Every owners corporation in Victoria sits in one of five levels, yours included. Most owners haven’t heard of them and some owners find out when their building misses an audit they felt wasn’t needed.
Owners cooperation’s tiers didn’t just appear out of nowhere. They came in quietly back in December 2021, and each tier states the conditions your building needs to meet and those it can skip. Continue reading to know where you stand.
First Things First: What’s an Owners Corporation?
An owners corporation means the owners of a building. These persons are responsible for taking care of certain bits of the property. This includes the lifts, gardens, and the driveway.
If there’s “common property” stated on your plan of division, you’re in an owners corporation. There’s no place to sign-up, your presence follows the title.
5 Owners Corporation Tiers in Victoria
Now’s the perfect time for you to grab your plan of subdivision and count “occupiable lots.” All flats, shops, and offices count. However, car parks and storage spaces don’t count, even if they were sold for the price of a small flat.
Quickly, let’s see what tiers exist alongside their occupiable lots:
| Tier | Number of Occupiable Lots |
| 1 | More than 100 |
| 2 | 51 to 100 |
| 3 | 10 to 50 |
| 4 | 3 to 9 |
| 5 | A 2-lot subdivision or a “services only” owners corporation (i.e., shared water pipes but nothing else) |
Counting is easy. You’d find that most apartment towers in Melbourne fall under tier 1 or 2. On the flip side, suburban blocks of flats are usually grouped into tiers 3 or 4.
The Big Question: What Does Your Tier Change?
The tier you’re in changes three things: money, maintenance, and people.
Money
Tiers 1, 2, and 3 must prepare financial statements on a yearly basis and present them at an Annual General Meeting (AGM). How much checking a statement needs depends on the tier they fall under.
Tier 1 statements are audited by an independent body. Tier 2 statements need an external audit; however, they’re lighter compared to tier 1 audits. Tier 3 can table their original statements without being subject to external audit.
That said, tier 4 only prepares statements in the years where it collects fees. In tier 5, paperwork isn’t necessary.
Maintenance
Tier 1 and 2 buildings need to have a maintenance plan backed by proper funding. Smaller buildings can decide between themselves, and we’d suggest they do.
Why? We’ve seen beautiful buildings run great for 10 years. But in the 11th year, the roof, pumps, and intercom decide to quit when winter rolls around. When there’s no fund set aside to fix this, repair money needs to be sourced quickly.
The only ways to come up with this emergency fund is either via a strata loan or a special levy; this is a one-off bill that lands on every owner and is announced during a tense meeting.
Going this route is a last resort and a route to tell owners that planning costs little but the absence of a plan is expensive. Speaking of plans, no individual in the corporation is mandated to draft one.
People
Tiers 1 to 3 have to elect a committee at each AGM. This committee has between 3 to 7 members. The remaining tiers can have a committee if they want to, but it’s optional and not compulsory. Tier 5 can decide not to have a chairperson or secretary.
Bigger Building, Bigger Load
Running a tier 1 or 2 building is difficult. Even a tier 3 can stir off stuff a committee doesn’t expect. This isn’t surprising, as most people in an owners corporation just want to approve that weird gardening quote and not run a side business.
That’s where Above OCM comes in. Our Chartered Accountants can handle the finances big buildings must get right. This is work worth doing well, and cutting corners will only lead to more expenses.
Don’t Know Where You Sit?
Just count your occupiable lots and check out the table in this article. If you’d rather get your count done right with a pro in the picture, reach out to us via email or phone. We’ll give you the answers you need, no hard sell attached.
Your building deserves all the care in the world. It doesn’t matter what level it’s in.
