The upcoming changes to the Owners Corporation Act will place some new and increased obligations on property developers.
To enhance transparency between the developer of a property and the Owners Corporation Manager for that property, the Victorian Government has made a series of amendments to the Owners Corporation Act 2006. These acts will take effect from 1 December 2021.
Another purpose of the changes to the Act is to clarify the expectations on a property developer in relation to any property they develop.
Tiered Owners Corporations
In future, Owners Corporations will defined into five tiers based on the number of residential lots within the development. Each of these tiers will have different obligations and potentially, some exemptions dependent upon the size of the Owners Corporation. Essentially larger Owners Corporations must prepare a Maintenance Plan and strike levies to ensure the Maintenance Plan can be paid for.
Property Developer Obligation Period
Developers will have their obligations to “act in the best interests of (by acting honestly and in good faith and with due care and diligence) the Owners Corporation” increased from 5 years to 10 years after registration of a plan of subdivision.
Appointment of Manager
A property developer may not appoint itself or any associate as the manager of the owners corporation on any property it has developed. Further, it may not appoint any Owners Corporation Manager for any period of more than 3 years and must not receive any payment from the Owners Corporation Manager with respect to their appointment.
A property developer who holds a majority vote within the relevant Owners Corporation may not vote on any resolution pertaining to defects on the property.
A property developer must disclose to the members of an Owners Corporation their relationship with the Owners Corporation Manager they have appointed and any financial transactions and/or benefits that may receive at the first meeting of the Owners Corporation. They must also include a realistic and sustainable initial budget as well as any other documents which are relevant to the owners corporation such as warranty details, permits, legal orders et al.