Once called a body corporate
Victoria’s owners corporations used to be called bodies corporate. The new name arrived on 31 December 2007, the day the Owners Corporations Act 2006 came into force, and that Act is where an owners corporation’s duties and powers are set out. The detail sits in the Owners Corporations Regulations 2018.
Lots and common property
A plan of subdivision divides the land, and the pieces that can be owned and sold on their own are lots. Consumer Affairs Victoria counts accessory lots among them: a car space, a storage bay or a storeroom can be a lot of its own. Whatever on the plan is not a lot, a road or a reserve is common property, and it can include airspace as well as land and buildings.
Common property is whatever the plan says it is. CAV’s examples of what it may cover are gardens, passages, walls, stairwells, pathways, driveways, lifts, foyers and fences. The lot owners own it together, as tenants-in-common. Floor coverings and fixtures inside a lot are usually the lot owner’s own.
- 1Apartments: lots, each owned separately
- 2Car spaces and storage: can be accessory lots
- 3Stairs, lift and foyer: common property
- 4Garden, path and fence: common property
- 5The owners corporation’s own letterbox
Who is a member, and how votes are counted
Nobody opts in. If you own property affected by an owners corporation, you are a member of it automatically, with legal and financial responsibilities to it.
Votes follow lots or lot entitlements, never the number of people. Someone who owns two lots has two votes; two people who share one lot share one vote. Two numbers on the plan of subdivision matter to every member. Lot entitlement is a lot’s share of ownership of the common property, and it decides voting rights. Lot liability is the lot’s share of the owners corporation’s costs. The developer sets both when the land is subdivided, and changing them takes a unanimous resolution.
| Resolution | What it takes | Used for, among other things |
|---|---|---|
| Ordinary | At a meeting, a simple majority of the votes cast | Appointing a manager |
| Special | Owners or proxies for 75% of lots, or 75% of lot entitlements in a ballot or poll, with the exact text on the notice of the meeting | Making new rules; special fees above twice the annual fees |
| Unanimous | 100% agreement by lots, with the exact text on the notice of the meeting | Selling common property, buying land, altering boundaries, lot entitlement or lot liability |
A special resolution that falls short becomes an interim special resolution in either of two ways: it gets at least 50% of the votes with no more than 25% against, or it is voted on at a general meeting that has a quorum and no one votes against it. It can be acted on only if notice is sent to every lot owner within 14 days and no petition from owners holding 25% of the votes arrives within 29 days. The rules guide walks through it.
What the owners corporation must do
Consumer Affairs Victoria sets out the core duties in two lists, quoted here in full and in its order:
“An owners corporation must:
- manage and administer the common property
- repair and maintain the common property, fixtures and services
- take out and maintain required insurance
- raise fees from the lot owners to meet financial obligations
- prepare financial statements and keep financial records
- provide owners corporations certificates when requested
- keep an owners corporation register
- establish a grievance procedure.
It must also:
Consumer Affairs Victoria, What is an owners corporation
- carry out any functions and duties under the Owners Corporations Act 2006, the Owners Corporations Regulations 2018, the owners corporation rules and any other law or regulation
- ensure compliance with the Act, the Regulations and the rules.”
Everyone who acts for it, from the whole owners corporation to its committee and its delegates, must act honestly and in good faith, take due care and diligence, and never make improper use of the position to win an advantage for themselves or anyone else.
Five tiers, by size
Since 1 December 2021, Victoria sorts owners corporations into five tiers, and the larger ones carry stricter duties. The tier depends mainly on the number of occupiable lots.
| Tier | Size | Committee | Manager | Maintenance plan |
|---|---|---|---|---|
| 1 | More than 100 occupiable lots | Must elect one at the annual general meeting | Must appoint one, unless it opts out by special resolution | Must prepare and approve one |
| 2 | 51 to 100 occupiable lots | Must elect one | Optional | Must prepare and approve one |
| 3 | 10 to 50 occupiable lots | Must elect one | Optional | Optional |
| 4 | 3 to 9 occupiable lots | Optional | Optional | Optional |
| 5 | Two-lot subdivisions, and “services only” owners corporations | Optional | Optional | Optional |
Tiers 1 to 4 count only owners corporations that are not “services only”. A services only owners corporation has no land or building designated as common property; what it shares is common meters, or a common supply or service that is unmetered.
The tiers also set the money rules. Tiers 1, 2 and 3 must prepare annual financial statements under the Australian Accounting Standards and present them at the annual general meeting; tier 4 must prepare them for any financial year in which it levies annual fees. A tier 1 owners corporation must have its statements audited. A tier 2 owners corporation must have them reviewed by a member of CPA Australia, of the Institute of Public Accountants, or of Chartered Accountants Australia and New Zealand. Neither job may go to anyone with a personal or financial interest in the owners corporation, direct or indirect. A committee has at least three and at most seven members, unless an ordinary resolution raises the limit to as many as 12.
Two lots, or several owners corporations
A subdivision of just two lots still has an owners corporation, though Consumer Affairs Victoria lists many requirements it is spared. Among them: it needs no special resolution to bring legal proceedings, no approved forms for fee notices, no financial statements, no maintenance plan or fund, and no owners corporation register. What it must still do, in CAV’s list: “Prepare owners corporation certificates”; “Repair and maintain any service relating to a lot that benefits more than one lot and common property”; “Comply with other laws; for example, fences around swimming pools”; and “Care for the common property”.
At the other end, a large development can hold several owners corporations. The usual pattern is one unlimited owners corporation that owns the common property, and one or more limited owners corporations that apply only to some lots. Every lot owner belongs to the unlimited one and may belong to several limited ones. In CAV’s example, the owner of a ground-floor unit with parking may belong to the owners corporation for the parking spaces but not to the one for the lifts.
Next, the person many owners corporations hire to run the day-to-day: registered managers.