What Is an Owners Corporation and What Does It Do?

Alexandra Cunningham

AssociateAitken PartnersView Profile

If you own an apartment, townhouse, unit or property within a subdivision, you may be part of an Owners Corporation. But what exactly is an Owners Corporation, and what does it do?

Many property owners are surprised to learn that purchasing a lot within a subdivision often comes with obligations and responsibilities that extend beyond their individual property.

An Owners Corporation is a legal entity created when land is subdivided and contains common property. Some plans contain more than one owners corporation. An Owners Corporation is responsible for the management, administration, repair and maintenance of the common property. In Victoria, Owners Corporations are governed by the Owners Corporations Act 2006 (Vic)..

Whether you are considering purchasing a property, have recently become a lot owner, or are experiencing a dispute involving an Owners Corporation, understanding how Owners Corporations operate is important.

In this article, we'll explain what an Owners Corporation is, what it does, who is responsible for managing it, and when you may need legal advice.

What Is Common Property?

Common property refers to areas within a subdivision that are shared and held by the owners corporation for the interest, as tenants in common of all lot owners rather than owned by an individual owner.

Depending on the subdivision, common property may often include:

• Building foyers and entrances.
• Hallways and stairwells.
• Lifts.
• Driveways.
• Shared gardens and open spaces.
• Swimming pools.
• Gyms.
• Rooftop terraces.
• Car parks.
• Shared service infrastructure.

To determine what common property is contained within your subdivision, an analysis of the registered plan of subdivision needs to be undertaken.

What Does an Owners Corporation Do?

Maintaining and Repairing Common Property

One of the primary functions of an Owners Corporation is ensuring common property is properly maintained and repaired.

This may include:

• Repairing building defects affecting common areas
• Arranging cleaning and gardening services
• Maintaining lifts and security systems
• Managing shared utilities and infrastructure
• Organising building maintenance works

Obtaining Insurance

Owners Corporations are generally required to hold insurance over common property and, in many cases, buildings within the subdivision, such as building insurance and public liability insurance.

• Other forms of insurance required by law

Insurance requirements can vary depending on the nature and size of the subdivision.

Collecting Fees and Levies

Owners Corporations collect fees and levies from lot owners to meet operating expenses and maintain common property.

These funds are commonly used for:

• Insurance premiums
• Maintenance and repairs
• Building management services
• Utilities relating to common property
• Administrative costs
• Future capital works

Owners are generally required to contribute according to their lot liability as set out in the subdivision documentation.

Making and Enforcing Rules

Owners Corporations have the power to create and enforce rules governing certain things including the use of lots and common property.

These rules often relate to matters such as:

• Parking
• Noise
• Waste disposal
• Pets
• Use of common facilities
• Renovations and alterations

Lot owners, tenants and occupiers are required to comply with properly made and registered rules.

Who Runs an Owners Corporation?

All lot owners are members of the Owners Corporation and share in the obligations of that owners corporation. . Depending on the size and/or complexity of the owners corporation, management may also involve:

The Owners Corporation Committee

A committee may be elected, and in some cases must be elected, to make certain decisions and oversee the day-to-day operation of the Owners Corporation. Committee members are generally lot owners who volunteer to assist with governance and administration.

Owners Corporation Managers

Many Owners Corporations engage professional managers to assist with administrative and operational functions.

An Owners Corporation manager may help with:

• Organising meetings
• Preparing notices and agendas
• Collecting fees
• Managing contractors
• Keeping records
• Assisting with compliance obligations

Managers are not a replacement for the Owners Corporation itself, and ultimate decision-making authority generally remains with the lot owners.

Do You Have to Pay Owners Corporation Fees?

In most cases, yes.

Lot owners are generally required to contribute to the costs of operating and maintaining the Owners Corporation.

Failure to pay fees may result in:

• Interest being charged on overdue amounts
• Recovery action being taken
• Legal proceedings in some circumstances

Understanding the financial obligations associated with ownership is important before purchasing property within a subdivision.

Can an Owners Corporation Enter My Property?

Lot owners often ask whether an Owners Corporation can access their lot. An Owners Corporation cannot enter your lot for any reason, but in certain circumstances, an Owners Corporation does have rights to enter private lots.

For example, access may be required to:

• Inspect potential damage to common property
• Carry out repairs
• Investigate maintenance issues affecting other lots
• Address emergencies

There is a strict procedure which must be followed before an Owners Corporation or any agent is permitted to access a lot.

What Should Property Buyers Know Before Purchasing?

Before purchasing property in a subdivision, buyers should carefully review:

• Owners Corporation certificates
• Financial statements
• Current levies and fees
• Maintenance plans
• Meeting minutes
• Existing disputes
• Special levies
• Building defect issues

Understanding the financial position and governance history of an Owners Corporation can help identify potential risks before committing to a purchase.

Legal Advice for Owners Corporation Matters

Owners Corporations play an important role in managing shared property and ensuring subdivisions operate effectively. However, disputes and legal issues can arise for lot owners, committees and managers alike.

Whether you are purchasing property, challenging an Owners Corporation decision, seeking advice about levies or maintenance responsibilities, or involved in a dispute, obtaining timely legal advice can help you understand your rights and obligations.

Aitken Partners advises lot owners, committee members, Owners Corporations and property professionals on a wide range of Owners Corporation matters, including disputes, governance issues, recovery of fees, maintenance obligations and VCAT proceedings.

Contact us to discuss your Owners Corporation matter with an experienced property lawyer on 03 9600 6000.