Owners corporations must maintain common areas. The corporation’s powers may be delegated to a manager or chair or secretary. It may lease or licence parts of the common property. Prospective buyers must receive owners corporation certificates. Two-lot subdivisions are exempt from many of the requirements. The subdivision plan decides the boundaries for who pays for repairs. Implied easements restrict what owners may add to the building. Reinstatement and replacement insurance is required for shared services. Annual general meetings must not be more than 15 months apart and matters to cover are set by law. Un-financial lot owners are ineligible to vote. Power of attorney can only be held by a family member of a lot owner. The dispute resolution provisions of the Owners Corporations Act 2006 (Vic) are complex. Complainants may seek conciliation or mediation from Consumer Affairs Victoria. VCAT may determine disputes.

Contributors

Norman Mermelstein

REIV Accredited Owners Corporation Specialist

Neville Sanders

REIV Accredited Owners Corporation Specialist

Managers of owners corporations

Last updated

1 July 2020

Registered and volunteer owners corporation managers

A manager of an owners corporation who receives a fee or reward must be registered (s 119). The penalty for non-compliance is 60 penalty units (pu) (from 1 July 2020 to 30 June 2021, the value of one pu is $165.22) (s 178). A registered manager must:

  • pay an annual registration fee to the Business Licensing Authority (s 183);
  • act honestly and in good faith in the performance of the manager’s functions;
  • exercise due care and diligence; and
  • not make improper use to gain an advantage personally or for any other person (s 122(1)).

A volunteer manager has similar immunity to a committee member (s 123). Such immunity may be viewed as alleviating the need to have office bearers’ liability insurance, although the prospect of funding a legal defence is a consideration.

Reporting requirements

The manager of an owners corporation must submit a report of the manager’s activities to each AGM, including details of professional indemnity insurance held (currently $2 million) (s 126). Records must be returned, not merely made available for collection, within 28 days of the manager’s appointment being terminated (s 127) even though fees to the manager may remain outstanding.

If the manager does not comply with section 127, the owners corporation must commence legal proceedings against the manager. To do this, 75 per cent of the owners corporation members must agree to a special resolution (s 18). Achieving this may be difficult considering the manager holds the records of the names, addresses and contact numbers of the owners corporation members. Therefore, in such circumstances, VCAT allows a single member to make an application on behalf of an owners corporation under section 165(1)(b).

Dismissing an owners corporation manager

Under section 119(6), an owners corporation can dismiss a manager. Once the manager’s appointment is revoked – even if the term of employment has not ended – there is an absolute obligation under section 127 for the manager to return funds and records within 28 days. A committee may dismiss a manager unless the owners corporation decides that the manager can only be dismissed at a general meeting (see s 82). Any term in the manager’s employment contract stating that the decision to dismiss a manager can only be made at a general meeting is invalid under section 202 because it excludes, modifies or restricts the operation of the OC Act.

When a manager is dismissed before the end of the term of their employment, the manager may be able to sue the owners corporation for breach of contract. In such circumstances, damages are limited to the loss of profits for the unexpired term and not the agreed fee for that period.

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