Owners Corporations in Victoria: Complete Developer's Guide to Establishment & Ongoing Management

Property developers creating subdivisions with common property in Victoria may face complex obligations that extend for up to 10 years following plan registration, with significant financial and legal responsibilities under the Owners Corporations Act 2006. Understanding how owners corporations work—from initial establishment through ongoing management—is typically considered critical for successful multi-unit development in Victoria’s rapidly expanding apartment sector.

This comprehensive guide covers what developers may need to know about owners corporations: from the five-tier classification system introduced in 2021, through lot entitlement calculations that determine voting rights and levy contributions, to first annual general meeting requirements and the extended good faith obligations that could affect development strategy and project returns.

What is an Owners Corporation?

An owners corporation (formerly known as a body corporate until 31 December 2007) is automatically created when a plan of subdivision containing common property is registered at Land Use Victoria. The owners corporation is a statutory body that manages, administers, repairs, and maintains common property for the benefit of all lot owners.

Automatic Creation at Registration

Unlike some jurisdictions where developers may choose whether to establish a community management structure, Victorian owners corporations come into existence by operation of law the moment the subdivision plan is registered. This automatic creation means developers must typically plan for owners corporation obligations well before lodging plans with Land Use Victoria.

Common Property Definition

Common property may include any land, buildings, or airspace shown on the plan of subdivision that is not defined as a lot, road, or reserve. Typical common property might encompass:

• Driveways, pathways, and landscaped gardens
• Building exteriors, roofs, and foundations (in multi-storey developments)
• Lifts, foyers, corridors, and stairwells
• Shared amenities such as pools, gyms, and recreation rooms
• Utility infrastructure serving multiple lots

The plan of subdivision definitively establishes what constitutes common property versus private lot property. This determination could have lasting implications for maintenance responsibilities and owners corporation budgets.

Victoria vs Other States: Terminology and Framework

Victoria’s owners corporation system differs from NSW’s strata schemes and Queensland’s body corporate system in several material ways:

Terminology: What Victoria calls an “owners corporation,” NSW terms an “owners corporation” (within a strata scheme), while Queensland retains “body corporate” terminology.

Tiered Classification: Victoria’s five-tier system based on lot numbers (introduced December 2021) creates proportionate compliance obligations, whereas NSW uses a simpler large scheme threshold (100+ lots) and Queensland employs five regulation modules based on scheme type.

Developer Restrictions: Victoria’s extended 10-year good faith obligation period for developers is notably longer than NSW’s two-year initial period or Queensland’s disclosure-focused requirements. This extended Victorian framework may materially affect development feasibility and exit strategies for projects where developers retain significant lot holdings.

Dispute Resolution: Victorian disputes proceed through the Victorian Civil and Administrative Tribunal (VCAT), while NSW uses the NSW Civil and Administrative Tribunal (NCAT) and Queensland maintains a dedicated Office of the Commissioner for Body Corporate and Community Management.

The Five-Tier Classification System

From 1 December 2021, all Victorian owners corporations are classified into one of five tiers based on the number of occupiable lots. This tiered approach replaced the previous “prescribed owners corporation” concept (which was based on lot numbers or annual fees exceeding $200,000) and establishes proportionate regulatory requirements.

Tier Definitions and Thresholds

A “services-only owners corporation” is one with no common property land or buildings but which manages shared services such as water, gas, sewerage pipes, electrical infrastructure, or telecommunications on common property.

What Counts as an Occupiable Lot?

The tier classification is based on occupiable lots only—car parks, storage lots, or accessory units do not count towards the tier threshold. For example, a development with 45 apartments plus 90 car park spaces would be classified as Tier 3 (based on 45 occupiable lots), not Tier 2.

Special Cases: Non-Occupiable Lot Calculations

If an owners corporation consists entirely of non-occupiable lots (such as a commercial development with only car parks and storage units), the tier determination treats references to “occupiable lots” as references to “non-occupiable lots” for classification purposes. A development with 60 non-occupiable commercial storage units would therefore be classified as Tier 2.

