Owners Corporations – The A to Z of Owners Corporations

Letter

Word

Meaning

A

Act

The Owners Corporations Act 2006

A

Annual General Meeting

An Annual General Meeting is a yearly meeting of the members of the Owners Corporation. This meeting must be held every financial year the Owners Corporation receives or pays out money. The time between meetings must not exceed 15 months.

B

Ballot

A ballot is a vote of the members of the Owners Corporation taken via post or email and may be arranged by:

• The chairperson
• The secretary
• Any other lot owner who is nominated by lot owners who have at least 25% of the total lot entitlements for the land affected by the Owners Corporation
• The manager
  • As instructed by
    • The committee
    • Any other lot owner who is nominated by lot owners who have at least 25% of the total lot entitlements for the land affected by the Owners Corporation
  • Where there is no committee 

C

Committee

The Committee is a group of members of the Owners Corporation which represents the entire membership and works with the manager to manage the affairs of the Owners Corporation.

Owners Corporations with 10 or more lots must elect a minimum of 3 and a maximum of 7 members (or 12 if approved by ordinary resolution) at each annual general meeting.

D

Delegated authority

The Owners Corporation may delegate to the committee any function or power of the Owners Corporation, except for a power or function that requires a unanimous resolution, a special resolution, a resolution at a general meeting, or the power of delegation.

In the absence of a delegation to the committee by the Owners Corporation, the functions and powers are delegated to the committee under section 11(5) of the Act.

E

Extraordinary Item of Expenditure

An extraordinary item of expenditure is expenditure that is not accounted for in the Owners Corporation’s annual budget and must be approved by special resolution if the amount of the expenditure is more than twice the total amount of the current annual fees.

The Owners Corporation levy any extraordinary item of expenditure for repairs, maintenance or other works that are carried out wholly or substantially for the benefit of one or some lots on the basis that the lot that benefits more pays more. 

F

Financial Audit

A financial audit is an analysis of financial records to determine if they are accurate and confirm that there has not been any financial mismanagement.

Tier 1 Owners Corporations must have their financial statements audited after the end of each financial year.

Tier 2 Owners Corporations must have their financial statements reviewed after the end of each financial year.

Tiers 3, 4 and 5 Owners Corporations may resolve at their annual general meeting to have their financial statements audited or reviewed after the end of the financial year.

G

Good Faith

Good faith refers to honest dealings or truthful performance of duties.

The Owners Corporation and members of the committee have an obligation to act in good faith when carrying out their functions and powers.

H

Handover

Handover occurs when a manager’s appointment is terminated.

The manager must hand over all of the Owners Corporation’s records and any funds held by the manager to the secretary within 28 days of termination.

I

Insurance

The Owners Corporation must take out:

• reinstatement and replacement insurance for all buildings on the common property; and
• public liability insurance for the common property.

Reinstatement and replacement insurance covers the cost of rebuilding.

Public liability insurance covers the cost of any claims made by third parties for injury, loss or damage sustained on the common property. 

J

Joint Owners

Joint owners refers to two or more parties who hold title to a particular parcel of property.

Joint owners are only entitled to submit one vote for any resolution of the Owners Corporation, they are not entitled to have a vote each.

K

Keeping of Records

An Owners Corporation must keep records of various information relating to the Owners Corporation.

Voting papers and ballots must be kept for 12 months after the vote or ballot has been taken, proxy forms must be kept for 12 months after they have expired or have been revoked, and all other documents as set out in section 144 of the Act must be kept for at least 7 years.

L

Levies

Levies are struck on each lot so that funds can be raised to cover the Owners Corporation’s financial obligations for annual items of expenditure and extraordinary items of expenditure that were not foreseen in the annual budget.

M

Maintenance Plan 

Tier One and Tier Two Owners Corporations must prepare and approve a maintenance plan for the major capital items that are anticipated to require repair and replacement within the next 10 years. Major Capital items includes common property structures (such as the roof), services (such as a hot water service) and assets (such as the lifts).

