Question: Do all OC’s need to have a valuation done if they have not had one in the last 5 years? If not, are they in breach of the act?
Does the new legislated requirement in Victoria for Owners Corporations with 3 or more lots that came in on 1 December 2021 require them to conduct an Insurance valuation at least every 5 years?
Should all OC’s that have not had a valuation at all or in the last 5 years have one over the next few months?
Is there an amnesty/indulgence period allowed or does it mean that every OC that has never had a valuation and doesn’t have one before 1 December 2022, is in breach of the act?Answer: All OC’s that have not had a valuation at all or in the last 5 years should immediately obtain a valuation.
Those subsections were in fact unchanged by the Owners Corporations and Other Acts Amendment Act 2021 which commenced on 1 December last year.
An exception was introduced by that Act. It is encapsulated in the notation to subsection (1): A tier five OC is exempt from compliance with s.65.
A tier 5 OC is defined in s.7(6) of the Owners Corporations Act 2006 (OCA) as:
a. an owners corporation for a 2-lot subdivision; or
b. a services only owners corporation.
A services only OC is defined in s.3 of the OCA as meaning an OC for a subdivision that has no land or building that is designated as the common property and either—
a. the initial owner of the subdivision has arranged for a utility company to install common meters that are designated as the common
b. the subdivision has a common supply or common service that is unmetered.
Doubtless, that is the basis of your observation regarding OCs with 3 or more lots.
And so, as subsections (2) and (3) are not new there is no transitional provision proving any amnesty. The requirement to obtain a valuation has in fact existed since the OCA first came into operation on 31 December 2007.
There is no prescribed penalty for non-compliance with the obligation to obtain a valuation, but the importance of having an indemnity sufficient to do the following (required by s.59 of the OCA) can scarcely be overstated:
· the cost necessary to replace, repair or rebuild the property to a condition substantially the same, but not better or more extensive than its condition when new; and
· the payment of expenses necessarily and reasonably incurred in the removal of debris and the remuneration of architects and other persons whose services are necessary, being incidental to the replacement, repair or rebuilding of the damaged property.
· reinstatement and replacement of the OC’s portion of any shared services.
In short, I agree that all OC’s that have not had a valuation at all or in the last 5 years should immediately obtain a valuation.
Tim Graham
Bugden Allen Graham Lawyers
