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QA Does the Owners Corporation Committee have power to reduce levies for a particular Lot?

Question:

A landlord has suffered loss of rent due to repairs to common property. Does the OCC have the power to reduce that lot’s levies by the amount of the lost rent? Could an OCC pass a motion in favour of reducing a particular lot owner’s levy for a fixed period? Authorised works are being conducted on a lot owner’s property. The works have resulted in loss of rental to the landlord. The landlord is looking for the OC fees to be reduced by the amount of the lost rent. Does the OCC have the power to reduce the levy or would an Extraordinary General Meeting be required?
 
Answer:

The committee does not have a legal power to reduce an owner’s levy contribution  

In Victoria, the committee does not have a legal power to reduce an owner’s levy contribution.

That said, it is lawful for the committee to pass a resolution that the OC would provide a credit to the owner’s account as a result of the circumstances described, being loss suffered by the owner caused by the OC to the owner’s property. Alternatively, the committee could decide to pay the owner cash for the loss the owner has suffered.
 

Rochelle Castro
RC & Co Lawyers


 

 

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Sharing cost of building insurance

How do I find out who owns the other unit in our duplex so we can share the cost of our building insurance?

 

I own a duplex. We have always divided the building insurance for the duplex between both owners. A few years ago, I put my unit up for rent. As I no longer live at the address, I’ve only just discovered that my next-door neighbour sold their unit and the new owner rents out their property as well. Our renewal for building insurance is due and I am trying to locate the details of the new owner.

Is there some way to find out who owns the property so I can contact them about the insurance? In the meantime, what do I do to ensure the property is sufficiently insured?
If I pay the insurance in full, how do I recover the proportion owed by the other owner?
 

Do a Land Titles Search.

 

The best way to identify the owner of a property is to do a Land Titles Search. A title search shows the information held in the Victorian Register of land at the time the search is made. This includes registered proprietors’ names and addresses, mortgage details and information about other encumbrances affecting the land. There is a cost to undertaking a search.

Land Victoria holds this information and manages the process. For information on how to do a Land Titles Search go to Land Victoria’s website and follow the link: Find land title information.

Alternatively, you could approach the tenants or the real estate management agent and ask them for them to pass on a message to the owners explaining that you would like to contact them.

Regarding insurance, as the owner of a duplex you are part of a two lot or Tier Five Owners Corporation, which is exempt from many of the legislated requirements of more complex owners corporations, including the requirement to take out reinstatement and replacement insurance or public liability insurance. This means that there is no obligation on owners to take out insurance and therefore no avenue for you to recover any money that you choose to spend on joint insurance.

Nevertheless, it is a good idea to take out joint insurance where you share any common property, such as a shared wall, shared driveway or shared services. Joint insurance in such circumstances is generally cheaper than individual insurance. Also, where you insure individually, it can be difficult to get coverage for those shared areas. However, if you cannot contact your neighbour or they choose not to take out joint insurance, you should discuss with your insurance broker about insuring your own property.
 

Gary Howell | MBCM Strata Specialists
 

 

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QNA Cost in Lot Entitlements


29 Nov 2022

Question: What would the estimated range of costs be for changing lot entitlements in a strata scheme?

I have a query relating to the process for changing lot entitlements in a strata scheme. I have read the details relating to the Act as to the various considerations in how lot entitlements could be calculated, the need for consensus (or VCAT) if not.

My query specifically relates to the legal process to re-evaluate and hence the types of costs we might incur in going down this path. I believe all owners will be agreeable but also understand it has to be done legally and registered with the appropriate authorities before any strata fees can be re-calculated.

Do we have to engage a surveyor to come on site and measure up or can they work from amended plans of subdivision etc or can we simply tell a strata lawyer how the entitlements should be split in future (with agreement by all owners) and have that drawn up to accommodate the legal registration process?

What is the estimated range of costs we should anticipate for such a process? We are a strata of 8 townhouses.

Answer: The costs of applying to VCAT will ultimately depend on the time spent. The major factor which will affect that variable is whether the proceeding is undefended or (seriously) defended.

Under s.32(k) of the Subdivision Act 1988 if there is a unanimous resolution of the members, an OC may proceed to create, alter or extinguish lot entitlement or lot liability in any way necessary.

