When you purchase an apartment that is part of a strata scheme in Australia, you also buy into the owners corporation (known as a body corporate in Queensland).
The owners corporation is responsible for overseeing and managing the property’s communal areas and shared functions. As part of this entity, you have a say in how the property is managed, how finances are utilised, and the property rules (also known as by-laws) that are implemented.
The owners corporation is critical to the smooth running of the property, finding solutions for day-to-day issues, as well as dealing with emergencies, insurance claims and major repairs.
What is an owners corporation?
The owner’s corporation or OC is a legal entity, combining all the individual lot owners. It is created automatically, whenever a subdivision has common property.
Common property refers to a range of shared spaces including pathways, driveways, foyers, stairs, stairwells, lifts, and gardens. It also covers walls and the property’s exterior (depending on the plan of subdivision), along with swimming pools, gyms, laundries, and other amenity areas.
The OC operates like a business, setting rules about use and management of common property. All rules must operate within broader legislation governing strata titles. The rules represent the collective interests of the owners, and are binding on owners, tenants, and visitors.
All OC members (also known as lot owners) are required to pay levies or fees towards the upkeep of the common property. These levies or fees are generally paid into two separate funds – the administrative fund (for regular, recurring costs) and the capital works fund, or sinking fund (for significant repairs and upgrades).
What are the rights and responsibilities of the OC?
The OC has a range of legal responsibilities, designed to promote the upkeep, management, and smooth running of the property. The OC is required to/must:
- Maintain all common property including facilities, assets, and fittings.
- Raise fees from owners to cover financial requirements.
- Insure the property for full replacement value.
- Administer funds and finances on behalf of the owners.
- Maintain full financial records.
- Set up and manage meetings, including minutes, documentation, and correspondence.
- Resolve any disputes arising among OC members.
- Enforce OC rules and regulations.
- Manage the owner register and OC roll.
- Plan and manage all compliance requirements (e.g., safety, fire).
The responsibilities of the OC are a legal requirement and failure to undertake many of these tasks can result in the OC being financially liable and may lead to legal action. For this reason, it is important to ensure that your OC is being managed correctly and all decisions are made in line with the legislation.
How does the owners corporation make decisions?
As an OC member, you are entitled to attend the Annual General Meeting (AGM). This is where you can have your say about how the property is run. If you are unable to attend, you can appoint a proxy to attend on your behalf or submit your votes prior to the meeting.
At the AGM, as a financial member of the owners corporation, you or your proxy have the right to:
- Vote on motions regarding annual budgets and fees
- Vote on motions regarding the OC insurance
- Vote on any other motions regarding major works or contracts
- Nominate for any vacant committee positions
- Vote on the election of the OC committee.
It is vital that all OC decisions are made in a transparent, democratic, and legally correct manner. This protects the best interests of property owners and prevents decisions from being challenged.
What is the role of the committee?
Every OC has a strata committee (also known as a body corporate committee in QLD, or owners corporation committee in VIC). A committee are given the responsibility for making decisions about the day-to-day running of the property on behalf of the OC. The OC elects their chosen committee members at the AGM. The governing legislation sets the scope of the committee’s decision-making powers.
The legislation generally provides for a committee to make decisions about:
- Spending to support the daily running of the property (e.g., tradespeople, insurance).
- Approving by-law applications (e.g., owners wanting to renovate their units).
- Issuing by-law compliance notices (e.g., where a tenant is making too much noise).
The committee can also appoint a community manager (also known as a strata manager, or body corporate manager), to help carry out its duties. Managing the administrative duties can be a time-consuming process and staying up-to-date with changing regulations and compliance can be complicated and confusing. For this reason, most OCs engage a manager who is trained in compliance to help relieve the administrative burden and provide guidance to the committee with changing regulations.
The manager can organise property maintenance, provide financial management and record keeping, organise and attend meetings, facilitate the enforcing of rules, and assist in the resolution of disputes.
When you understand your rights and responsibilities as an OC member, you are empowered to make smarter decisions for your property and help your property work towards creating harmonious community living.