Are you up to speed on the latest laws affecting body corporates?
Strata and body corporate regulations in Victoria are often changing and, if you're on the body corporate committee or simply an owner in a strata property, it can be hard to keep up - especially when it comes to insurance. And that's where Flex Insurance can help.
We're experts in strata insurance in Victoria, because strata insurance is what we do. So, we can make sure your body corporate / owners corporation is covered for everything it needs, including tailored additional cover that meets your needs perfectly.
But first, let's look at some of the key strata laws in Victoria that every body corporate / owners committee needs to be across.
Timeline - Owners Corporations Act 2021
The Owners Corporations and Other Acts Amendment Act 2021 was introduced as a bill into parliament in 2019 and passed in 2021, with most of the requirements starting from 1 December 2021. It amends sections of three existing Acts: the Owners Corporations Act 2006 (the OC Act), the Retirement Villages Act 1986, and the Subdivision Act 1988.
Basic rules and responsibilities
If you're on an owners committee in Melbourne or regional Victoria, then it is important that you know your obligations under the different laws that deal with owners corporations (also known as body corporates).
The Owners Corporations and Other Acts Amendment Act 2021 and Owners Corporations Act 2006 in particular, deal most extensively with committees and body corporates.
Owners Corporations and Other Acts Amendment Act 2021
Things to look out for
From December 2021, the amendment Act brings in a number of major changes to the way owners corporations in Victoria are run, the responsibilities they have, and the rights they can enjoy. Key features in the amendments include:
- Tiers. Owners corporations will be in a specific tier based on the number of units under the strata scheme, (from Tier 1 with 100 or more lots down to Tier 5 with only 2 lots). Make sure you know what tier you're in, as each tier has different responsibilities, with higher tiers having more obligations.
- Insurance. Building and public liability insurance remains compulsory for all owners corporations. However, owners corporations can now apply a special levy to cover strata insurance needs including claims' excesses, or changes to insurance policies.
- Maintenance plans. Tier 1 and Tier 2 corporations will be required to have a written maintenance plan in place. For Tiers 3, 4 and 5 these plans aren't compulsory but are highly recommended.
- Financial records. Higher tiers must keep detailed financial records. For Tier 1, they must be independently audited, for Tier 2 they must be checked by a chartered accountant, while Tier 3 must present them at the AGM.
- Inaugural meetings. There is now an obligation for developers to provide certain documents to the inaugural committee of the corporation, including maintenance plans and manual, a register of assets, and all warranties, reports, certificates, compliance documentation, approvals and permits etc. These should be readily handy when tailoring the right insurance cover for your property, or if you need to make a claim.
Owners Corporation Act 2006
In addition to the above amendments, the original OC Act and its regulations (both of which are still in force) aim to provide greater clarity around the management of owners corporations.
This includes who is responsible for what in a strata property and the things that owners corporations are legally required to do - such as taking out strata insurance.
The Act covers a huge range of topics, such as:
- Setting up an owners corporation and management committee
- The constitution of the corporation
- Compulsory building and public liability insurance
- Strata meetings and AGMs
- Functions, obligations and responsibilities of the owners corporation
- Appointing external strata managers
- Financial management and responsibility
- Property and asset management
- Functions and responsibilities of building managers
- Making and enforcing by-laws
- The levels of consent owners need to get to make 'cosmetic' or 'minor' changes to their property
- Responsibility for building repairs and defects
- Disputes and how to resolve them
Retirement Villages Act 1986
The Retirement Villages Act was introduced in Victoria in 1986 to explain and protect the rights of residents and prospective residents of retirement villages. The Owners Corporations and Other Acts Amendment Act 2021 amends the Act slightly, to give retirement village residents the power to elect their own residents' committee. It's important to note that some parts of the Retirement Villages Act do not apply to strata schemes.
Subdivision Act 1988
In addition to setting out procedures for subdividing and consolidating land or buildings, the Subdivision Act 1998 also contains sections that deal with the management of common property and the constitution and operation of body corporates. In 2021, the Owners Corporations and Other Acts Amendment Act included amendments that specify how lot liability and entitlement must be allocated.
Still not quite clear?
The way laws are written can often be hard to understand , but if you have an external strata manager, they should be able to advise you further as they are experts in Victorian strata laws and regulations. If you don't have an external strata manager, getting advice from a solicitor specialising in property law may be a wise investment.
A wise first step...
Taking out the correct strata insurance is an important and valuable first step to take. But not all insurers know the unique (and sometimes confusing) features of Victorian strata laws. That's why it makes sense to chat to an expert at Flex Insurance, because we are strata and owners corporation insurance specialists. It's our key focus, so we make sure you'll have the right strata cover, for the right price, and flexibility to add extra cover if you need. Or you can call your broker if you prefer.
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References - original legislation:
Owners Corporations and Other Acts Amendment Act 2021
Owners Corporation Act 2006
Retirement Villages Act 1986
Subdivision Act 1988