The Owners Corporation (OC), formerly a ‘body corporate’ in Victoria, is responsible for maintaining and upgrading common property, such as entryways, elevators, and external cladding.
Maintenance and upgrades have distinct legal differences, with each requiring unique approval processes and funding mechanisms.
In this post, we’re looking at what sets maintenance and upgrades apart in the owners corporation maintenance realm, and what’s required to get the ball rolling on each.
What is OC maintenance?
OC maintenance refers to the repair, upkeep, and preservation of existing common property. Consumer Affairs Victoria divides OC maintenance into three types:
- Corrective: Maintaining the property at an acceptable standard, such as clearing gutters, trimming hedges, and changing light bulbs.
- Predictive: Preventing predictable failures of components or infrastructure with a known lifespan, such as replacing elevators due to wear and tear.
- Emergency: Urgent repairs for health, safety, or security reasons, such as post-storm roof repairs.
Under the Owners Corporations Act 2006, an OC has a legal obligation to maintain common property, including:
- Gardens and nature strips
- Fittings and fixtures
- Equipment and services
- Roofs, external walls, foundations, and balconies
- Hallways, elevators, and driveways
- Piping, wiring, and utilities
Maintenance works are typically approved via standard committee actions, with no majority vote required. Funding normally comes from routine annual fees, which are allocated according to lot liability.
Does my OC need a maintenance plan?
A maintenance plan outlines all common property that requires repair or replacement over the next decade. The document should contain details on each component, including:
- The current condition
- When the repair or replacement is expected
- Its expected cost
- The expected lifespan of the newly replaced component
Tier 1 (100+ occupiable lots) and Tier 2 (51-100 lots) OCs are legally obligated to have a maintenance plan. Tier 3 (10-50 lots) and Tier 4 (1-9 lots) OCs don’t have any legal requirements, but are often recommended to create a plan anyway.
If your OC does have a maintenance plan, it must also have a maintenance fund to cover the associated works, and must report on plan implementation at each Annual General Meeting (AGM).
What do upgrades mean in Owners Corporation Management?
In Owners Corporation Maintenance, common property ‘upgrades’ refer to building works, renovations, or improvements with an estimated cost exceeding double the annual OC fees, or that require building or planning permits.
As upgrades are costly and cumbersome, the OC must first pass a special resolution at a general meeting. This high-level threshold requires at least 75% of the total lot entitlements (or total votes) to pass.
A special resolution is not required for upgrades outlined in an approved maintenance plan. Exceptions may also exist when there are reasonable grounds to suspect an urgent alteration is needed for safety or to prevent significant damage to common property.
How are upgrades levies divided in a Victorian OC?
With upgrades potentially costing more than double your annual fees, they can understandably cause substantial financial strain.
In Victoria, the levies for upgrading common property are based on lot liability, meaning each lot owner pays a sum proportional to the size and value of their lot.
However, when upgrades benefit one or some lot owners solely or substantially, the fees may be structured so that the lot owners who benefit the most will pay the most. This distribution method is widely known as the ‘benefit principle.’
When can an OC upgrade or alter common property?
There are limited situations in which an OC can make significant alterations to the aesthetics or functionality of common property. Any alterations must be:
- Detailed in an approved maintenance plan; or
- Approved as an upgrade by a special resolution in a general meeting; or
- Based on reasonable grounds to prevent risks to safety or significant loss from damage
When can an OC repair common property?
An OC has the power to undertake reasonable repairs whenever common property is damaged, begins to wear out, or becomes unsafe.
Emergency repairs generally happen immediately, or as soon as there is no longer any risk to health or safety. For example, an OC Committee might organise a tradesperson to come and patch up roofing as soon as a storm subsides.
Routine maintenance typically occurs on a predetermined schedule, ideally one outlined in a maintenance plan.
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