This Q&A about whether Victorian lot owners in small schemes are required to form an Owners Corporation has been supplied by Jane Giacobbe, Strata Reports Victoria.
Question: In a three lot scheme with little or no common areas, do we need to form an owners corporation or can we agree to act independently. What is the minimum we are required to do?
I’m a lot owner in a 3 lots scheme on a strata property in Victoria. Our lots have little to no common areas, all yards and driveways are separate etc. Do we still require an Owners Corporation? My understanding is that it is mandatory.
If all three owners agree, can we act independently or do we need to operate as an Owners Corporation – committee, meetings, insurance, fund, approvals?
If bound by the legislation, what is the minimum we are required to do?
Answer: If you have more than two lots, you do need to have an OC established.
The obligations for the lot owners really does depend on the plan of subdivision and it would be imperative that you closely look at this or ask a specialised owners corporation lawyer to review it for you.
An owners corporation with more than two lots does need to have an Owners Corporation established. However, there is no requirement to have an Owners Corporation Manager appointed and instead it could be self-managed by the owners.
Your plan of subdivision will also need to be referenced to determine whether there is any common property.
If there is no common property and therefore no maintenance required, the owners could agree to just have an annual general meeting for the records and may not need to have any contributions as there are no shared costs given there is no common property.
There may however be a requirement to have insurance for the owners corporation and this will once again come down to the plan of subdivision and whether there is common property that should be covered by insurance.
If insurance is required it may be prudent to have a contribution determined at the annual general meeting. This ensures that although it is a small owners corporation, good governance is being carried out which helps protect the value of the properties and allows for transparent and accurate records should a property be sold or require an inspection of some sort.
We hope this has been helpful and we note that it is not legal advice and we would suggest consulting a specialised owners corporation lawyer if you would like legal advice with your matter.
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This post appears in Strata News #261
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