Developer Feasibility Implications

Tier classification may materially affect development feasibility through varying establishment and ongoing compliance costs:

Tier 1 developments (100+ lots) require professional manager appointments, annual financial audits (which might cost $5,000-$15,000 annually for larger schemes), and comprehensive 10-year maintenance plans typically prepared by quantity surveyors or specialist consultants at costs ranging from $5,000-$20,000.

Tier 2 developments (51-100 lots) face similar maintenance plan requirements but with an extended 24-month preparation timeframe and financial statement review (rather than audit) requirements that may reduce annual compliance costs by 30-50% compared to Tier 1.

Tier 3-5 developments enjoy significantly reduced compliance burdens, with discretionary maintenance plans and simplified financial reporting that could reduce establishment and ongoing administrative costs by 60-80% compared to Tier 1 requirements.

Developer Obligations: The 10-Year Framework

The Owners Corporations and Other Acts Amendment Act 2021 significantly extended and clarified developer obligations. These changes came into effect on 1 December 2021 and impose strict requirements on developers as “initial owners” of owners corporations.

The Extended Good Faith Period

Developers must act honestly, in good faith, and with due care and diligence in the interests of the owners corporation for 10 years following plan registration (extended from the previous five-year period), provided the developer owns a lot or lots with the majority of lot entitlements (not simply the majority number of lots).

This extended obligation period could materially affect:

• Development exit strategies for staged projects
• Build-to-rent feasibility where developers retain ownership
• Joint venture structures where developers maintain ongoing interests
• Subdivision staging and settlement timing

What Developers Cannot Do

During the 10-year good faith period, developers are prohibited from:

Manager Appointments: Developers cannot appoint themselves or their associates (spouses, employees, agents, or direct relatives) as owners corporation manager, except for retirement village land.

Defect Voting: Developers cannot vote on any resolution relating to building defects in or on the plan of subdivision. This restriction prevents developers from blocking or delaying defect rectification decisions.

Unreasonable Budgets: Developers cannot propose annual budgets that are unreasonable or unsustainable. This requirement aims to prevent artificially low budgets that create deferred maintenance problems.

Common Property Manipulation: Developers cannot designate as private lot property what would normally constitute common property or services. This prevents developers from avoiding owners corporation maintenance obligations through creative lot definitions.

Manager Payments: Developers cannot receive any payment from the owners corporation manager in relation to the manager’s appointment contract. This prohibition targets commission arrangements that may create conflicts of interest.

Contract Term Restrictions

Manager Appointments: If a developer appoints a third-party manager (neither the developer nor a lot owner) before the first owners corporation meeting, that contract expires automatically at the first meeting. Lot owners must then decide whether to reappoint the manager.

Other Service Contracts: Any contract (other than manager appointments) entered into by the developer that relates to the owners corporation and benefits the developer must not exceed three years in duration. This restriction applies to contracts such as:

• Building management agreements
• Embedded network provider arrangements
• Common property leases or licences to the developer or related entities
• Maintenance contractor agreements where the developer receives financial benefits

Exemptions: Hotel and resort management contracts relating to hotels, resorts, and serviced apartment complexes are exempt from the three-year contract limit, though regulations may be made in the future prescribing requirements for such contracts.

First Meeting Disclosure Requirements

At the inaugural general meeting, developers must disclose and ensure minutes record:

Relationship Disclosure:

• Any relationship the developer has with the proposed owners corporation manager
• Any immediate or future financial transactions arising from that relationship
• Any specific benefits the developer will receive from the relationship

Required Documents:

• Building maintenance manual
• Asset register documenting all common property assets and equipment
• Copies or details of all warranties (or if copies unavailable, full warranty details)
• Specifications, reports, certificates, permits, notices, or orders relating to the plan of subdivision
• Occupancy permits, fire safety certificates, compliance certificates
• As-built plans and engineering reports
• Master keys, security systems, and digital access documentation

Failure to provide required documentation or make proper disclosures could provide grounds for VCAT applications by lot owners to compel compliance.

Domestic Building Warranties and Defect Liability

The Domestic Building Contracts Act 1995 implies warranties into all domestic building work contracts that apply for 10 years from the occupancy permit. These implied warranties cannot be excluded by contract and cover:

• Work performed in a proper and workmanlike manner
• Materials suitable for their purpose and of acceptable quality
• Work and materials reasonably fit for their specified purpose
• Work complying with all legal requirements
• Work completed with reasonable care and skill

Developers must take all reasonable steps to enforce any domestic building contract affecting the owners corporation. The 10-year restriction on voting about defects prevents developers from blocking enforcement actions.

