Property - Owners corporations to replace bodies corporate
As the Victorian property market continues to expand, apartments and flats are becoming increasingly popular with property owners and renters alike. Traditionally managed by bodies corporate, this densely populated domain is about to be streamlined by new legislation affecting regulation and other related matters. Among the changes, bodies corporate are to be replaced by owners corporations (OC).
The introduction of the Owners Corporation Act 2006 (Vic) (the Act) represents much more than just a name change. The new Act, which will come into operation in late 2007, builds on and enhances regulations under the Subdivision Act 1988 and will affect one in five Victorians who own, live in, manage or develop bodies corporate. The new regime aims to clarify roles and responsibilities of owners’ corporations, committees of management, managers, lot owners and occupiers.
The Act also aims to improve access to dispute resolution processes, give sufficient powers and flexibility to OCs to operate effectively, improve financial management, enhance regulation in relation to information disclosure and promote professional standards throughout the industry. The changes will be welcomed in an area that has arguably been poorly regulated to date.
The introduction of this legislation represents good news for owners as well as occupiers, who will now enjoy better access to dispute resolution processes. Under the new system, disputes cannot be taken to the Victorian Civil and Administrative Tribunal (VCAT) unless rules and complaints procedures outlined in the legislation have first been exhausted.
The existing framework provides no alternative for dispute resolution outside applying for a formal order from the Magistrates’ Court or using the services available for resolving neighbourhood disputes. This can result in delays, unnecessary cost and a degree of uncertainty for users. The new Act offers a more structured three-tier approach to dispute resolution, namely:
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OCs must establish an internal dispute resolution process. An OC must follow the process as set out in the rules before the dispute can go further;
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If either party is unhappy with the internal process, Consumer Affairs Victoria (CAV) can conciliate or mediate between both parties;
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Disputes cannot be taken to VCAT unless earlier dispute resolution processes have been exhausted.
A significant problem currently experienced by people buying property managed by a body corporate has been the difficulty in accessing information such as financial statements, maintenance plans, committee minutes and body corporate rules. Under the Act, OCs must keep all records of activities, undertakings and owners corporation certificates as well as information about proposed fees, repairs and liabilities to be included in a Vendor’s Statement at sale. This process will ensure potential purchasers can make informed decisions about the property.
There are forms and regulations still to be settled before the Act comes into operation on 31 December 2007. To ensure a smooth transition for your existing body corporate, it is a good idea to get your documentation in order now.
More information
Useful web links
LIV website at: www.liv.asn.au/public/legalinfo/property
Disclaimer: The information in this newsletter is not intended to be a complete statement of the law relating to the issues raised. Accordingly, no person should rely on this information without first obtaining specific advice from Mr Brendan Kelly of our office.
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