Owners Corporation update: New Regulations to improve efficiency and effectiveness of owners corporationsOct 30, 2018
On 2 December 2018, the Owners Corporation Regulations 2018 will come into effect.
The new Regulations give effect to the Owners Corporation Act 2006, which provides the foundation for regulating owners corporations in Victoria, by setting:
- the threshold for ‘prescribed’ owners corporations;
- fees, costs and charges;
- classes of prescribed owners corporations;
- standards for financial statements and maintenance plans; and
- model rules for owners corporations.
While the existing Regulations have largely been maintained, the new Regulations introduces a number of changes to improve the efficiency and effectiveness of owners corporations, and address specific issues, such as:
- to ensure negligence claims are met by requiring paid owners corporation managers to have a minimum of $2 million indemnity insurance;
- to improve the standard level of governance for owners corporations by broadening the scope of the model rules; and
- to providing committees the ability to remove a member who is regularly absent from meetings, enabling owners corporation to run more efficiently.
Outlined below are the key additional regulations:
Regulation 8 — Prescribed information for maintenance plan
A classification of common property according to structure, services and assets has been introduced for the purpose of defining major capital item in section 37 of the Act.
The classes prescribed are as follows:
- common property structures, including the roof, stairways, balustrades, and window frames;
- common property services, such as shared water, gas and sewerage pipes, pumps, drains, electrical and telephony infrastructure; and
- common property assets, such as fences, pools, and water tanks.
Regulation 10 — Membership of committee
The committee can resolve to remove a committee member that is absent from 25% or more committee meetings held at any time within a 6 month period without giving prior written notice or a reasonable explanation for their absence.
Regulation 11 — Professional indemnity insurance
The amount of professional indemnity insurance required to be held by a registered owners corporation manager has been increased from $1.5 million to $2 million.
The additional model rules pursuant to Regulation 12 are:
Model Rule 2.1 — Functions, powers and reporting of committees and sub-committees
A committee may appoint members to a sub‑committee without reference to the owners corporation.
Model Rule 5.2 — External appearance of lots
Owner / occupiers must obtain written approval from the owners corporation before making any changes to the external appearance of their lot and the owners corporation cannot unreasonably withhold approval.
However, the owners corporation may give such approval on reasonable conditions to protect quiet enjoyment of other lot owners, structural integrity or the value of other lots and/or common property.
Model Rule 5.3 — Requiring notice to the owners corporation of renovations to lots
Owner / occupiers will be required to notify the owners corporation if they undertake any renovation works or other works that may affect the common property or unreasonable interfere with the peaceful enjoyment of anyone entitled to use the common property.
Fees remain unchanged
Regulations 19, 20 and 21 outline the fees associated with owners corporation registration which remain unchanged.
Consumer Affairs Victoria expect the fees to change when the Government implements changes to the Act.
($ amount in 2018-19)
The objectives of the new Regulations are to:
- protect the rights and interests of lot owners in relation to common property, including protecting against avoidable financial exposure; and
- support and promote good governance of owners corporations.
Interestingly, the Model Rules have not been amended to reflect the short-stay standard of conduct referred to in the Owners Corporations Amendment (Short-stay Accommodation) Act 2018.
For more information, or advice regarding the new Owners Corporation Regulations, please contact Anton Block, Principal Lawyer and Head of Owners Corporation, on (03) 8600 8833 or email@example.com, or Deborah Andronaco, Associate, on (03) 8600 8848 or firstname.lastname@example.org.
Note: This update is a guide only and is not intended to constitute legal advice.