N

Notice of Entry

An Owners Corporation needing to access private property must give the occupier written notice of least 7 days prior to entering the lot unless the occupier agrees to provide access earlier or there is an emergency.

Where the occupier is tenant pursuant to the Residential Tenancies Act 1997, notice of entry must also be given to the occupier.

O

Occupancy Permit

An Owners Corporation Owners Occupancy permit is issued by the by the building surveyor once building works have concluded which confirms that the building is suitable for occupation. 

P

Proxy

A proxy is a person who is authorised in writing by a lot owner:

• to attend, speak or vote on behalf of the lot owner at a meeting of the Owners Corporation; and/or
• to vote on behalf of the lot owner at a ballot; and/or
• to represent the lot owner on a committee of the Owners Corporation.

Q

Quorum

A quorum for a general meeting is either:

• at least 50% of the total number of lots; or
• if 50% of the total number of lots is not available, the quorum is at least 50% of the total lot entitlement.

Meetings can proceed even if there is no quorum, although all resolutions will be interim resolutions for a period of 29 days. 

R

Resolutions

An Owners Corporation may pass the following resolutions:

• Ordinary resolutions which require a simple majority or 50% votes in favour;
• Special resolutions which require 75% of the total lot entitlements of all the lots affected by the Owners Corporation of votes in favour; and
• Unanimous resolutions which require 100% of votes in favour

S

Schedule of Lot Entitlement and Liability

When a plan of subdivision creates an Owners Corporation, the plan must specify the lot entitlement and lot liability.

A schedule of lot entitlement and liability will be registered on the plan which outlines:

• The entitlement, or voting rights, of each lot on the plan; and 
• The lot liability, or payment obligation, of each lot on the plan.

T

Tiers of Owners Corporations

There are five tiers of Owners Corporations:

• Tier one: An Owners Corporation with more than 100 occupiable lots and is not a services only Owners Corporation
• Tier two: An Owners Corporation with more 51 to 100 occupiable lots and is not a services only Owners Corporation
• Tier three: An Owners Corporation with 10 to 50 occupiable lots and is not a services only Owners Corporation
• Tier four: An Owners Corporation with 3 to 9 occupiable lots and is not a services only Owners Corporation
• Tier five: An Owners Corporation for a 2 lot subdivision or a services only Owners Corporation

U

Upgrading of Common Property

An Owners Corporation can upgrade the common property and levy fees on lot owners for those works if authorised to do so by special resolution.

Upgrading works are building works for the upgrading, renovation or improvement of the common property where:

• total cost of the works is estimated to be more than twice the total amount of the current annual fees; or
• the works require a planning permit or a building permit.

Upgrading works does not include works allowed in an approved maintenance plan or repairs and maintenance of items that the Owners Corporation is obligated to attend to.

V

Valuation of Buildings

Tiers One to Four Owners Corporations must obtain a valuation at least every five years of all buildings that it is liable to insure.  

W

Water

Any water, including rain water, that falls, Owners Corporation occurs or flows on the common property forms part of the common property. The Owners Corporation will be liable for any water damage caused by this water.  

X

X

When voting in a postal ballot, to vote in favour of a motion lot owners must mark the FOR box, and to vote against a motion they must mark the AGAINST box. If the lot owner marks the ‘FOR’ box with an X, it will be counted as a vote in favour of the motion.

Y

Yearly Budget

An Owners Corporation must set a yearly budget to cover its forecasted expenditure for the next year, including fees for general administration, insurance and maintenance and repairs.

Z

Zoning

Land is zoned for particular use according to the Victorian planning scheme, and is divided into the following categories:

• Residential zones;
• Industrial zones;
• Commercial zones;
• Rural zones; and
• Special purpose zones

The planning permit issued for the development will outline whether there are any restrictions on the use of a particular lot or lots on the plan of subdivision