Domestic Building Insurance covers structural defects for six years and non-structural defects for two years, with maximum coverage of $300,000. This insurance is triggered only if the builder dies, disappears, or becomes insolvent—it does not replace the implied warranties or provide a primary recourse for defect rectification.

Lot Entitlement and Lot Liability: Permanent Cost Allocation

Developers engage licensed surveyors to establish initial allocations of lot entitlement and lot liability at the subdivision planning stage. These allocations are set out in the owners corporation schedule within the plan of subdivision and, once registered, become publicly searchable through owners corporation reports.

Lot Entitlement: Voting Rights and Ownership Share

Lot entitlement determines:

• Each owner’s voting power at owners corporation meetings
• Each owner’s proportionate share of common property ownership
• The distribution of any income the owners corporation may receive

Allocation Basis: Lot entitlement must be allocated based on the market value of each lot relative to the total market value of all lots in the plan. Licensed surveyors typically prepare valuations to establish these proportions at subdivision stage.

Significance for Developers: Lot entitlement allocation can materially affect development feasibility where certain lots (such as penthouse apartments with premium values) receive disproportionate voting rights that could influence owners corporation decision-making on matters like special levies for capital works or rule amendments.

Lot Liability: Cost-Sharing Formula

Lot liability determines:

• Each owner’s proportionate share of administrative and general expenses
• The calculation basis for annual and special levies
• Each owner’s contribution to maintenance fund requirements

Allocation Principles: Under the Subdivision Act 1988, lot liability must be allocated:

1. Equally between lots if lots are substantially similar in size
2. By lot size if there is substantial size difference between lots (e.g., one-bedroom versus three-bedroom apartments)
3. By consumption or use if different lots have materially different impacts on common utility consumption or maintenance costs
4. By bedroom numbers if occupancy levels have greater bearing on consumption than lot size

The Owners Corporation Additional Information (OCAI) document lodged with the plan must describe the allocation basis and methodology.

Permanent Nature of Allocation

Once registered, lot entitlement and liability allocations can only be changed through:

• Unanimous resolution of all lot owners, followed by lodgement at Land Use Victoria within 60 days, or
• VCAT order under Section 34D of the Subdivision Act 1988

Obtaining unanimous resolution is typically considered extremely difficult in practice, particularly for larger developments. This permanence means allocation decisions made at subdivision stage could affect property values and marketability for the development’s entire life.

Levy Calculation Formula

Annual levies are calculated as:

Individual Lot Levy = (Lot Liability ÷ Total Liability) × Annual Budget

For example, if a development has total lot liability of 400 units and an annual budget of $200,000, each unit of lot liability attracts an annual levy of $500. An apartment with lot liability of 3 units would pay $1,500 annually; an apartment with lot liability of 5 units would pay $2,500 annually.

Developer Feasibility Considerations

Lot liability allocation directly affects unit pricing and purchaser carrying costs:

Typical Melbourne Annual Levy Ranges (based on lot liability):

• Townhouses with minimal common property: $1,500-$2,500
• Standard apartment buildings: $2,000-$4,000
• High-amenity buildings (pool, gym, concierge): $4,000-$6,000+
• Mixed-use developments: Premium of 15-30% for commercial lot insurance costs

Developers modelling feasibility should typically account for these carrying costs in purchaser serviceability calculations, as high ongoing levies could materially affect demand and achievable sale prices.

Establishing the Owners Corporation: Planning to Registration

Plan of Subdivision Requirements

When preparing a plan of subdivision that creates an owners corporation, developers must engage a licensed surveyor to:

• Prepare the plan showing all lots, common property, and any reserves
• Set out the initial lot entitlement allocation
• Set out the initial lot liability allocation
• Describe the allocation basis and methodology

The plan must be accompanied by a statement detailing how lot entitlement and liability have been allocated, having regard to the principles set out in Section 27F(4) and (5) of the Subdivision Act 1988.

