VIC: The Long Road to Fairness for Apartment Owners

David Lin, Strata Management Consultants

4 years ago

This article about changes to the Owners Corporation legislation in Victoria has been provided by David Lin, Strata Management Consultants.

Owners Corporation Management Legislation in Victoria

In October of 2014, what was known as the Consumer Affairs Legislation Further Amendment Bill 2014 was tabled and ready to be enacted.

The Consumer Affairs Legislation Further Amendment Bill 2014 sought to:

Compel officers-in-effective control of a strata management business to disclose any relevant criminal history;

Mandate that strata managers are not to pool funds from different corporations but will have to manage separate accounts;

Mandate strata managers to disclose any potential conflicts they have, such as ownership of a contractor that provides services, or any payments or commissions they receive; and

Limit strata management contracts to three-year terms, rather than the five- or 10-year terms.

All very sensible and definitely much needed changes to the owners corporation legislation in Victoria.

However with the 2014 state election and a change in government, things went back to the drawing board.

In August 2015, Consumer Affairs announced it was going to commence a review of the entire Owners Corporations Act 2006. And after years of reviews, submission papers, and delay – a Bill was introduced into the Lower House in September 2019 only to be adjourned for further debate…

The Owners Corporations and Other Acts Amendment Bill 2019 sought to amend the Owners Corporations Act 2006, Retirement Villages Act 1987, and Part 5 of the Subdivision Act 1988. Once again much needed changes; you can track its current progress here.

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With regards to changes to governance of owners corporations, the Owners Corporations and Other Acts Amendment Bill 2019 seeks to:

Prohibit the initial owner of land affected by an owners corporation proposing an unreasonable or unsustainable annual budget for the owners corporation;

Prohibit the initial owner of land affected by an owners corporation from designating areas which would normally be considered common property or services as private lots;

Prohibit the initial owner of land affected by an owners corporation from receiving payments from the manager of the owners corporation in relation to the manager’s contract of appointment; and

Provide that for any other contract entered into that relates to the owners corporation and benefits the applicant for registration, any term of that contract must not exceed 3 years in duration***.

Contracts for Mates, at Mates’ Rates, and for Super Lengthy Terms

Tom Bacon, a partner at Strata Title Lawyers summed it up best: “the cost of inaction is galling. Frankly, the owners of apartments in Melbourne deserve better from Consumer Affairs.”

So 7 whole years later, we are still waiting and it is the owner-occupiers, investors, owners corporations, and Committees that suffer.

Owners corporations are created before settlement and before owners move in. The process and purpose of installing genuine service providers is being abused well beyond what can be considered fair.

It’s absolute madness that owners corporations and Committees have to jump through hoops to unravel these contracts.

We have worked with owners corporations and Committees that have had to go to VCAT to contest 25 year building management agreements, and very commonly strata management contracts that run for 5 years and ‘automatically roll’ into another 5 years….

We even had a smaller owners corporation go to VCAT in 2019 to contest a 3 year contract from 2009 that had supposedly kept “rolling-over” ever since….

Here’s a small sample of what they have to put up with:

Locked Into Lengthy and Unfair Owners Corporation Management Contract?

We work with Committees on general matters when it comes to changing owners corporation management companies. If the matter is more complex then there are 5-6 knowledgeable and proficient specialist strata law firms we can put you in touch with.

David Lin Strata Management Consultants E: david@strataconsultants.com.au P: 1300 917 848

This post appears in Strata News #413

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