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Q&A Roof Replacement

Question:


The property is commercial. There are 4 units in the building. I own 1 unit representing 25% share allotment. Another owner also owns one unit , being 25% share allotment. Remaining 2 units owned by a charity organization, government funded ,representing 50% share allotment. Problem with roof leaking. Owner of the 2 units with unlimited funding and 50% share allotment wants a new roof at cost in excess of $250,000. Myself and the other owner want to repair the roof by a registered professional at a cost of $35,000. Together we have a 50% share allotment. Therefore, a stalemate exists. 2 votes versus 2. 
 
Can we be forced into paying the high cost of roof replacement rather than repair cost. There is no sinking fund.

 

Answer:


If the roof is considered common property in accordance with the Plan of Sub-division, the Owners Corporation has an obligation to repair and maintain it. Notwithstanding, if the replacement cost of $250,000 is more than twice your Owners Corporations’ annual budget, then a Special Resolution would be required to raise levies for this amount.
 
A Special Resolution requires 75% of owners to be in agreement, and therefore, with consideration to the lot liability and entitlement, yourself and the other single lot owner would formally be able to object or withhold your permission to grant the Special Resolution. If you have obtained reports and quotations stating the roof can be repaired,  then there is no reason why the other lot owners would not consider your proposal for repair with a professional registered contractor.
 
Further, a Special Resolution will be required even if $250k is not more than twice the annual fees provided that a building or planning permit is required for the replacement option, and provided that repair rather than replacement is a possibility.
 
Finally, if no permit is required and the amount is less than twice the annual fees (so an ordinary resolution is only needed), the stalemate is determined by the chairperson casting an extra vote.

Vanessa Bucci
Managing Director
MBCM Bayswater & Ringwood



 

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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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Duties of Small Owners Corporations


10 May 2022

Question: For a small 4 unit strata scheme, are we legislated to hold AGMs or carry out any other activities in terms of the owners corporation?


We’ve bought a unit in a 4 unit strata complex in Northern Melbourne. The only common property is the driveway and the only expense is the strata insurance policy covering all 4 units.

Are we legislated to hold AGMs or carry out any other activities in terms of the owners corporation?


Answer: We recommend that your Owners Corporation at least hold an annual general meeting resolving to raise a budget to cover the common driveway and strata insurance expenses.


The Owners Corporations Act 2006 (Act) requires that the Owners Corporation pass resolutions when it takes actions. Passing resolutions and recording them through meeting minutes or ballot results record the decision of your Owners Corporation when it raises funds for expenses each year.

Further, an Owners Corporation is only capable of making legal decisions and validate its actions when it passes resolutions.

Therefore, at a minimum we recommend that your Owners Corporation at least hold an annual general meeting resolving to raise a budget to cover the common driveway and strata insurance expenses.
 

Rochelle Castro
RC & Co Lawyers