Owners Corporation Additional Information (OCAI) Document

Each owners corporation being created requires an OCAI document lodged with the plan. From 31 July 2023, this document transitioned from being supplied by the lodging party to being provided by the licensed surveyor when an owners corporation spreadsheet is uploaded in SPEAR (the electronic lodgement system).

The OCAI document must specify:

• The owners corporation postal address
• How lot entitlements and liabilities were allocated
• Whether the owners corporation is unlimited, limited, or limited to common property
• For limited owners corporations, the specific limitations on purposes or responsibilities

SPEAR Electronic Lodgement Requirements

From 29 April 2024, all plans of subdivision lodged by a represented party must be lodged using the SPEAR Electronic Lodgement Network. Lodging parties who are SPEAR ELN subscribers were required to use the system from 4 March 2024.

This mandatory electronic lodgement affects developer timelines and requires coordination with licensed surveyors and conveyancers who maintain SPEAR access.

Unlimited vs Limited Owners Corporations

Unlimited Owners Corporations (the most common type) have no limits on how functions and powers determined by the Owners Corporations Act 2006 apply. Unlimited owners corporations manage all land affected by the owners corporation, including any common services and common property.

Limited Owners Corporations are restricted to managing:

• Specific common property (designated “limited to common property”), or
• Only common services where no common property exists

Limited owners corporations are common in large multi-storey developments with multiple buildings or distinct zones. For example, a development might have:

• One unlimited owners corporation managing all common areas
• Several limited owners corporations each managing amenities for specific towers or sections

The purpose and limitations of each limited owners corporation must be clearly defined on the owners corporation schedule and in the OCAI document.

Setting Initial Rules

Developers may set out initial rules for the owners corporation to be recorded with the plan of subdivision. These developer-initiated rules automatically apply from registration but must be formally registered with Land Use Victoria to be enforceable.

If no custom rules are registered, the Model Rules (Schedule 2, Owners Corporations Regulations 2018) apply automatically. The Model Rules cover standard matters such as:

• Use of common property and lots
• Noise, parking, and pet restrictions
• Rubbish disposal and waste management
• Maintenance obligations

Rules must be consolidated—only one complete set of rules is recorded against an owners corporation at Land Use Victoria. Any subsequent rule amendments require lodgement of consolidated rules incorporating all changes.

First Annual General Meeting: Critical 6-Month Deadline

Convening the First Meeting

The applicant for plan registration (typically the developer) must convene the first meeting of the owners corporation within six months of plan registration. This deadline is strict—developers cannot extend it, even if they own all lots at the time.

Notice Requirements: Developers must provide 14 days’ written notice to all lot owners. A 2022 VCAT decision invalidated a developer’s first meeting held within 14 days of registration, finding that the mandatory notice period applies even when the developer is the sole lot owner. This ruling means developers typically cannot hold the first meeting earlier than 14 days post-registration.

Practical Timing Considerations

Most Victorian off-the-plan contracts specify settlement 14 days after plan registration. Developers typically face pressure to:

• Register the plan to trigger settlement deadlines
• Transfer building insurance obligations to the owners corporation immediately
• Establish budgets and levy collection to fund ongoing costs

These competing pressures mean developers typically convene first meetings on day 14 or 15 post-registration—the earliest compliant timing.

Mandatory First Meeting Agenda Items

The first meeting must address:

• Financial statements (if any expenses have been incurred)
• Proposed budget for the current financial year
• Election of committee members (mandatory for developments with 10+ lots)
• Election of chairperson and secretary
• Appointment of owners corporation manager (if proposed)
• Tax registration arrangements (TFN, ABN, GST)

Required Documentation

Developers must table all documentation required under Section 67 of the Owners Corporations Act 2006:

Building and Compliance Documents:

• Building maintenance manual with equipment specifications
• Asset register documenting all common property assets
• Occupancy permit and building approval certificates
• Fire safety certificate and compliance certifications
• Electrical and plumbing compliance certificates
• Warranties from builders, contractors, and equipment suppliers

Planning and Legal Documents:

• Registered plan of subdivision
• Owners corporation rules (if custom rules apply)
• Any easements, covenants, or encumbrances affecting common property

