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GOVERNING DOCUMENTS

There's a myriad of governing documentation that directs how an owners corporation should run, well beyond The Owners Corporations Act. What do you need to know?

Governing Documents for an Owners Corporation

We discussed in the article here that owners corporations and committees are not a law unto themselves, and there are restrictions about exactly what decisions an owners corporation can make, and principles directing how they must run. One of the restrictions relates to the multitude of documents governing both owners corporations specifically, and the broader society as a whole. An extensive (but by no means exhaustive) list of these documents, and a brief summary of each, is below.

While many of the governing documents are state-based, it is worth remembering that federal laws, standards and regulations must be considered also.

As a member of an owners corporation, you are not required to read and understand each of the documents; rather it is the role of the manager to provide general advice to the owners corporation in relation to these documents, when required. (It is best practice for an owners corporation management firm to employ chartered accountants to ensure that all accounting regulations are followed correctly in-house). If more detailed advice is required regarding a specific interpretation of legislation or an Australian Standard, an owners corporation can instruct the manager to engage an expert, such as a solicitor or fire engineer, to provide such advice.


Plan of subdivision

A plan of subdivision allows a developer to divide land into two or more new parcels of land that can then be sold off separately. It shows the locations of the private lots, the common property, and any easements. It also details the 'lot entitlement' and 'lot liability' of every lot, which are used to calculate voting rights and owners corporation fees for each member. For more information see here, or download The Subdivision Act 1988.


Owners Corporations Act 2006 (Vic)

The Owners Corporations Act (OCA) details the governance of the owners corporation. It contains information in relation to raising fees, fee expenditure, convening meetings, insurance, the owners corporation register and more. Although it is one of the most important pieces of legislation regarding owners corporations, it should not be read in isolation, and the other governing documents listed in this article should also be taken into consideration.


Owners Corporations Regulations 2018

The Owners Corporation Regulations contain information that isn't in the OCA, and speaks to the prescribed form of documents (such as a proxy form) and contains the model rules.


Model Rules

The Model Rules are included in the regulations mentioned above, and are the default set of rules for every owners corporation. They contain information pertaining to health and safety, and use of common property, amongst other items. Failure to abide by the rules can result in a breach notice being issued.


Special Rules

Some owners corporation have their own 'special rules' or 'consolidated rules', in addition to the model rules mentioned above. They may include rules governing window furnishings, or use of a common facility such as a gym. The rules will be registered at the titles office, and is available to all owners. If an owners corporation wishes to amend the special rules at any time, it may do so by passing a Special Resolution (see the glossary for more details).


Accounting Standards

Owners corporations are required to comply with the standards set by The Australian Accounting Standards Board. It is for this reason that we recommend that you confirm with your owners corporation manager that they employ in-house chartered accountants, to ensure compliance. More information on accounting standards are available here, and you can speak to your owners corporation manager regarding general accounting standards and special purpose accounting standards in relation to owners corporations.


Privacy laws

The Information Privacy Act 2000 needs to be considered by all owners. The owners corporation manager will have sensitive information relating to owners, and will need to comply with all privacy laws. The Owners Corporations Act states that any lot owner is entitled to view or take a copy of the owners corporation register, which includes the name and address of each lot owner in the Plan of Subdivision. The information to be given does not extend to phone numbers or email addresses.


Competition and Consumer Act

The Competition and Consumer Act may be relevant in relation to contracts that the owners corporation has with service providers.


Occupational health and safety

The Occupational Health and Safety Act 2004 is the main workplace health and safety law in Victoria. It sets out key principles, duties and rights about OHS.


Australian Standards

There are many laws in place regarding the servicing and testing of assets in a large building. By way of example, AS 1851-2012 pertains to routine servicing of fire equipment, AS 2293.2:2019 pertains to the inspection and testing of emergency lights, and AS 5007-2007 sets out maintenance of pedestrian doors and egress; there are many more. We recommend that you speak to your facility manager for more information.


Corporations Act

Many lot owners in owners corporations are in fact corporations themselves - superannuation funds, sole trader companies or family trusts. The original developer may still own some lots if they were not all sold prior to completion. A corporation may nominate a person to represent them on their behalf, so that they can vote in a meeting or be represented on a committee. Requirements in relation to corporations appointing proxies are listed in the Corporations Act 2001.


Tax

It's possible that your owners corporation needs to pay income tax, in which case you can refer to The Income Tax Assessment Act 1997. If your owners corporation has an annual turnover of over $75,000 per year, it may need to be registered for GST - or refer to the A New Tax System (Goods and Services Tax) Act 1999. Ask your owners corporation manager for more information


Building Codes

There are a number of codes that may need to be taken into consideration when doing large-scale maintenance works (such as facade replacement) or disputing defects with a builder. These include the Building Act 1993, Domestic Building Contracts Act 1995, Building Regulations 2018, the National Construction Code, or the Building and Construction Industry Security of Payment Act 2002.


Trustee Act 1958

Laws pertaining to how the owners corporation manager is authorised to manage the accounts for the owners corporation are detailed in the Trustee Act 1958. The owners corporation manager is permitted to remove funds from the owners corporation accounts to pay themselves for services provided in managing the funds in accordance with the manager's contract.

 

Melb OC takes governance seriously. Speak to us about how we can manage your precinct better.

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