Steps to Owners Corporation Success

You’re the proud new owner of an apartment in a multi residential block. Or perhaps you’re thinking of buying into a high-rise residential tower, or strata community, and you’re not sure what costs, rights and responsibilities are involved with ownership.

You might know it involves something called an Owners Corporation (OC), formerly known as a Body Corporate. What more should you be aware of? For a start, the law surrounding ownership in multiresidential communities has increased in complexity in recent years. In Victoria particularly, complying with the many requirements and regulations relating to OCs can demand the combined skills of a lawyer, accountant, insurance broker, project manager and building contract manager. Typical Victorian Owners Corporation This e-report covers the functions and responsibilities of a typical OC in Victoria. For a more in-depth examination of the many issues OCs must attend to, please go to our blog page. There, we regularly address in finer detail issues that affect OCs. Alternatively, you can seek excellent independent advice from Consumer Affairs Victoria. Visit www.consumer.vic. gov.au/housing-and-accommodation/owners-corporations/ buying-into-an-owners-corporation/what-is-an-ownerscorporation. Disclaimer: This report is for general information purposes only and should not be interpreted as, or used for legal advice on any matters relating to OCs. If you’re uncertain about any OC issue, we welcome your query on 03 8697 0600.

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Get to grips with what your Owners Corporation is Owners Corporations go under different names and are governed by different legislation around Australia. In Victoria, the Owners Corporations Act 2006 sets out your rights and responsibilities as the owner of a property or properties in a community housing setting controlled by an owners corporation. At 122 pages long, it’s not exactly bedside reading. This section simplifies the Act for you. Common property An Owners Corporation (OC) is an organisation responsible for looking after the shared elements of your community property. These elements generally include the grounds, gardens, footpaths, walkways, corridors, stairs, lifts, foyers and other assets that you and your fellow lot owners use together but don’t own individually.

Common property is listed on the Plan of Subdivision, a document registered with and held by Land Victoria. Land Victoria administers the Act in Victoria on behalf of the state government. When you buy a lot, or lots, in a strata community, you automatically become a member of the Owners Corporation. Remember, though, this is different from the OC committee, which is elected by all members to carry out the functions of the OC. If you want to go into further detail, visit www.consumer.vic.gov.au/ housing or talk to our professional Owners Corporation Managers on 03 8697 0600.

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Understand what your Owners Corporation does

Under the Owners Corporations Act, the Owners Corporation has very specific duties relating to the common assets of the property. It also has to fulfill reporting and compliance requirements under the Act and the Owners Corporations Regulations 2007. The main responsibilities of the OC are to: •

Manage, maintain, repair and administer all common property, fixtures and services (including grounds, gardens, footpaths, walkways, corridors, stairs, lifts, foyers, lighting, plumbing and other common assets)

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organise and maintain required insurance, specifically reinstatement and replacement insurance and public liability insurance

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collect fees from lot owners to cover costs which generally include:



– utilities – building management – maintenance – building services – administration – insurance

• maintain financial records and prepare financial statements •

provide Owners Corporation certificates when requested

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create and/or maintain an owners corporation register. The register is a record of all the details of the OC’s membership, and reports its activities

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follow an approved complaints and grievances process

The full responsibilities of the OC and committee can be demanding, but with the right advice and management, they can be fulfilled effectively and enjoyably. Find out how from our professional Owners Corporation Managers on 03 8697 0600.

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Involve an expert independent Owners Corporation Manager As an OC services provider, you’d expect us to give you that advice. We naturally endorse it fully. But before you make your choice, here are some points you should take note of and questions you should ask to help you make an informed decision: • How long has the service provider been in business? Like any enterprise, experience includes mistakes and failure and the ability to learn lessons. Ask not only how long the company has been active, but also what level of experience the managers who may be assigned to your OC have. • What are their qualifications? Professional OC managers must at a minimum be registered with the Business Licensing Authority. While there are no other formal qualifications required, the better firms have stringent training and continuing professional development programs under the auspices of bodies such as Strata Community Australia (SCA) and Real Estate Institute of Victoria (REIV). • What size is their portfolio, and more importantly, what is the ratio of buildings/lots to each Owners Corporation Manager? Regardless of the size of the management company, what is important is whether the individual managers—the people who actually do