Financial Information:

• Proposed budget with line-item expense allocations
• Levy calculation methodology based on lot liability
• Details of any monies already collected or owing
• Tax registration documentation

Physical Handover Items:

• Master keys for all common areas
• Security system access codes and administrator rights
• Digital building management system access
• Contact lists for contractors, suppliers, and service providers

Disclosure and Minute-Taking Requirements

Minutes of the first meeting must record:

• Date, time, and place of the meeting
• Names of lot owners present
• Names and details of proxies
• Voting results on all resolutions
• Text of all resolutions passed
• Complete disclosure of developer relationships with proposed managers
• Details of any financial transactions or benefits from manager relationships

These minutes must be retained permanently by the owners corporation as they establish critical decisions and disclosures made at formation.

Financial Management and Maintenance Planning

Annual Budget Development

Owners corporations set annual budgets to cover anticipated expenses in several categories:

Administrative Fund:

• Owners corporation manager fees
• Insurance premiums (building, public liability)
• Utility costs for common areas
• Cleaning and gardening services
• Security services (if applicable)
• Lift servicing and maintenance
• Minor repairs and routine maintenance
• Accounting and audit fees (for Tier 1 and 2)
• Legal and compliance costs

Maintenance Fund (formerly sinking fund):

• Major capital replacements (lifts, roofs, facades)
• Significant building works (repainting, waterproofing)
• Equipment replacement beyond economic repair
• Compliance upgrades (fire safety, accessibility)

Tier 1 and 2 owners corporations must establish maintenance funds and make adequate contributions to implement approved 10-year maintenance plans. Annual fees must include amounts designated for maintenance plan purposes and sufficient to allow plan implementation.

10-Year Maintenance Plans

Mandatory Requirements:

• Tier 1 (100+ lots): Must prepare and approve plan within 12 months of registration
• Tier 2 (51-100 lots): Must prepare and approve plan within 24 months of registration
• Tier 3-5: Discretionary but recommended

A maintenance plan must set out:

• Major capital items anticipated to require repair or replacement within 10 years
• Present condition or state of repair of those items
• When items or components will need repair or replacement
• Estimated costs of repair and replacement
• Expected life of items once repaired or replaced

Major capital items include lifts, air conditioning plants, heating plants, roofs, facades, waterproofing systems, and other prescribed items.

Professional Preparation: Developers or committees typically engage quantity surveyors or specialist building consultants to prepare maintenance plans. Professional fees may range from:

• Small developments (51-100 lots): $2,000-$5,000
• Medium developments (100-200 lots): $5,000-$10,000
• Large developments (200+ lots): $10,000-$20,000+

Financial Reporting Requirements by Tier

Tier 1 (100+ lots):

• Annual financial statements per Australian accounting standards
• Annual independent audit required
• Audit fees typically $5,000-$15,000 depending on complexity

Tier 2 (51-100 lots):

• Annual financial statements per Australian accounting standards
• Annual independent review (less rigorous than audit)
• Review fees typically $2,000-$6,000

Tier 3 (10-50 lots):

• Financial statements per accounting standards
• No audit or review required (but recommended)

Tier 4 (3-9 lots):

• Basic financial statements if fees are levied
• Simplified requirements

Tier 5 (2 lots or services-only):

• Largely exempt from financial reporting requirements

Tax and GST Obligations

Owners corporations must:

• Obtain a Tax File Number (TFN)
• Register for an Australian Business Number (ABN)
• Register for GST if income meets or exceeds $75,000 per year
• Lodge Business Activity Statements (BAS) with the ATO if GST-registered
• Keep financial records that satisfy ATO requirements for income tax and GST

Developers should typically factor professional accounting fees ($2,000-$5,000 annually) into feasibility budgets for Tier 1-3 developments.

Insurance Requirements and Costs

Mandatory Building Insurance

Owners corporations must take out reinstatement and replacement insurance for all buildings on common property. This insurance must cover the replacement, repair, and rebuilding of damaged property at full replacement value.

