Shopping for an Owners Corporation Manager is the easy part. It is the juggling act of maintaining your vision as a Developer whilst continuing to act in the best interests of the Owners Corporation that can at times prove challenging.
In an attempt to create further transparency between the Developer and their nominated Owners Corporation Manager, and to clarify the expectations of a Developer, various amendments to the Owners Corporation Act 2006 will take effect from 1 December 2021.
The Amendment Act received Royal Assent on 23 February 2021 and will take effect from 1 December 2021.
What are the main changes?
- Five Tiers – To allow for further regulation and streamlining of Owners Corporations, there will be five tiers of Owners Corporations that will be based on the number of residential lots within a development, each with differing obligations and potential exemptions.
- Extended Obligation Period – Developers will have an obligation to act in the best interests of (by acting honestly and in good faith and with due care and diligence) the Owners Corporation for a period of 10 years after registration of a plan of subdivision, rather than 5 years.
- Disclosure Requirements – At the first meeting of an Owners Corporation, Developers will be obliged to disclose to the members their relationship with the Owners Corporation Manager and any financial transactions and/or benefits that will result from this relationship. Further, along with the provision of an initial budget by the Owners Corporation that is neither unreasonable nor unsustainable, Developers must provide various additional documents at the first meeting (such as copies of permits and orders, and details of warranties etc).
- Appointment of Manger – Developers must not initially appoint themselves or their associates as the Owners Corporation Manager and if they hold a majority vote amongst the owners of the lots, they must not cast a vote in respect of resolutions regarding defects. Further, the appointment of any Owners Corporation Manager must not exceed a term of 3 years and Developers cannot receive any payment from the Owners Corporation Manager with respect to their appointment.
- Annual Fees – If the Owners Corporation has incurred additional costs due to a lot owners use of the lot (such as excess repair costs) and the set annual fee does not adequately cover these costs, an additional annual fee, including additional fees for excess insurance claims, can be levied by the Owners Corporation.
- Interim Resolutions – Owners Corporation Managers will be able to pass ‘interim resolutions’ in instances where there are no votes against a resolution but a special resolution is unable to be passed (due to low attendance at meetings).
- Common Seal – A common seal is no longer a requirement of an Owners Corporation and signatures from at least two separate lot owners will suffice.
How will this affect you?
Whilst these changes will not drastically change the relationship between the Developer and the Owners Corporation, Developers must be aware of their additional obligations under the Amendment Act and continue to act honestly and in the best interests of the Owners Corporation in accordance with the Act.
Need assistance preparing for these changes or require advice regarding your development? Feel free to contact our office.