Friday, October 2, 2020

What is an Owners Corporation?

What is an Owners Corporation?

An owners corporation is the legal entity that combines all the lot owners in a strata scheme.

Owners corporations (also called strata corporations, corporations, body corporates and strata companies, depending on the state or territory) are automatically created when a plan of subdivision contains common property.

Common property may include driveways, paths, foyers, stairs, lifts, and common garden areas. Every strata scheme has an owners corporation. All owners are automatically members of the corporation, but tenants are not.

In large subdivisions, more than one owners corporation may be created.

An owners corporation operates like any other business. It can make rules which are binding on the corporation, owners and tenants regarding the use of common property and the lots, providing that the rules do not contravene legislation governing strata titles or other laws.

An owners corporation (formerly body corporate) manages the common property of a residential, commercial, retail, industrial or mixed-use property development.

You are likely to be a member of an owners corporation if you own a flat, apartment or unit. Your ‘body corporate’ became an owners corporation on 31 December 2007, when the Owners Corporations Act 2006 came into force. This law sets out the duties and powers of owners corporations.

Responsibilities of an owners corporation

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:

  • 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.

 

Four levels of an owners corporation

The owners corporation operates at four levels:

  1. The owners corporation, consisting of all the lot owners.
  2. The committee, consisting of elected lot owners or lot owners’ proxies.
  3. A delegate of the owners corporation. For example: the chairperson, the secretary, a committee member, a lot owner, or an employee of the owners corporation.
  4. A delegate of the committee. The committee may delegate to a lot owner, a manager or sub delegate to a member of the committee.

The owners corporation (all the lot owners):

  • keeps control of all decision-making
  • can delegate powers, but only for matters that do not require a unanimous or special resolution or that are required to be dealt with
  • can overturn an earlier decision of the owners corporation. Only the owners corporation can do this
  • can appoint sub-committees to advise the owners corporation. Sub-committees cannot make decisions.

The committee:

  • can make decisions on all matters delegated to it by the owners corporation except on matters that the owners corporation has determined must be decided at a general meeting.

A delegate:

  • can make decisions within the limits set by the owners corporation
  • cannot overturn a decision of the owners corporation or the committee.

 

© State of Victoria (Consumer Affairs Victoria)

Strataville Editorial
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