What Must Be Insured:

• All buildings on common property
• Shared services (pipes, cables providing utilities to multiple parties)
• Fences, letterboxes, and other common property structures
• Permanently moored boats or pontoons (if applicable)

Multi-Storey Special Requirements: If a building on the plan is located above or below common property, a reserve, or another lot, the owners corporation must insure all buildings on all lots (not just common property buildings). This requirement applies except for:

• Single-storey buildings, or
• Single-storey buildings registered under the Strata Titles Act 1967 or Cluster Titles Act 1974 that designate space above and below lots as common property

Mandatory Public Liability Insurance

Owners corporations with common property must maintain public liability insurance of not less than $20 million per claim and in aggregate during any insurance period. This insurance protects against:

• Personal injury occurring on common property
• Property damage to third parties
• Death occurring on common property

Exemption: Two-lot subdivisions and services-only owners corporations are exempt from mandatory public liability insurance requirements, though insurance is strongly recommended given potential liability exposure.

Building Valuation Requirements

Tier 1-4 owners corporations must obtain professional building valuations at least every five years. The valuer’s report must be presented at the next general meeting following completion. These valuations ensure insurance coverage remains adequate for full replacement costs.

Insurance Cost Factors

Insurance premiums for owners corporation buildings may be affected by:

Building Characteristics:

• Building age and construction quality
• Location and exposure to natural disaster risks
• Building height and complexity
• Use of flammable cladding or non-compliant materials

Claims History:

• Previous claims significantly increase premiums
• Buildings with known defects may face difficulty obtaining coverage
• Water damage claims from waterproofing failures

Risk Features:

• Swimming pools (public liability considerations)
• Lifts and mechanical systems
• Basements and underground parking
• Mixed-use designation (commercial tenancies increase risk)

Typical Annual Insurance Costs:

• Townhouse developments: $400-$800 per unit
• Standard apartment buildings: $600-$1,200 per unit
• High-rise apartments with amenities: $1,000-$2,000+ per unit
• Mixed-use developments: 20-40% premium over residential-only

Non-compliant cladding has caused substantial insurance issues across Victoria, with some buildings facing premium increases of 200-500% or inability to obtain coverage at any price. The Victorian Government established Cladding Safety Victoria with $600 million to assist affected owners corporations.

Optional Additional Insurance

Owners corporations may, by ordinary resolution, take out additional insurance including:

Fidelity Guarantee Insurance: Covers committee members for wrongful acts committed while carrying out duties (fraudulent acts excluded). Policies may provide coverage up to $30 million.

Workers Compensation: Required if the owners corporation employs workers (cleaners, gardeners, building managers). Generally not required for residential-only common areas without employees.

Voluntary Workers Insurance: Provides compensation for volunteers working on behalf of the owners corporation whose names are recorded in owners corporation books.

Owners Corporation Manager Costs and Contracts

Manager Appointment Considerations

While Tier 1 owners corporations with 100+ lots are not explicitly required to appoint professional managers under current legislation, the practical complexity of managing large schemes means professional management is typically considered essential. Tier 2-5 owners corporations may choose whether to engage professional managers.

Typical Management Fees

Professional owners corporation management fees in Victoria typically range from:

By Development Type:

• Townhouses (minimal common property): $170-$300 per lot per year
• Standard apartment buildings: $300-$400 per lot per year
• High-amenity buildings (pool, gym): $400-$500 per lot per year
• Mixed-use developments: $450-$500+ per lot per year

Total Annual Fees: For a 100-unit building at $400 per lot, annual management fees would total $40,000. For a 200-unit building, fees might total $80,000-$100,000.

Additional Revenue Sources for Managers

Management companies typically derive additional income from:

Owners Corporation Certificates: $65-$80 per certificate (required for Section 32 vendor statements when lots are sold)

Insurance Commissions: 10-20% commission on insurance premiums placed through the manager’s preferred brokers

Disbursements: Administrative fees for arranging contractors, obtaining quotes, or handling special projects

These additional revenue streams mean total costs of professional management may be 20-40% higher than base management fees alone.

