What about the Owners Corporation?
Bodies Corporate that existed prior to December 2007 are now known as Owners Corporations and are governed by the Owners Corporation Act 2006. An Owners Corporation exists where the plan of subdivision contains common property such as pathways, driveways, stairs, lifts and lobbies. However, sometimes an Owners Corporation exists where there is no common property.
An Owners Corporation is a legal entity that is created to collectively manage the common property by undertaking the following:
- repairing and maintaining the common property, fixtures and services;
- general management and administrative functions associated with the land and building;
- maintaining relevant insurances;
- ensuring members comply with the rules and regulations of the corporation; and
- providing Owners Corporation Certificates.
Not all Owners Corporation fees and levies are adjustable at settlement. You should seek advice about such fees before entering into a contract of sale as the treatment of each fee or levy can have a substantial impact on the amount and distribution of settlement monies.
Special care should be taken to read and understand the contract in this regard. Where there are significant fees and levies you should understand who takes the responsibility for these costs before you sign the contract.
An Owners Corporation must have public liability insurance for the common property for a minimum amount set by the Act and reinstatement and replacement insurance for all buildings on the common property. An Owners corporation may take out additional public liability insurance and reinstatement and replacement insurance to cover any insurable interest in the common property or relating to the performance of its function and conduct of its office bearers.
Each owner of property in the Owners Corporation will be liable for a proportion of the insurance costs which is calculated on the lot liability. Where there is no common property or there are only 2 lots in the subdivision, the Owners Corporation may resolve that each lot owners must arrange for their own insurance in accordance with the Act.
It is important to note that a person cannot sell a lot affected by an Owners Corporation unless the vendor or the Owners Corporation has a current insurance policy in accordance with the Act. Where a lot is sold without such insurance the purchaser may avoid the sale at any time before the contract is completed.
An accumulated fund is a fund into which the members of the Owners Corporation contribute money based on lot liability for purposes such as maintenance, repairs and capital improvements. Care should be taken to ensure you understand whether you are to obtain the benefit of such a fund when purchasing.
