Owners Corporations Act Amendments 2021 Strata Property Owners Need To Know

Strata living is desirable for a number of reasons, including the unique lifestyle opportunities and the chance to live in a connected community. With the implementation of these amendments, life as a lot owner is set to become even easier, with clearer guidelines about what is expected of an owners corporation, its individual lot owners, lessees, and guests, as well as the introduction of more efficient processes.

Let’s take a look at 8 of the key points you need to know.

1. New 5 Tiered System

Owners corporations will now fall under one of five categories, based on their size. This means that regulatory requirements are varied across different owners corporations, depending on the number of occupiable lots.

The tiers are structured as follows:

• Tier One: More than 100 occupiable lots
• Tier Two: 51 to 100 occupiable lots
• Tier Three: 10 to 50 occupiable lots
• Tier Four: 3 to 9 occupiable lots
• Tier Five: 2 occupiable lots or a services only owners corporation

Large owners corporations need to meet more rigid requirements with respect to their annual financial statements, such as having them audited. Smaller owners corporations may be required to carry out a review of their financial statements and/or choose if they wish to do so.

2. Common Seal

An existing owners corporation will need to decide by an ordinary resolution whether to continue use of its common seal when executing documents, or if it is no longer necessary and can be destroyed. This means that once agreed by resolution of the owners corporation, documents such as contracts can be executed by two authorised lot owners signing on behalf of the owners corporation.

3. Maintenance Plan

Implementation of the new tiered system means that owners corporations who fall under tier one or tier two must prepare and approve a maintenance plan and its fund. Tier one owners corporations will have 12 months from the 1st of December 2021 before they are required to comply, and tier two will have 24 months.

4. Removal of goods

As a result of the new amendments, owners corporations have also been empowered to remove or dispose of goods that have been discarded on common property. If it is known who abandoned the goods, the owners corporation may send a notice of intention to that person, detailing the removal and plan for disposal of the items.

5. Committees and Managers

Previously, an owners corporation was only expected to elect a committee if it had thirteen or more lots. As a result of the amendments, this number has now been reduced to 10.

The number elected to a committee should now be no more than seven members. Although, if additional members are needed, the owners corporation can increase the number to 12 by ordinary resolution.

Tier one owners corporations must also have a manager appointed, unless otherwise decided by a special resolution. As specified in the amendments, a manager must:

• Abide by a limit of three years for the term of their appointment;
• Disclose any beneficial relationship between the manager and a supplier of goods or services to the owners corporation; and
• Adhere to increased reporting obligations at each annual general meeting.

6. Interim Resolutions

In most situations, a manager will be allowed to pass an interim resolution if there are no lot owners or proxies present at the meeting to make decisions.

This amendment helps the manager ensure that the owners corporation can continue to operate. It is particularly important where the issue being addressed is time sensitive, such as placing insurance where the existing policy is about to expire. A manager will not be able to pass an interim resolution if it will impact their appointment.

For owners corporations whose members fail to attend meetings, this will make it easier for important decisions to be implemented in a timely manner.

7. Insurance and Levies

Owners corporations will have greater authority to levy fees to specific lot owners. This can be applied if the owners corporation has incurred additional expenses that are directly attributable to a specific lot owner’s use of their lot, and the lot’s existing lot liability (apportionment of cost) would not sufficiently take account of these additional costs.

An owners corporation may ask a lot owner to pay:

• An increase to an insurance premium that has been caused by gross negligence or a wilful act of the lot owner themselves, their tenant or guests;
• An insurance excess if a claim relates directly to the owner’s lot; and
• Fees to cover damage to the common property that has been caused by a lot owner and is not covered by insurance.

It’s important to note that occupiers of lots are considered responsible for their guests’ behaviour, and consequently, they may both be liable for any breach of the owners corporations’ rules.

8. VCAT and the Magistrates’ Court

As a result of the amendments, there are instances when an owners corporations is no longer required to pass a special resolution to commence legal proceedings. With the new legislation, owners corporations will now be able to commence legal proceedings with VCAT or the Magistrates’ Court for claims up to $100,000, by way of an ordinary resolution.

Being a lot owner in an owners corporation is a unique situation. Whilst there is always room for improvement, these amendments will provide greater protection and transparency for lot owners collectively, and continue to improve strata living.

Need help?

We have been in the Strata Living industry since 1995 and have an expert team of Ace Body Corporate Managers here to help. Get in contact with your local manager today.