Contract Term Restrictions

Under the 2021 amendments, owners corporation manager contracts are subject to strict limitations:

Maximum Terms:

• Maximum three-year terms (except retirement villages which may have five-year terms)
• No automatic renewal clauses permitted
• Manager cannot unilaterally renew without owners corporation consent

Notice Periods for Termination:

• Tier 1 and 2: Maximum three months’ notice required
• Tier 3-5: Maximum one month’s notice required

Prohibited Contract Terms:

• Cannot require special or unanimous resolution to revoke appointment
• Cannot require general meeting to be convened to revoke appointment
• Cannot allow manager to renew at manager’s option
• Cannot restrict owners corporation’s ability to refuse consent to contract assignment (except “not unreasonably withheld” clauses)

Manager Duties and Obligations

Registered owners corporation managers must:

• Act honestly, in good faith, and with due care and diligence
• Ensure goods and services sourced are competitive in price and terms
• Not hold owners corporation money in separate accounts without explicit permission
• Provide financial statements within 14 days when requested
• Not pressure owners to influence elections or meeting decisions
• Maintain registration with Consumer Affairs Victoria

Managers owe these duties to the owners corporation, not to individual lot owners, and must act in the collective interest of all members.

Committee Governance and Meeting Requirements

Committee Requirements by Tier

Mandatory Committee Election:

• Tier 1, 2, and 3 (10+ lots): Must elect committee at each AGM
• Tier 4 and 5: May elect committee but not required

Committee Size:

• Minimum 3 members
• Maximum 7 members (unless increased by ordinary resolution to maximum 12)

Mandatory Positions:

• Chairperson (election mandatory for all committees)
• Secretary (mandatory for all owners corporations, may be committee member or separate role)

Committee Member Duties

Committee members and all owners corporation delegates must:

• Act honestly and in good faith
• Exercise due care and diligence in carrying out functions
• Not make improper use of their position to gain advantages

These duties are fiduciary in nature and breaches could result in VCAT orders or personal liability.

Annual General Meeting Requirements

After the first meeting, owners corporations must hold annual general meetings (AGMs) no more than 15 months apart. The AGM is required only if the owners corporation receives or pays out money in any financial year.

AGM Notice Requirements:

• Minimum 14 days’ written notice to all lot owners
• Notice must include detailed agenda
• Financial statements for the previous year
• Proposed budget for the coming year
• Text of any proposed special or unanimous resolutions
• Advice that owners may appoint proxies

Mandatory AGM Agenda Items:

• Minutes of previous AGM (for consideration and amendment)
• Financial statements presentation
• Budget approval
• Committee election (for Tier 1-3)
• Manager’s report (if manager appointed)
• Maintenance plan review (for Tier 1 and 2)
• Building valuation report (if completed in past year)
• Insurance policy details and coverage levels

Resolution Types and Voting

Ordinary Resolution: Requires more than 50% of votes. Used for day-to-day decisions including:

• Approving annual budgets
• Electing committee members
• Appointing or revoking managers
• Approving maintenance plans

Special Resolution: Requires at least 75% of votes. Used for significant matters including:

• Amending or creating new rules
• Borrowing more than annual fees
• Spending more than twice annual fees on works
• Granting leases or licences over common property

Unanimous Resolution: Requires 100% of votes. Required for:

• Altering lot entitlements or liabilities
• Significant changes affecting all owners equally

Voting Basis: Votes are allocated by lot entitlement, not by number of people. An owner of multiple lots has multiple votes; co-owners of one lot share one vote between them.

Voting Restrictions: Lot owners with fees in arrears cannot vote, except when special or unanimous resolutions are required (where their votes may still be counted).

Design Decisions That Affect Ongoing Costs

Developers’ design choices at feasibility stage may create lasting impacts on owners corporation budgets and levy affordability.

High-Cost Amenities

Swimming Pools: May add $800-$1,500 per unit annually for:

• Water treatment chemicals and testing
• Equipment maintenance and replacement
• Regulatory compliance inspections
• Seasonal opening/closing procedures
• Liability insurance premiums

Gym and Recreation Facilities: May add $500-$1,000 per unit annually for:

• Equipment maintenance and replacement
• Cleaning and hygiene services
• Compliance with health and safety standards
• Enhanced liability insurance

Lifts: Each lift may cost $15,000-$25,000 annually for:

• Servicing contracts (monthly inspections)
• Breakdown repairs and callouts
• Periodic component replacement
• Regulatory compliance inspections