If a unanimous resolution is not sought or obtained:

1.     Under s.34D(1)(a) and (2) a member, the OC, an administrator or a person with an interest in the land affected by the OC may apply to VCAT for an order requiring the OC to do any of the things set out in s.32 – including removal of the height limitation
– even though there is no unanimous resolution of the OC authorising the action. If the OC is to be the applicant a special resolution is required to authorise the proceeding under s.18(1) of the Owners Corporations Act 2006; and
2.     Under s.34D(1)(b) and (3) a member, the OC, an administrator or a person with an interest in the land affected by the OC may apply to VCAT for an order consenting on behalf of a member or group of members of an to the doing by the OC of any of the things set out in s.32. VCAT must be satisfied that satisfied that—

a.     the member or group of members cannot vote because the member is or the members are dead, out of Victoria, or cannot be found; or
b.     for any other reason it is impracticable to obtain the vote of the member or members; or
c.     the member has or members have refused consent to the proposed action and—

 i. more than half of the membership of the OC having total lot entitlements of more than half of the total lot entitlements consent to the proposed action; and
 ii. the purpose for which the action is to be taken is likely to bring economic or social benefits to the subdivision  as a whole greater than any economic or social disadvantages to the members who did not consent to the action.

The leading case on point is Conroy v Owners Corporation Strata Plan 30438 (Owners Corporations) [2014] VCAT 550 (23 May 2014) in which I acted on behalf of the successful Applicants. The applicants proceeded under s.34D(1)(a) to amend the schedules of entitlement and liability on the basis they were unfair. The application did not proceed under s.34D(1)(b) and no effort was made by the applicants to meet the criteria imposed by subsection (3). An owner who stood to losing lot entitlement and accrue additional lot liability opposed the application on the bases including that subsection (1)(b) took primacy over subsection (1)(a). VCAT, constituted by the President, His Honour Garde J, allowed the application to proceed and it was ultimately decided in favour of the applicants (see Conroy v Owners Corporation SP 30438 (Owners Corporations) [2014] VCAT 1413 (12 November 2014); The Concept Developer Pty Ltd v Conroy & Ors [2015] VSC 464 (14 September 2015)).

The VCAT application may be made by:
·        A member (or members) of the OC;
·        the OC (however a special resolution may be required);
 an administrator;
·        or a person with an interest in the land affected by the OC (which probably means mortgagees; possibly insurers).

However, the Land Registry will not register the amendment without the consent of all mortgagees of lots in the strata plan. Mortgagees will need to make their duplicate Certificates of Title available. All financiers have different requirements, which may include application fees, valuations and other matters. Mercifully, VCAT may make an exempting order under s.34D(1)(c) and (5) dispensing with the requirement for mortgagees’ consents. That will overcome difficulties you may encounter in mobilising owners to cause their mortgagees to consent to the amendment. VCAT will waive mortgagees consents if it is satisfied that—

a.     the person whose consent is required is dead or out of Victoria or cannot be found; or
b.     it is otherwise impracticable to obtain the person’s consent; or
c.     it is impracticable to serve the person with the notice under section 22(1B) of the Subdivision Act (namely mortgagees, registered lessees, annuitants and caveators).

In Real Estate Victoria Pty Ltd v Owners Corporation No 1 PS332430W [2021] VSC 373 (REV decision) Her Honour Justice Richards declined to follow Conroy. In Conroy, His Honour Justice Garde decided that the application may be brought under s 34D(1)(a) of the Subdivision Act need not be made only under s 34D(1)(b) of the Subdivision Act. However, in REV, Her Honour disagreed and stated as follows:

[59] I have concluded that, in the absence of a unanimous resolution of members, s 34D does not empower the Tribunal to make an order requiring an owners corporation to apply to the Registrar under s 33 to alter lot entitlement or lot liability unless the requirements of s 34D(3) are met. Regretfully, I am unable to agree with Garde J’s analysis of the provision in Conroy. This is largely due to two subsequent decisions of the High Court.

[85] As a result, the Tribunal cannot make an order under s 34D(6) requiring an owners corporation to apply to the Registrar under ss 32 or 33 to alter a plan of subdivision on an application under s 34D(1)(a), if there is not a unanimous resolution of the members, without also making an order consenting on behalf of the members who did not vote in favour of the resolution. In order for the Tribunal to make the latter order, it must be satisfied of the relevant conditions in s 34D(3).

And so, since the REV decision, it is necessary to meet the criteria of s.34D(1)(a) and (b).

The costs of applying to VCAT will ultimately depend on the time spent. The major factor which will affect that variable is whether the proceeding is undefended or (seriously) defended. By “seriously” I mean that the contradictors commit resource to legal representation, engaging experts etc. A precise cost estimate should be requested from your lawyer based on the discrete facts of your case.

Tim Graham
Bugden Allen Graham Lawyers