the work—have to manage more properties than they can handle. The lower the ratio, the higher the level of service. • What kind of customer charter do they have in place? This is a relatively new initiative taken by OC managers who have seen the importance of customer service and relations and put it front and centre of their operations. • What useful information do they make available for free? The best OC managers and service providers know that you can no longer sell. In today’s informed world buyers make the decisions based on trust, transparency and relationships. These are formed through informative websites with helpful and authoritative content such as regular blog posts. • What is their attitude to contracts? Too many OC managers take the easy, compliant route when it comes to contracts such as insurance and utilities. Only the best will take the time to actively check contracts and bills, and challenge them where they believe value is falling short. Find out more from our professional Owners Corporation Managers on 03 8697 0600.

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Take an active interest in your Owners Corporation, especially its finances Like any endeavour, the more you put in to your OC, the more you’ll get out of it. The fact that you’re reading this e-report suggests you have at least a passing interest in matters concerning OCs. If you’re a lot owner in a strata community, you’re automatically an OC member. And if your community has 13 lots or more, you must elect a committee of at least three and not more than 12 members. Leading OC managers and service providers agree that an active and attentive OC, and by default, OC committee members, add substantial value to a strata community. By becoming a member of the OC committee you:

If you really want to get to the bottom of your OC and your place in the community, ask to look carefully at the financials. As a member of the OC, you are entitled to examine the financial records and to get a clear idea of income, expenditure, assets and liabilities. As an OC committee member, you contribute to the thinking and the decisions behind the management of your shared property. You get to share in policy making for the future of the property as well as the day to day management of the asset. Your responsibilities as a committee member can include: •

raising money through fees and levies

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borrowing, spending and investing on behalf of the OC

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debt management and recovery

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earn the right to play an energetic role in your and your neighbours’ properties

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demonstrate your commitment to the future of your shared asset

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planning and administering maintenance schedules

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communications with owners and residents

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unlock the communications door to a host of potential new friendships and relationships

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selection of and liaison with OC service providers.

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position yourself to understand the history of the property

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gain immediate access to further documentation, contracts and business relationships.

Playing a part on the OC committee can deliver other benefits too. It can deliver a collegial sense of a shared purpose and destiny, and help build a legacy that can remain with you and your fellow members and residents for years. For an in-depth chat on how OC committees work, and can be made to work better, contact our professional Owners Corporations Managers on 03 8697 0600.

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Understand the roles of the Building Manager and the Owners Corporation Manager

Some larger strata communities have their own full- or part-time Building Manager. In fact, very large complexes can even have a Building Manager in residence to look after the daily needs of owners and tenants. Don’t, however, mistake your Building Manager for your Owners Corporation Manager. They’re mostly different people. A good Owners Corporation Manager will have the right mix of practical and communications skills to work collaboratively with the Building Manager to complement both roles. The Building Manager can also fulfil parts of the role you would expect to find performed by a Facilities Manager in a multi-purpose setting involving a residential component. Functions would include, but are not restricted to: •

Planning, scheduling and supervising maintenance

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Liaison with and management of professional contractors and trades

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Liaison with and problem solving for owners and residents dealing with minor defects

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Emergencies such as power failures, plumbing and sewerage issues, security and parking problems

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Access issues, especially where owners or tenants are moving in or vacating premises.

Competent Owners Corporation committees and external Owners Corporation Managers delivering services to the OC will have an excellent understanding of what a Building Manager should deliver. Find out more when you contact our professional Owners Corporation Managers on 03 8697 0600.

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Check your Owners Corporation certificate carefully The OC certificate is a very important document. It provides a complete record and statement of the legal, financial and administrative position of your lot, its relationship to the OC, and the OC’s compliance with the Act and the regulations.

The key content you should examine in your certificate is:

As a member of an Owners Corporation, you’re entitled to an OC certificate if you request one in writing. Your OC must supply the certificate within 10 days of your application. As a legal document issued under the common seal of the OC, it must be properly authorised by either two lot owners or the OC Manager or Chairperson.

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Full details of fee schedules, fees paid and unpaid, and special levees

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Details of repairs, maintenance and other works carried out or planned

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Types, amounts and currency of insurance cover

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Detailed statement of the OC’s assets and liabilities, including maintenance funds

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Contracts, leases, licenses or service agreements involving lot owners and common property

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Outstanding legal notices or proceedings against the OC

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Information about management contracts and services.

