Owners Corporation Act changes – additional protections for lot owners

Tuesday March 16, 2021

Owners Corporation Act changes – additional protections for lot owners

The Owners Corporations and Other Acts Amendment Act 2021 (the Act) was passed last month.  The Act amends the Owners Corporations Act 2006, Retirement Villages Act 1987 and part 5 of the Subdivision Act 1998. The Act will come into operation by default on 1 December 2021, if not proclaimed earlier.

The amendments seek to:

  1. improve the quality of owners corporation managers and enhance protection for owners corporations;
  2. expand and improve developers' duties to the owners corporations they create;
  3. improve the governance and financial administration of, and internal relations in, owners corporations;
  4. improve and rationalise the regulation of owners corporations in retirement villages; and
  5. make a number of minor and technical drafting improvements to the Owners Corporations Act 2006, Retirement Villages Act 1987 and part 5 of the Subdivision Act 1998.

In brief, some of the key changes include:

  1. The classification of owners corporations into five tiers -

    This is to allow for varied regulatory requirements based on the number of occupiable lots. In essence, larger owners corporations will be subjected to more stringent requirements.

  2. Removing the requirement of the use of the common seal to execute documents -

    An owners corporation with a common seal, by ordinary resolution, can determine that the common seal will no longer be required. Instead, two lot owners can be authorised to execute a document on behalf of the owners corporation.

  3. Clarification that rainwater or other water that falls or occurs on the common property is taken to be part of common property –

    This permits lot owners to take action against an owners corporation for water that flows from common property.

  4. Owners corporations will be authorised to initiate legal proceedings at the Magistrates' Court for claims up to $100,000.00 by ordinary resolution -

    The requirement for a special resolution will only apply to proceedings in the County Court and above.

  5. Introduction of a process for the removal of goods -

    Owners corporations may remove abandoned goods on common property to a safe place, if the goods block reasonable access to a lot or the common property, and the owners corporation has made a reasonable attempt to locate or communicate with the person who abandoned the goods.

  6. An owners corporation may levy an additional annual fee on a lot owner –

    Extra fees may be charged where the owners corporation has incurred additional costs arising from the particular use of the lot by the lot owner and where an annual fee set on a lot liability basis would not adequately take account those additional costs. This must be levied on the basis that the owner of the lot which benefits more from its use pays more.

  7. Disclosure of advantageous relationships between the manager and suppliers -

    The manager of an owners corporation must disclose any beneficial relationship with a supplier with whom a contract is proposed to be entered into for the supply of goods or services to the owners corporation.

In essence, the Act not only includes additional protections for lot owners but imposes more stringent obligations and restrictions on owners corporation managers and developers. Ultimately, the amendments seek to give additional protections to owners corporations and lot owners.

Should you have any questions regarding the new amendments and how they might affect you, please contact Chris Philactides on 03 9629 7411.