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We Live Here

08 May 2019

More support for Owners’ Corporations in the new Bill

The long-awaited exposure draft of the Owners Corporations and Other Acts Amendments Bill has now been released by Consumer Affairs Victoria (CAV) for public consultation.

The exposure draft can be accessed at www.consumer.vic.gov.au/OCBill

Submissions emailed to cav.consultations@justice.vic.gov.au will be accepted until May 10, 2019.

Subject to the satisfactory resolution of any issues raised during the consultation process, the Bill should be introduced into Parliament later this year.

It has taken more than three years since submissions to the Issues Paper closed in 2016 and at first glance the proposed new Bill does seem to give more support for owners’ corporations than previously, indicating that our voice is at last being heard.

The introduction to the Explanatory Memorandum states: The proposals that have emerged from the review seek to make buildings governed by owners’ corporations better governed and more liveable taking into account stakeholders’ experiences and industry developments since the Owners Corporation Act 2006 commenced in December 2007.

The amendments seek to:

  • Rationalise the regulation of owners’ corporations;
  • Enhance protection for owners' corporations by improving the quality of owners’ corporation managers and expanding and improving developers’ duties to the owners' corporations they create; and
  • Improve the governance and financial administration of, and internal relations in, owners’ corporations.

Some significant features of the proposed new legislation

Four tiers of owners’ corporations to replace “one size fits all”.

The current legislation fails to distinguish between 50-storey skyscrapers and suburban blocks with two units.

The new legislation will allow for different regulatory requirements based on the number of occupiable lots.

This is a huge step forward and one that “We Live Here” has campaigned for since the review of the legislation commenced in 2016.

The four tiers are:

Tier Composition

Tier one 51 or more occupiable lots, and not a services only owners’ corporation

Tier two 10 to 50 occupiable lots, and not a services only owners’ corporation

Tier three Three to nine occupiable lots, and not a services only owners’ corporation

Tier four A two-lot subdivision or a services only owners’ corporation

Limiting the powers of developers and owners’ corporation managers to determine how buildings operate to enhance protection for owners’ corporations.

2(a) In relation to developers the new legislation provides for the expiry of any contract appointing a third party manager (a person who is neither an initial owner or a lot owner) entered into by the applicant for registration of the plan of subdivision at the first meeting of the owners’ corporation.

Provision is also made that any other contract entered into that relates to the owners’ corporation and benefits the applicant for registration must not exceed three years in duration.

Further it will be a provision of the new legislation for the minutes of the first meeting be kept.

2(b) For owners’ corporation managers the current registration system will be strengthened to improve the quality of owners’ corporation managers.

Other proposals relate to additional obligations placed on owners’ corporation managers regarding procurement of goods and services on behalf of owners’ corporations (including disclosure of any beneficial relationship with a supplier, commissions, payments and other benefits received), influencing voting on owners’ corporation matters and owners’ corporations’ access to their financial records.

One long-overdue reform is the insertion of a new section in the Act that relates to the appointment of an owners’ corporation manager, prohibits certain terms in owners’ corporation management contracts and gives more power to the Victorian Civil and Administrative Tribunal (VCAT) to rule generally whether other terms in management contracts are unfair.

Terms that will be prohibited in owners corporation contracts of employment include those that:

  • Impose procedural restrictions on the revocation of the manager’s appointment;
  • Enable the manager to renew the contract of appointment at their option;
  • Provide for the automatic renewal of the contract of appointment if the owners’ corporation fails to give notice of its intention not to renew the contract, and
  • Must not restrict the ability of an owners’ corporation to refuse consent to the assignment of the contract of appointment to a person appointed as the manager, other than one which provides that such consent must not be unreasonably withheld.

We Live Here has previously expressed concern that the government has been consulting in private and only with commercial groups – businesses that make money from buildings that are governed by owners corporations, and not the owners’ corporations themselves.

However, it seems submissions and campaigning by us and others have not been in vain, and we welcome the proposals that are aimed at creating a clear distinction between the role of owners’ corporations and the role of owners’ corporation managers in buildings that are governed by owners’ corporations.

Future columns will review more of the Bill – the good and the not-so-good proposals.

We encourage as many of you as possible to review the Exposure Draft and provide us with your feedback.

Campaign donations

As a not-for-profit organisation, donations from individuals and buildings keep our campaigns going. To register as a supporter of We Live Here or to make a donation please visit our website at welivehere.net

We Live Here does not accept donations from commercial tourism interests.

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