COMMERCIAL INDUSTRIAL STRATA MANAGEMENT
Find answers to frequently asked questions about Body Corporate Strata, Owners Corporations and Strata Management.
An Owners Corporation (formerly body corporate) is a body of owners that manage the common property of a commercial, retail, industrial, residential or mixed-use property development. The common property is defined as any property not on title to any one particular owner and can include stairs, paths, elevators, lobbies, driveways, pools, common garden areas and other facilities set up for use by owners and occupiers.
An Owners Corporation may be created in any subdivision – retail, commercial, industrial, residential or mixed use. More than one owners corporation can be created in a subdivision of land or buildings.
An Owners Corporation is automatically created when a plan of subdivision containing common property is registered at Land Victoria. The plan of subdivision shows the parcels of land that can be sold separately, called ‘Lots’. Lot owners are the members of the Owners Corporation for the property.
In general terms, the Owners Corporation should manage and administer works on the common property areas and enforce, the related Rules and Regulations, and By-Laws. It is the duty of the Owners Corporation to ensure the areas and facilities it is responsible for are maintained in a serviceable state, undertaking all relative administration tasks, including obtaining comparative quotations for insurance, repair works and / or improvement works as necessary.
Maintenance of facilities extends also to the common area chattels, fixtures and fittings, ensuring attention is given to lifts, fire escapes, and all apparatus/equipment services for which an easement exists (eg. service meters, such as gas, electricity, water etc.).
The insurance cover placed on the building is also the responsibility of the Owners Corporation, ensuring the appropriate policy is maintained; requiring both a review of the previous year’s cover and prompt payment of the relevant premium.
The Owners Corporations Act 2006 and the Owners Corporations Regulations 2007 regulate Owners Corporations in Victoria.
An Owners Corporation manager is a specialist that deals in the running of an Owners Corporation. Many Owners Corporation use professional managers to assist with finances, insurance, administration, meetings and maintenance functions. Larger Owners Corporation usually engage paid professional managers because complex legal, technical and people skills are required to manage the property.
An Owners Corporation may appoint a manager to carry out any powers or functions it is able to delegate at a general meeting. The Owners Corporation usually delegates powers to a manager in a contract or instrument of delegation. This enables the manager to make decisions on behalf of the Owners Corporation.
Duties include but are not limited to:
- managing the financial accounts of the Owners Corporation;
- looking after insurance matters – claims and renewals, and Owner’s queries;
- managing the correspondence with Owners, contractors, and other 3rd parties;
- drawing up proposed new budgets each financial year;
- calling the AGM, and sending out related Notices, Nominations etc;
- holding of the AGM, and issuing the Minutes following the meeting;
- setting up the new budgets adopted at the AGM, and the resulting Levies;
- attending to the issuance of Disclosure Statements for Owners selling their Lot;
- attending to the calling of any EGM;
- managing Committee issues, including calling of Committee Meetings and issuing Minutes of those meetings;
- advising any Owner on matters of Owners Corporation law and procedure and;
- managing any dispute and resolutions that may arise.
Though members ‘self-management’ is an option, the appointment of a professional management company is highly recommended to ensure that the respective owners corporations are being administered in accordance with the rulings and regulations imposed by the Act and its Regulations as amended.
Owners should note also that ‘Standard Rules’ or ‘Additional Rules’ (depending on what has been registered on the Plan of Subdivision) also may apply within the confines of a development and are applicable to all residents, ie. owners and tenants. An Owners Corporation agent, being an impartial body, is in a position to enforce these rules ensuring little or no disharmony amongst occupants.
If your Owners Corporation has 13 lots or more it is mandatory that a committee be elected. An Owners Corporation committee can have between 3 and 12 members. If there are less than 13 lots in your Owners Corporation it is at the members option whether or not to elect an Owners Corporation committee.
Whilst all members of your Owners Corporation should be involved in the appointment of a manager it only requires an ordinary resolution (ie. 50% of more of lot owners) to agree to the appointment of an Owners Corporation manager. This can be done either at a General Meeting or by a Postal Ballot. If your Owners Corporation has a properly delegated committee they can, in the majority of cases, make the decision to appoint a new Owners Corporation.
If your Budget has been prepared accurately and a provision has been made for unexpected expenses the Owners Corporation should have sufficient funds. However, if more funds are required the Owners Corporation members will need to authorise the owners corporation manager to raise a Special Levy.
There are processes set down as to how this is to be handled and largely depends on previous decisions made by the members of your Owners Corporation at your Annual General Meeting. Non-financial members of a body corporate are not allowed to vote on ordinary resolutions at meetings nor participate in Owners Corporation committee meetings.
The Owners Corporation members can instruct the Owners Corporation manager to arrange an insurance valuation which will indicate the level of cover needed to insure the property. Larger Owners Corporation are required to undertake a valuation every 5 years whilst smaller Owners Corporations can decide for themselves when a valuation should be obtained.
This very much depends on the Owners Corporation manager. Some strata managers will expect to be paid out the fees they would have earned had the contract run its full term. Other Owners Corporation managers take the view that they will negotiate to end their contract early. The best advice is to contact your current Owners Corporation manager and request, in writing, the total cost that the Owners Corporation will incur if the Owners Corporation managers contract is terminated early.