If you’re looking at units or flats you may see reference to an owners corporation. This used to be known as a body corporate, and is an organisation that helps manage communal property. As soon as your purchase a flat, unit, or apartment, you automatically become a member of the property’s owners corporation. This situation arises when a piece of land that has been registered with Land Victoria is subdivided into multiple lots of titles. It may include recreational areas like a pool and gym, or other common property including lifts, pathways, and gardens. The property will be regulated under the Owners Corporation Act of 2006 as well as the Owners Corporation Regulations 2007.
As you search for a property to potentially rent out, it’s important to learn more about these corporations and what they mean to you as a landlord. One way to narrow down your search for the right property is to work with a real estate agent in your area who has experience with rental units. Register your details at LocalAgentFinder to get started with this process and receive proposals from licensed agents in your area. An agent can help you with property management and learning how an owners corporation works.
What is the Role of an Owners Corporation
There are a variety of tasks that the owners corporation assists with. The main role of this type of organisation is to take care of administrative duties related to the property, in a way that benefits all members. These tasks include maintaining and repairing common areas of the building, managing the costs of these repairs, insuring the property for issues such as public liability or workers’ compensation, and resolving member disputes. As a governing body, the owner’s corporation also creates and enforces all related rules.
The Owners Corporation Regulations of 2007 apply to all property owners in a communal piece of land, until the owners corporation decide to draft their own set of rules. The rules must be officially recorded at Land Victoria before they can be enforced, and a copy of these new rules must be provided to all tenants and owners in the building. There are a variety of issues that could be included in the new set of rules, pertaining to:
- The use of common areas
- Security concerns
- The use of your lot
- The behaviour of guests, tenants, and owners
- Noise levels
- Conflict resolution
- Safety or public health issues
- Pet behaviour and ownership
Because these are all issues that could affect the well-being of other property owners and tenants on the premises, they are fair game for owners corporation rules. The new regulations can be modified with the consensus of all members of the owners corporation. Should any resident break the rules, it’s up to the owners corporation to meet in a tribunal to determine suitable penalties. One way to deal with this is to apply for a breach notice from the Victorian Civil and Administrative Tribunal, but it’s also possible to simply issue a warning or refrain from taking action.
Many landlords choose to rent out their property with the assistance of a real estate agent. You can find an agent who specialises in property management by using the free online dashboard at LocalAgentFinder. If you do use a real estate agent, they may need to also take part in the owners’ corporation.
Requirements of the Owners Corporation
There are several requirements that you must meet as the member of an owners corporation. If a new property is registered, all members must meet within six months of its registration. Meetings must be called on an annual basis if the corporation receives or pays out any money during the financial year. There may also be additional meetings throughout the year. When properties have at least 13 lots, a committee must be appointed to assist with administering the corporation duties. These committees typically have three to twelve members, including defined positions such as treasurer, secretary, and manager.
Some owners corporations will charge fees. It’s the role of the owners corporation committee to determine whether or not to ask for monetary charges from their members, and how often these payments are required. These fees go towards the cost of insurance, maintenance, and administration. Additional fees could go to the cost of large building repairs or refurbishments, for example.
As a member of the owners corporation, you have to meet a variety of obligations in addition to time and money. You must abide by all rules that have been set forth, and comply with the regulations of the Owners Corporation Act 2006. This includes looking after your property lot and keeping the common areas in good condition. However, you also have a say in matters as a member of the corporation. You will be required to vote during annual general meetings, and may need to respond to any postal ballots. Your rights may be suspended if you don’t pay your owners corporation fees on time, however, so this is one thing to stay on top of.
It’s a good idea to at least attend all meetings. Although you don’t necessarily need to get involved, your contribution could be valuable and it allows you to have your say. This also helps ensure that quorum is reached. Quorum refers to when 50% of the total votes attend the meeting, or at least 50% of the lot entitlement.
Taking Advantage of Owners Corporation Membership
The owners corporation does have some degree of power in shaping how the building is run and how members are charged. It’s in your best interest as a landlord to take advantage of your membership, to make sure that your own interests are represented and that you know what’s going on. The decisions made by this body can have an influence on the value of your property, after all. When you choose to attend meetings, you’ll know exactly how your funds are being used and express concerns if it’s not in line with your own interests.
You can also feel free to make suggestions if you have ideas that could be positive for the property. Getting involved also gives you a heightened awareness of the owners’ corporations financial movements. This helps prevent issues like embezzlement, which could be caused by member indifference. You can help protect your investment by becoming involved.
Your real estate agent may also take part in the owners corporation if he or she acts as a property manager. You can start the process of finding the right real estate agent to work with as a landlord by registering your details at LocalAgentFinder.
It’s also helpful to read our following articles about selling and renting out property: