Owners Corporations and Other Acts Amendment Act 2021

Best Hooper
14 November 2021

The Owners Corporations and Other Acts Amendment Act 2021 (Vic) (OC Amendment Act) has finally been enacted. These major changes will come into force on 1 December 2021.

Purpose

The Explanatory Memorandum, published on 10 September 2019, detailed the changes that the OC Amendment Act seeks to make.

The OC Amendment Act primarily seeks to implement the outcomes of a public review which considered the Owners Corporations Act 2006 (Vic) (OC Act). Specifically, to ensure that buildings governed by Owners Corporations are managed correctly, as well as becoming more financially responsible, liveable and sustainable. The Amendments primarily consider the experiences of key stakeholders and significant industry developments since the OC Act commenced operation.

Key Changes

Part 2 of the OC Amendment Act sets out the key amendments to the OC Act. Notable amendments that will impact Owners Corporations, include the following.

1. Implementation of Five-tier System

The OC Amendment Act introduces a five-tier system. The system aims to provide different regulatory requirements, based on the size of the Owners Corporation.

The tier system is detailed below.

Under the tier system, various rules are in place. For example, Tier 1 and 2 owners corporations must prepare and approve a maintenance plan, whereas a Tier 3, 4 and 5 owners corporation may prepare one, though it is not compulsory.

2. Commencement of Legal Proceedings

In the past, owners corporations could only initiate legal proceedings if a special resolution was passed.

The OC Amendment Act now allows an owners corporation to initiate legal proceedings with an ordinary resolution for the Magistrates’ Court civil jurisdiction.

3. Removal of Common Seal

Whilst existing owners corporations must still use their common seal to execute documents, owners corporations may resolve that common seals are no longer required by ordinary resolution.

4. Additional Owners Corporation Powers

The OC Amendment Act has given additional powers to an owners corporation. Some of these additional powers are outlined below.

• The power to levy fees on a lot other than in accordance with lot liability. Specifically, where the owners corporation has incurred additional costs arising from a particular lot, and that lot’s liability does not adequately account for those costs.
• The ability to charge an increase in insurance if that claim is caused by negligence or a wilful act of a lot owner, occupier or guest.
• The power to levy damage costs to common property where that damage is not covered by insurance.
• The owners corporation may dispose of abandoned goods on common property.
• The ability to make rules regarding alteration of a building, unless the rules sought are unreasonable and restrict the installation of sustainability items such as solar panels.
• An owners corporation can limit how many proxies are at one meeting. Owners corporations may also prohibits a proxy attending a committee meeting unless the proxy is also a committee member.

5. Lot Owners in Arrears

Various amendments have been made in relation to lot owners in arrears or where VCAT debt recovery proceedings have been commenced.

• VCAT may order a lot owner to pay reasonable legal costs for the owners corporation, where the owners corporation has incurred legal costs in pursuing a lot owner for unpaid levies.
• Lot owners who are in arrears for any amount, cannot vote on a resolution unless the arrears are paid in full. This rule does not apply where the matter requires a special or unanimous resolution

6.Owners Corporation Managers

The OC Amendments Act introduces various amendments that impact owners corporation managers and their respective powers.

• Termination of a manager must be approved by a unanimous decision, special resolution or any resolution that is not a majority vote.
• The manager can renew their contract of appointment.
• Tier one and two owners corporations must give at least three months’ notice of intention to revoke a manager’s contract.
• Contracts entered into, such as maintenance or cleaning contracts, cannot exceed three years of duration.
• A manager is ineligible if they have been convicted or found guilty of an offence within the last 10 years unless permission is obtained from the Business Licensing Authority.

Conclusion

Given that the OC Amendment Act introduces significant changes, owners corporations must become knowledgeable quickly, and ensure compliance with the new provisions.

Most importantly, owners corporations must assess which tier of the five-tier system applies to them, in order to avoid significant penalties.

For advice on compliance and the new OC Amendment Act provisions, we recommend that owners corporations seek legal assistance. Please contact us if you require advice.

About Best Hooper – Victoria’s Property, Planning and Land Development Advisory Law Firm

Best Hooper has a rich history as being the longest-serving and most prominent developer focused law firm in Victoria. We are at the forefront of the development industry and continuously recognised as industry leaders in a variety of publications, including Doyles Guide and Best Lawyers.

If you have any queries about this development in the law or require assistance with a owner’s corporation issue, please reach out to our Land Development & Compensation Team: Joel Snyder (Managing Principal), Jonathan Hourigan (Senior Associate), Ruby Rockman (Associate) and Taryn Parkinson (Lawyer).