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Everything you need to know about Maintenance Plans for prescribed and non-prescribed owners corporations.

What is a "prescribed" owners corporation? 

A prescribed owners corporation is defined as having an annual turnover of $200,000 or more, or consist of more than 100 lots on a plan of subdivision.

What is the maintenance plan?

The maintenance plan is a document usually written by a quantitative surveyor that sets out the anticipated repair and replacement on all major items over the next 10 years. These items include lifts, air conditioning plants etc.

The plan outlines the present condition of those items, and specifies when they'll need to be repaired and replaced, and the estimated cost of doing so.

Any "prescribed" owners corporation must prepare a maintenance plan for the property for which it is responsible.

- A non-prescribed owners corporation may prepare a maintenance plan, but it isn't compulsory.

What's the difference between a "maintenance plan" and a "maintenance fund"?

The maintenance plan (Whether it covers 5 years or 10 years) is described above. A maintenance fund is the money raised in order to pay for the items in the maintenance plan. Or if the plan is not adopted - see "Option 2" below - the maintenance fund is money raised specifically to be spent on maintenance, but only at the discretion of the owners corporation committee or AGM. (This is separate to the administration fund).

What happens once the maintenance plan is prepared?

If you are a "prescribed" owners corporation, once the maintenance plan has been prepared by an external agency, the owners corporation has fulfilled its legal obligation. What happens next is up to the owners corporation committee or AGM. There are three options on how to proceed, each with their benefits:

Option 1: The most expensive, but most straightforward option.

Adopt the maintenance plan. This means following the maintenance plan exactly as directed. This includes directions on how much money is raised each year for the maintenance fund, and which items are replace/repaired each year and how much that will cost.

Option 2: The same cost as option 1, but with more hands-on work by the committee to assist in generating savings.

Decide not to adopt the maintenance plan. Instead, the owners corporation committee or AGM may choose to start up a maintenance fund for the express purpose of maintaining the building at their own discretion. Usually the funds will be raised in accordance with the maintenance plan, but the expenditure will be independent.

Option 3: The Melb OC approach that saves you money.

We recommend that a prescribed owners corporation prepare a maintenance plan to fulfil the obligations in accordance with the Act. A qualified owners corporation manager from Melb OC can assist you in reviewing the plan to ensure that you are fulfilling your obligations, without raising hundreds of thousands of dollars a year unnecessarily. Many maintenance plans have a variety of assets that simply don’t need replacing regularly – while the plan may state that you need to raise $300,000 a year, in fact $0,000 a year may be more than enough to cover your roof, heating, air conditioning, some additional savings, and it’s possible that your lift service contract may cover your lift obligations already. There is no need to pay for it twice.

OC Maintenance Plan Logistics

If the owners corporation committee or AGM choose to adopt the plan, when does the maintenance plan come into effect?

The maintenance plan has no effect until it is approved by either the AGM, or the owners corporation committee (if powers have been delegated to the committee).

Who allocates money from the maintenance fund to be spent?

If the maintenance plan is adopted (like option 1 above), the money must be spent according to the plan.

If the maintenance plan is not followed (like options 2 or 3 above), the money is spent at the discretion of the AGM, or the owners corporation committee (if powers have been delegated to the committee), using the advice of the professional OC manager.

All the money spent from the maintenance fund must be reported at the AGM.

How is it decided how much individual owners pay into the maintenance fund?

The maintenance plan will specify the total amount that needs to be put into the maintenance fund every year. If the maintenance plan is adopted, the funds will have to be raised according to the maintenance plan.

If the maintenance plan is not adopted, the owners corporation committee or AGM can choose the total amount to be raised every year.

The portion of the total amount to be paid into the maintenance fund by each individual owner is based on lot liability, the same as regular owners corporation fees.


Is your prescribed owners corporation lacking have a maintenance plan?

Or do you have a maintenance plan already, but are paying too much?

Call Melb OC to assist with your legal obligations, while at the same time keeping your fees down.


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