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Owners Corporation update: Get it right — Preparation of an Owners Corporation Certificate

May 4, 2016

Get it right — Preparation of an Owners Corporation Certificate

One role of the Owners Corporation Manager (Manager) is to prepare an Owners Corporation Certificate (OC Certificate) in accordance with the Owners Corporations Act 2006 (OC Act) and the Owners Corporations Regulations 2007 (Regulations). 

Getting it wrong can result in disputes between the new and former lot owner, OC and the Manager.

For example:

  • whether the new lot owner owes outstanding fees struck prior to their ownership; and
  • whether the OC failed to disclose anticipated maintenance or repair works that would result in future significant levies.

In such instances, the new and former lot owner may not only sue the OC but the Manager as well on the basis that the Manager was negligent in preparing the OC Certificate.

Managers can be liable in negligence if the information they put in an OC Certificate is wrong. 

Where the Manager gets it wrong the damages that may be payable by the Manager can be substantial.

This can be avoided if the Manager accurately prepares the OC Certificate in the first instance.

What is an OC Certificate?

An OC Certificate is a document summarising prescribed current OC information. 

Lot owners who intend selling their property will request an OC Certificate to be included in a Vendor Statement.  They are required to give the document to purchasers under Section 32 of the Sale of Land Act 1962 (Sale of Land Act). 

A purchaser may also request an OC Certificate prior to settlement, particularly if there is a lengthy period of time between the date of sale and the date of settlement due to the adjustments that will be made to the sum to be paid on the settlement date.

Since 1 October 2014, the Sale of Land Act no longer requires a lot owner who is selling their property to include an OC Certificate in the Vendor Statement. However, OCs have continued to receive requests to produce OC Certificates when properties are placed on the market for sale.

An OC Certificate must contain accurate information. Ambiguous provisions in the OC Act and the OC Regulations do not make it clear as to what information must be included in an OC Certificate. This is fertile ground for allegations of inaccurate or incomplete OC Certificates.

For example:

  • Section 151(4)(b)(iv) of the OC Act requires inclusion in the OC Certificate of any other documents of a prescribed kind; and
  • The Regulations do not clarify what other prescribed documents are to be included in the OC Certificate to satisfy that relevant provision.

To avoid an allegation that an OC Certificate is inaccurate or incomplete, the Manager preparing the OC Certificate should use and complete a checklist of the prescribed information and accompanying documents so as to make sure that the document is accurate, complete and reflects the current position of the OC.

For best practice purposes, an OC Certificate should also include a statement that if some information in the document is not clear, further clarification should be sought from the OC and the Manager who prepared the document.

What must an OC Certificate contain?

Here is a summary of the requirements:

LegislationPrescribed Information
Section 151(4)(a)(i) to (xiii) & Regulation 11(a) to (o)Fees payable in respect of the lot for each quarter, semi-annually, annually or other period.
Fees and charges that are imposed or proposed to be imposed on the lot which includes the date up to which the fees for the lot have been paid.
Fees, special fees and other money owing in respect of the lot including that date they were struck and are payable.
Insurance details including name of insurer company, policy number, type of policy, buildings covered, building amount, public liability amount, and renewal date. The date that the OC resolved that lot owners may obtain their own insurance pursuant to Section 63 of the Act (if applicable).
Repairs and maintenance or other work which have been struck, and the dates on which they were struck and are payable.
Total of current funds held by the OC.
Other liabilities and contingent liabilities of the OC that have not yet been stated in the OC Certificate including any liabilities or contingent liabilities arising from legal proceedings.
Details of current contracts, leases, licences and agreements affecting the common property.
Details of current agreements to provide services to lot owners and occupiers or the public.
Details of notices and orders served on the OC in the last 12 months that have not been satisfied.
Legal proceedings to which the OC is a party and any circumstances of which the OC is aware that are likely to give rise to proceedings.
Manager name and address if the OC has appointed or resolved to appoint one.
An appointment, potential appointment or proposal to appoint an administrator for the OC.

An OC Certificate must be accompanied by the following documents:

LegislationAccompanying Documents
Section 151(4)(b)(i) to (v) & Regulation 11(p) and Schedule 3Model rules and/or registered consolidated/special rules.
Statement in the prescribed form that provides advice and information to prospective purchasers and lot owners set out in Schedule 3 of the Regulations.
Minutes of the last or most recent annual general meeting.
Any other documents of the prescribed kind.
Statement advising that further information on prescribed matters can be obtained by inspection of the OC register.

An OC’s common seal must be affixed onto the OC Certificate. The Manager or elected OC chair are authorised to witness the sealing of an OC Certificate in accordance with Section 21(2A). 

More information

For more information or advice, please contact Anton Block, Principal Lawyer and Head of Owners Corporation, on (03) 8600 8833 or ablock@kcllaw.com.au.

Note: This update is a guide only and is not intended to constitute legal advice.