Lot Owners’ frequently asked questions

WHAT IS A GENERAL MEETING

An Annual General Meeting (or AGM) of the owners is annually convened to decide how the Owners Corporation is to operate during the following year. The AGM is held once a year usually around 90 days after the financial year end and at least 15 months from the date of the previous AGM. The legislation requires that a notice must be sent to all owners at least 14 days prior to the meeting date.

WHAT IS AN OWNERS CORPORATION MANAGER

The management company appointed to manage the affairs of the Owners Corporation is usually delegated certain functions. The Owners Corporation manager is an administrator who is typically responsible to carry out the administrative, secretarial and financial management of the Owners Corporation and assist with Legislative compliance. Unless specifically stated, the Owners Corporation manager is not a facilities manager, a property manager or a project manager.

WHAT IS COMMON PROPERTY

This is the area of the building or land around it that does not form part of any private lot which is either common or shared and jointly owned by all lot owners.

WHAT IS A COMMON SEAL

The owner’s corporation has a corporate or company seal that is typically affixed whenever the Owners Corporation executes a document like a contract.

WHAT ARE RULES OR BY-LAWS

These are a set of rules or by-laws adopted by the members of an Owners Corporation which all residents are required to abide by or adhere to. The rules can only be changed or amended at a general meeting of the Owners Corporation by passage of a Special Resolution to do so.  The legislation has provided a set of Model Rules that apply in the absence of specifically adopted rules. In order for the rules to be binding, they must be registered with the land title’s office.

WHAT IS COVERED IN THE BUILDING INSURANCE

The entire building structure including all permanent common fixtures and fittings and any approved permanent structural lot improvements. The policy usually also includes public liability insurance for accidental injury or death on the common property of the owners corporation. The Owners Corporation insurance does not cover internal lot or personal contents or landlord’s insurance

WHEN SHOULD WE GET A VALUATION FOR INSURANCE

This is reviewed and decided upon by members annually at the AGM in accordance with the Owners Corporation ACT typically every 4 to 5 years.

WHAT IS A CERTIFICATE OF TITLE

A deed issued by the Land Titles Office of Victoria to prove ownership of a lot.

WHAT IS AN OWNERS CORPORATION CERTIFICATE

These are certificates provided by lot owners intending to sell their lots. Lot owners who are selling are required by law to disclose to the potential buyer certain information about the unit being sold including levy contributions, the building’s financial solvency and other information that could affect the new buyer if they decide to buy within an Owners Corporation. These certificates have different names in other states.

WHO PAYS FOR AN OWNERS CORPORATION CERTIFICATE

The person or entity requesting for the certificate is usually responsible to pay for it. The amount charged for this is usually set out in the management agreement.

WHAT IS AN OWNERS CORPORATION REGISTER

This is a register of the owners for each lot in the Owners Corporation, and other specific information usually retained as part of the Owners Corporation records.

WHAT IS A PROXY

A person appointed in writing by an owner to attend an Owners Corporation meeting and vote on that owner’s behalf.

WHAT IS A RESOLUTION

This is any decision made or motion passed at a meeting or postal ballot by the majority of owners or the committee.

WHAT IS A SPECIAL RESOLUTION

This is any decision made or motion passed at a meeting or postal ballot which requires the approval of a 75% majority of members who are eligible to vote.

WHAT IS A QUORUM

Before any motion can be voted upon at a general meeting, a quorum must exist, i.e.

50% of members entitled to vote or members holding 50% of lot liabilities entitled to vote (financial at the time of meeting) must be present at the meeting to form a quorum. At committee meetings, a quorum is constituted when half of the members are present. When there is no quorum, the decisions made at any meeting are interim decision which can be challenged by 25% of eligible voters within 28 days in accordance with the Owners Corporation Act 2006. After 28 days if interim decisions are not challenged they become effective. This requirement is different in other states.

WHAT ARE CONTRIBUTIONS / FEES / LEVIES

These are terms used to refer to monies paid by lot owners to the Owners Corporation account for the repair and maintenance of the common and shared property and for the day to day administrative costs of operating the building. Owners Corporation fees are usually paid according to lot liability as required by the ACT.

WHAT IS LOT LIABILITY / LOT ENTITLEMENT

Each lot is given a “lot entitlement” and a “lot liability” which are clearly defined on the strata plan. The total amount of liabilities allocated to each lot in the building determines how much fees lot owners pay to the Owners Corporation. Levies or fees payable by owners to the Owners Corporation are calculated on the basis of lot liability and the amount of lot liabilities vary depending on a number of factors, i.e. the value of the lot at the date of registration of the strata plan when the building is constructed. The amount of lot entitlements allocated to each lot determines the voting rights of that lot owner at meetings.

HOW ARE LEVIES CALCULATED

The Owners Corporation levies or fees are based on an annual budget approved by the lot owners at the AGM based on anticipated expenses of the owner corporation for the following year. The fees include expenditure for items like maintenance contracts, insurance, cleaning, gardening and other anticipated expenses during the year in order to maintain and manage the common and shared property. The amount payable by each lot owner is calculated based on the total lot liabilities allocated to each lot in accordance with the plan of subdivision.