By law, the certificate must also have attached a copy of: •

Resolutions made at the last Annual General Meeting

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Consolidated rules registered at Land Victoria

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Schedule 3 of the Owners Corporation Regulations 2007 (‘Statement of advice’).

Find out more when you contact our professional Owners Corporation Managers on 03 8697 0600.

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Check the condition and quality of the building’s painting with your OC committee or Owners Corporation Manager

You’ve probably heard of the term ‘painting over rust’. It means to hide faults under a temporary cover designed to make the subject of the purchase look new or in good condition. It’s common practice when selling real estate— residential or commercial—to apply a last minute coat of paint to a property to freshen it up and attempt to add some value to the selling price. Not all paint jobs are equal. Insufficient surface preparation, rust, poor filling and low quality or inappropriate paint for the surface can mask problems that may come back to haunt you. Competent OC committees and OC Managers will employ specialist painting contractors to protect and enhance the value of the building. They also keep accurate records so you know not only about the paint on top, but what lies underneath. Contact our professional Owners Corporation Managers on 03 8697 0600.

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Check the condition and quality of the building’s windows with your OC Committee or Owners Corporation Manager It may seem obvious, but many lot owners and buyers sometimes forget to check the type and condition of the windows and glazing in their multi-title buildings. Window systems can vary enormously in function and efficiency. Their performance can also alter according to variables such as height, location, environment and proximity to traffic and other noise hazards. Window frames, especially those with moving parts, are often the weak link in the building chain. Unless due care is taken with their selection and installation, windows can often present as the first point of failure or compromise, even in relatively new constructions. Check the building’s history with your OC committee or Owners Corporation Manager, or call us on 03 8697 0600.

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Take an active interest in insurance You’re probably aware that most housing purchases require some form of insurance, and it’s no different with Owners Corporations. Be sure to check: •

reinstatement and replacement insurance of buildings on common property

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public liability insurance for the common property that covers owners in the event of injuries or damage to themselves, visitors or contractors and their property.

Insurance isn’t called a grudge purchase for nothing. It’s often a form of protection we wish we could do without. But it only takes a fire or a flood—or something more humanly malicious—for us to realise just how vital it can be. Rather than buying the necessary policies and filing them in the lowest drawer available, taking an active interest in your insurance can add substantially to the value of your Owners Corporation. That needn’t mean spending your life chasing insurance agents. An expert OC Manager will already have in place a scheduled approach to obtaining competitive quotes at least annually, or according to market trends. Contact our professional Owners Corporation Managers on 03 8697 0600.

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Look regularly at your utilities contracts and bills Nobody likes paying bills. And we like them even less if we don’t believe we’re getting value for money. But who has time these days to pore over lengthy and complicated power, water, gas and communications bills to check for mistakes, duplicate charges, or even outright rip-offs? The utilities sector is massively more competitive since the swathe of privatisations of the late 1990s and early 2000s. That means more companies hustling for your business, with more and more intricate and confusing offers. Does your expert OC Manager have proven skills in contract and bill appraisal? Is this a feature of your OC management services agreement? Contact our professional Owners Corporation Managers on 03 8697 0600.

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Useful links The law around Owners Corporations, and compliance to its many requirements, can make managing your OC very complex. As experts in OC management over more than 40 years, we love solving problems and helping people get the most out of their living spaces, buildings, communities, and their lives. Here are some useful links to help you navigate the OC oceans: Strata Community Australia

www.vic.stratacommunity.org.au

Owners Corporation Act 2006

www.legilsation.vic.gov.au

Consumer Affairs Victoria

www.consumer.vic.gov.au

Turnbull Cook

www.turnbullcook.com.au

Subdivision Act

www.dtpli.vic.gov.au

Owners Corporation Regulations 2007

www.legislation.vic.gov.au

Model Rules

www.consumer.vic.gov.au

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DISCLAIMER: This information is intended as a guide only. If you have further queries, please contact Turnbull Cook’s Owners Corporation professionals on 03 8697 0600.

Total Care for you and your property head office L10, 606 St. Kilda Road, Melbourne VIC 3004 call (03) 8697 0600 email [email protected] visit www.turnbullcook.com.au