps financial records that record all its income, expenditure, assets and liabilities. We recommend you engage an accountant with expertise in the area of owners corporations in order to help manage the financial records of the owners corporation.
You may also decide to set fees to cover administration, maintenance, insurance and other ongoing costs.
You should ensure that the owners corporation maintains the following insurances at a minimum:
- reinstatement and replacement insurance for all buildings and for incidental costs of the replacement or repair of damaged common property; and
- public liability insurance.
You should ensure that each lot owner has a copy of the owners corporation register and the rules. These documents contain important information that owners should know about fees, allocation of lot liability and lot entitlements. Providing owners with this information upfront will help minimise the risk of complaints arising at a later date due to misunderstandings.
All owners corporations are required to keep a letterbox or a sign displaying their current contact details. You should also maintain a policy on how lot owners are able to communicate with you.
Review the Rules
You should review the rules regularly to ensure that the rules properly reflect the needs and requirements of the owners corporation. You should then ensure that the rules are communicated to the lot owners, and are enforced fairly, equally and transparently.
Upon receiving a complaint you may choose to take no action on the matter, however, you must always provide the person making the complaint with written reasons for that decision. We recommend you patiently hear out a complaint and address the concerns. Ignoring or avoiding complaints can be costly and time consuming, as the complaint may escalate.
The Owners Corporations Act provides a process to help you deal with grievances. If you choose to develop your own rules for handling grievances you must ensure that those rules do not conflict with any other laws or regulations and that they are recorded at Land Victoria. We can assist you with this.
Meetings and Decision Making
Decisions are made in an owners corporation by way of the members voting. Votes are allocated according to lots or lot entitlements. If you have more than 13 lots you must elect a committee that can make certain decisions that do not require a special or unanimous resolution or a general meeting.
The owners corporation must arrange for minutes of all meetings to be kept and available for inspection by lot owners.
If the owners corporation receives or pays out money during the financial year it must hold an annual general meeting of the lot owners. The annual general meeting is also used to provide lot owners with the opportunity to discuss current issues.
Appoint a Manager
You may wish to appoint a manager to assist with the finances, insurance and administration of the owners corporation. A professional manager will assist your owners corporation to be compliant with rulings and regulations imposed by the applicable laws. Whilst the manager can assist with certain responsibilities of the owners corporation including the implementation of decisions, ultimately the owners corporation remains responsible for its own compliance with the relevant laws and should therefore make all key decisions of the owners corporation.
If you require legal assistance with any aspect of your owners corporations, please contact our Property team today.