WHAT IS AN ADMINISTRATIVE FUND

This relates to levies or fees collected from lot owners to cover day-to-day expenses of the Owners Corporation, like the common electricity, gardening, insurance and other routine repairs and maintenance of common and shared property.

WHAT IS A MAINTENANCE FUND

This relates to levies or fees collected from lot owners under a fund dedicated and usually prescribed to cover capital expenditure and the long term structural repairs and maintenance of a building, like lifts, underground pipes, painting, stairwell roof walls doors and windows. Levies or fees under this fund are calculated based on the stipulations outlined in an approved maintenance plan of the Owners Corporation.

WHAT IS A SPECIAL LEVY

A lump sum one off contribution by lot owners to cover either unplanned or underestimated expenditure.

WHAT IS CONSUMER AFFAIRS

This office is part of the Department of Justice and provides various services and assistance with strata matters. It also provides a mediation and adjudication service program to assist in dispute resolution between members.

WHERE IS THE DUE DATE ON MY LEVY NOTICE

This is shown on the left hand side of the levy notice under DUE DATE. The due date is also noted in the AGM minutes of each AGM annually and the welcome pack for new owners.

WHEN WILL MY NEXT LEVY BE DUE

This can be varied depending on the decisions made at the previous AGM which is indicated in the AGM minutes.

WHEN DO I GET CHARGED LATE FEES ON MY OVERDUE LEVIES

Late fees are charged 14 days after the due date when a reminder notice is automatically sent to all lot owners who have not paid their levies and a second reminder or final fee notice is sent 28 days later. These fees are usually set out in the management agreement.

WHAT IS A PENALTY INTEREST

A penalty interest is also charged on overdue levies after 30 days of the due date in accordance with the penalty interest ACT when approved by members of the Owners Corporation at an AGM.

WHAT IS THE BALANCE BROUGHT FORWARD

This is usually the amount of unpaid fees that are due at the time a new levy becomes due including late fees, interest other charges.

WHO PAYS THE WATER RATE

The lot owner is usually responsible for the water rates, council rates and other utilities. Some lot owners pass on these charges to their tenants through the tenancy agreement when their lot is rented.

WHO PAYS FOR REPAIRS AND MAINTENANCE IN MY LOT

The lot owner is responsible for the repair and maintenance of their private lot. The Owners Corporation levies only cover the repair and maintenance of the common and shared property.

WHERE ARE THE ELECTRICITY AND GAS METERS

The location of these items is different from property to property. The utility companies or maintenance contractors are the best points of contact for this information.

WHERE ARE MY LEVIES GOING

The levies are determined at every Annual General Meeting by the owners who are in attendance and they are raised to pay for the annual repairs and maintenance of the common and shared property of the building like gardening and cleaning, lift and pool maintenance, common electricity and other required common services. The levies are also used to pay for the building insurance and the building manager’s fees.

WHY DO I HAVE TO PAY MORE THIS QUARTER

The Owners Corporation fees usually change every year depending on the total budget approved at the AGM. The amount that each lot owner pays depends on their lot liability and how much they have paid in previous quarters of the year. After the AGM the amount already paid is subtracted from each lot owner’s contribution and the remaining balance is usually divided equally between the remaining quarters of the year.

WHEN DOES THE WORK WE REQUESTED START

After the manager or the committee issues a work order, it is then dependent on the contractor to decide when the work starts depending on their availability schedule.

WHAT DO WE PAY THE MANAGER FOR

The Owners Corporation manager is an administrator who is responsible to carry out the administrative, secretarial and financial management of the Owners Corporation and assist with Legislative compliance. Unless specifically stated, the Owners Corporation manager is not a facilities manager, a property manager or a project manager.

MY NEIGHBOR DOES NOT STOP MAKING NOISE – WHAT CAN BE DONE ABOUT IT

When a complaint is received in the approved form, the manager is required to seek a resolution from the committee to issue a breach notice or a warning letter. If after a notice is issued and the problem still continues, the manager will refer it back to the committee who may decide to take legal action against the person who was issued the notice or warning.

WHY DOES THE OC LODGE A TAX RETURN

It is a statutory requirement to lodge a tax return if the Owners Corporation earns income other than the levy contributions from lot owners like interest on investments.

HOW MUCH DOES CERTIFICATES OF CURRENCY COST

The cost for certificates of currency can be found under additional services in the management agreement.

WHY AM I CHARGED A REMINDER FEE

This is an administrative cost to recover an unpaid debt which is approved by lot owners or the committee at an AGM.

HOW DO I GET MY REMINDER FEE OR LATE FEE REVERSED

When the manager receives request to reverse late fees the manager is required to seek approval from the committee to do so and the committee can then determine the appropriate action.

IS THERE FOXTEL OR PAID TV CONNECTION IN MY UNIT

The company that provides Foxtel or paid TV is the best point of contact for this information.

WHY IS THE OC REGISTERED FOR GST

This is a statutory requirement for Owners Corporations’ levy contributions exceed the ATO determined threshold.

 WHAT IS ADDITIONAL SERVICES

These are services provided by the manager which are not included in the standard services of the management agreement. These services are provided by the manager upon request by a lot owner, an agent or a tenant or upon instruction from the committee.