With Stage 3 restrictions now in place to deal with the COVID-19 crisis, the Federal Government have indicated that social distancing and isolation measures will most likely remain in place for at least 6 months. The recently imposed restrictions and expected time frame will certainly bring new challenges to owners corporations, requiring them to become more resourceful in managing their day-to-day operations.
Our latest Owners Corporation update looks specifically at levy collection, annual general meetings and managers duties, and provides some helpful tips on how owners corporation managers may respond to the challenges faced during the COVID-19 crisis.
Levy collection
Even in a pandemic, lot owners should continue to pay their owners corporation levies so that the owners corporation can perform its legal obligations, such as paying insurance premiums and cleaner’s fees.
Payment plans
While we strongly recommend that levy collection be pursued, an alternative to issuing proceedings is to enter into formal payment plans with recalcitrant lot owners for payment of the current arrears balance plus the next 2 or 3 quarterly levies.
A payment plan can provide some breathing space to a lot owner who may otherwise be struggling financially, and will ensure that the owners corporation receives at least some funds on a regular basis. In addition, an owners corporation may choose to not charge penalty interest to lessen the burden.
SCA Victoria has also recommended that special levies not be raised for the time being. However, if additional funds are urgently required for a particular purpose not related to the maintenance fund, the owners corporation could seek the approval (which would require a special resolution) to use maintenance fund monies for that purpose. This could be done by way of a ballot.
VCAT proceedings
In the event that an owners corporation does not wish to offer payment plans or a lot owner defaults on a payment plan, we suggest that VCAT proceedings be issued sooner rather than later.
With increased pressure on social distancing and Stage 3 restrictions now in force, as a precautionary measure VCAT has announced that all non-critical matters listed up to, and including, 15 May 2020 will be adjourned to a date to be fixed. With many cases now adjourned, and new cases still being lodged, the longer the owners corporation waits to file the proceedings, the longer it will have to wait for a hearing.
Annual general meetings
During the COVID-19 crisis, we anticipate that it is unlikely that there will be any significant repercussions for owners corporations that do not hold their annual general meeting within the required period. However, if there are concerns about exceeding the mandated 15-month period, owners corporations can hold their annual general meeting via teleconference or video conference in order to comply with their obligations.
By proceeding with an annual general meeting (albeit remotely), important matters like annual budgets, insurance, and appointment of managers and committee, can be dealt with. This will also allow owners corporation managers to overcome a potential backlog of annual general meetings when the crisis is over. All the other non-essential matters can be dealt with by way of a ballot.
In the event that it is not possible to hold an annual general meeting, we suggest that the levies and owners corporation management contract be rolled (the management contract may have to be rolled over on a month-by-month basis) until the annual general meeting can be held, post the COVID-19 crisis. However, we suggest that the owners corporation address these issues by way of a ballot, particularly if the 15-month mandated period for AGMs is approaching.
Manager’s duties during Stage 3 restrictions
During COVID-19 Stage 3 restrictions, there are a number of simple safety measures which we strongly recommend:
- hand sanitiser be made available for all residents on entering and leaving a building;
- increase the cleaning of the common property areas to ensure that all areas, such as lifts and intercoms, are sanitised as much as possible;
- provide building managers with disposable gloves, hand sanitiser and a face mask (if available); and
- ask residents to wear disposable gloves and bring their own pens if they need to collect anything from the building manager or for signing documents.
We also recommend that all non-essential common area facilities (such as gyms, pools, BBQ areas and the like) be closed and that any non-essential common area works be postponed until post the crisis.
Communication is key to maintaining safety
While building managers are not expected to police residents, particularly those who are self-isolating or in lockdown, they can provide guidance to residents through communications on how to maintain well-being and safety.
If you become aware of a resident that has contracted the virus in an owners corporation you are managing — in addition to taking all the necessary measures to enhance the cleaning of the common areas in the vicinity of that resident’s lot and other areas — we recommend that you contact the resident by phone or email to direct them to the relevant government websites which provide guidance on self-isolation.
While building managers may not be required to advise residents of an infection that has occurred, or of people isolating in a building, they may wish to notify all (or, depending on the circumstances, some) residents when an infection has occurred to ensure that those residents remain vigilant about practising the necessary safety measures.
In this situation a building manager must be mindful of the privacy of any individual and not, unless necessary in the circumstances to protect health and safety and as permitted under the Privacy Act, disclose any personal information about the individuals who are infected or are isolating.
More information
For more information, or assistance with preparing letters of demand, payment plans, VCAT applications, preparing postal ballot documents and memos for residents, please contact Anton Block, Principal Lawyer and Head of Owners Corporation, on (03) 8600 8833 or ablock@kcllaw.com.au.
For advice on privacy related issues, please contact Daniel Kovacs, Principal Lawyer and Co-Head of Intellectual Property, on (03) 8600 8859 or dkovacs@kcllaw.com.au.
Author
This Owners Corporation update was authored by Anton Block, Principal Lawyer.
Note: This update is a guide only and is not intended to constitute legal advice.