Legal Update - Owners Corporation Act 2006
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Legal Update: Owners Corporation Act 2006
Overview
The Owners Corporation Act was enacted on 14 September 2006 and received assent on 19 September 2006. It replaces and expands the regulations under the Subdivision Act 1988, concerning bodies corporate, now known as 'owners corporations.'
Key Highlights
The Act restructures and redefines the roles, rights, and obligations of owners corporations, impacting property owners, managers, developers, and various properties such as residential, commercial, and mixed-use developments. It took effect on 31 December 2007, directly influencing one in five Victorians associated with such entities.
Purpose of the Act
The Act addresses shortcomings in the Subdivision Act 1988 due to the growing number and complexity of bodies corporate. Key aims include:
- Improved dispute resolution access
- Clearer rights and duties for members and corporations
- Enhanced powers and flexibility
- Better financial management
- Long-term maintenance planning
- Higher professional standards in management
Creation and Function of Owners Corporations
Under the amended Subdivision Act 1988, a plan of subdivision can create owners corporations (OCs) upon registration. OCs handle maintenance, insurance, record-keeping, and other roles formerly managed by bodies corporate. They must operate with honesty, good faith, and diligence.
Existing Bodies Corporate
Upon implementation,:
- Existing bodies corporate become OCs
- Previous rules continue unless inconsistent with new legislation
- Existing certificates are considered OC certificates
Tiers and Financial Management
OCs are categorized into:
- Two-lot subdivisions, with certain exemptions
- General OCs
- Prescribed OCs, which face additional obligations
OCs must maintain proper accounts, prepare financial statements, and may require audits and maintenance plans.
Asset Management and Insurance
OCs are responsible for repairing and maintaining common property. Lot owners must maintain their lots and exclusive services. OCs need insurance for reinstatement, replacement, and public liability, especially for multilevel developments.
Developer Obligations
Applicants for subdivision registration must provide initial OC documentation and ensure contracts are enforced within the first five years. They must maintain an OC register with pertinent details.
Proxies, Committees, and Management
Proxy rules restrict demands on lot owners. A committee is necessary for OCs with 13 or more lots, tasked with acting in good faith. Managers must be registered, insured, and operate with transparency.
Record Keeping and Dispute Resolution
OCs must maintain records for seven years, accessible to owners and related parties. Dispute resolution includes OC complaints, Consumer Affairs Victoria mediation, and VCAT interventions.
Concerns and Future Amendments
While the Act was passed without amendments, concerns exist regarding:
- Roles of Chairman and Secretary
- Management burdens on smaller OCs
- Quorum issues for special resolutions
- Manager standards and register privacy
These issues may be revisited in future amendments or regulations.
You can find the original non-AI version of this article here: Legal Update - Owners Corporation Act 2006 .
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