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Summary of Owners Corporation Act changes coming into effect 1 December 2021

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The Owners Corporations and Other Acts Amendment Act 2021 (‘the Act’) will take effect from 1 December 2021.

The resulting amendments will significantly impact the organisation and operation of Owners Corporations (‘OC’) moving forward.

A new tiered system will be introduced to establish different requirements in respect of committees, financial reporting and maintenance plans depending on the size and nature of the Owners Corporation.

Property developers will also find that the changes will impose increased regulations and restrictions on their dealings when establishing Owners Corporations in the course of developing and selling property.

Summary and Purpose of New Change

  • To provide for five tiers of OC that allow for the degree of regulations of OC to be based on the number of occupiable lots;
  • To allow OC to levy fees to cover the premiums for reinstatement and replacement insurance or for any excess amount on an insurance claim;
  • To further restrict the circumstances in which a person with a criminal record may be registered as the manager of an OC;
  • To allow an OC to dispose of goods abandoned on the common property;
  • To remove the requirement for an OC to have a common seal; and
  • To provide for OC incorporated in respect of land used or to be used for the purposes of a retirement village.

Benefits of the New Changes

  • Documents can be signed by two lot owners authorised by the OC if resolved by ordinary resolution;
  • Legal Proceedings for claims up to $100,000 can now proceed when the OC resolves to do so by ordinary resolution rather than byspecial resolution;
  • OCs can now pass on insurance excess to individual lot owners in certain circumstances;
  • Developers who hold on to the majority of lots after the plan of subdivision is registered must now comply with such obligations for 10 years not 5 years.
  • Committees must have no more than 7 members unless there is an ordinary resolution which increases that to 12 members;
  • Occupiers will be responsible for a guests’ behaviour.
  • Any term of a contract of sale of a lot that limits or controls the voting rights of the purchaser of the lot in relation to the OC is void.

Changes relevant for Property Developers

Property development
  • Amendments have been made to the Subdivision Act 1988 to specify how lot liability and lot entitlement must be allocated, and to require an initial owner to engage a surveyor to set out the initial allocation of lot liability and lot entitlement;
  • Any term of a contract of sale of a lot that limits or controls the voting rights of the purchaser of the lot in relation to the OC is void;
  • Developers will now be required to disclose any relationship with a manager of the OC and benefits that may flow to the developer arising from that relationship;
  • The developer and their associates may no longer be appointed as manager of the OC they have developed;
  • The developer must not receive any payment from the manager of the OC in relation to the manager’s contract of appointment;
  • The developer must not propose an annual budget for the OC that is unreasonable or unsustainable; and
  • The developer must not designate as a private lot what normally would be common property or services.

At Burke & Associates Lawyers, we provide expert legal advice specifically tailored to assist you in purchasing and selling property, including advice on Owners Corporation requirements, property development and off-the-plan purchases.

To discuss further, please contact our Property & Development team.

Insight written by Peter Hall

Contacts

Kristy Muhlhan

Principal

Kristy Muhlhan

Principal
LL.B (Hons) GRAD DIP. L.P., GAICD.
Since 2014, she has been an owner and Principal of the firm and has mastered a broad range of essential commercial and business skills which go hand in hand with the work she does for...

Stewart Davis

Associate

Stewart Davis

Associate
LL.B (Hons) B.Com
As well as property law, Stewart has had exposure to VCAT administration matters and commercial law, particularly servicing developer clients.

George Hanger

Associate

George Hanger

Associate
LL.B BA
George was admitted to legal practice in May 2015 after completing a Bachelor of Arts at the University of Melbourne and a Bachelor of Laws at Monash University.

Emma Dickens

Paralegal

Emma Dickens

Paralegal
Emma previously completed a Bachelor of Legal and Dispute studies at RMIT University in 2015.

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