Concierge Services: May add $1,500-$3,000 per unit annually for:

• 24-hour staffing costs
• Relief staff for holidays and sick leave
• Training and uniforms
• Management and supervision

Building Complexity Factors

Facade Complexity: Complex facades with extensive glazing, feature panels, or intricate detailing may increase maintenance costs by 40-60% compared to simple rendered facades due to:

• Specialised cleaning requirements
• Difficult access requiring elevated work platforms
• Higher repair and replacement costs for premium materials

Landscaping Choices: Extensive landscaping with feature plantings, mature trees, and complex irrigation may add $300-$800 per unit annually compared to simple native gardens with minimal maintenance requirements.

Underground Parking: May add $200-$500 per unit annually for:

• Mechanical ventilation systems
• Lighting replacement and electricity costs
• Drainage pump maintenance
• Enhanced cleaning requirements

Construction Quality and Long-Term Costs

Waterproofing: Inadequate or poorly executed waterproofing systems could result in water ingress requiring rectification costing $50,000-$500,000+ depending on severity. Proper waterproofing specification at construction is typically 10-20 times more cost-effective than remediation.

Cladding Compliance: Non-compliant cladding may result in:

• Rectification costs of $20,000-$100,000+ per unit
• Insurance premium increases of 200-500%
• Difficulty obtaining insurance coverage
• Reduced property values and marketability

Building Services Quality: Installing economy-grade lifts, fire systems, or mechanical equipment may reduce construction costs by 15-25% but could increase maintenance costs by 40-80% over 10 years due to more frequent breakdowns and shorter component lifespans.

Dispute Resolution and Enforcement

Internal Dispute Resolution Process

The Owners Corporations Act 2006 establishes a three-step dispute resolution process:

Step 1: Internal Complaint

• Complainant submits written complaint on approved form
• Owners corporation must acknowledge within 14 days
• Owners corporation may take no action but must provide written reasons

Step 2: Conciliation

• Parties may seek conciliation through Consumer Affairs Victoria
• Voluntary process facilitated by neutral third party
• No binding outcomes but may lead to agreed resolution

Step 3: Mediation

• More formal process through Consumer Affairs Victoria
• Mediator assists parties to reach binding agreement
• Mediator cannot impose outcomes

VCAT Applications

If internal processes and mediation fail, parties may apply to VCAT for determination. VCAT has jurisdiction to:

Make Orders For:

• Compliance with the Act, Regulations, or rules
• Payment of fees and charges
• Repairs and maintenance of property
• Access to records and documents
• Enforcement of rules
• Appointment or removal of managers
• Alteration of rules or lot entitlements (in exceptional circumstances)

Impose Penalties For:

• Breach of rules: Up to 5 penalty units ($965 as of 2024)
• More serious breaches: Up to 50 penalty units ($9,652)

Award Compensation For:

• Damage to property
• Loss of amenity
• Costs incurred due to breaches

Developer-Specific Enforcement

If developers fail to meet their 10-year obligations, owners corporations or individual lot owners may:

• Pass special resolutions authorising legal proceedings
• Apply to VCAT for orders compelling developer compliance
• Seek orders requiring developers to enforce domestic building contracts
• Pursue damages for losses caused by developer breaches

Feasly Integration for Developers

Modelling owners corporation establishment costs and ongoing levies is critical for accurate development feasibility. These recurring costs directly affect purchaser affordability and may impact achievable sale prices, particularly for first-home buyers assessing loan serviceability.

Summary: Developer Checklist

At Feasibility Stage:

• □ Determine likely tier classification based on occupiable lot numbers
• □ Engage licensed surveyor for lot entitlement and liability methodology planning
• □ Model establishment costs (maintenance plans, initial budgets, first meeting costs)
• □ Estimate annual levy ranges and assess purchaser affordability impact
• □ Consider design choices affecting long-term owners corporation costs

Pre-Lodgement:

• □ Finalise lot entitlement and liability allocations with surveyor
• □ Prepare OCAI document with surveyor
• □ Consider whether to set initial custom rules
• □ Arrange SPEAR lodgement through conveyancer or surveyor

Post-Registration (Within 6 Months):

• □ Convene first AGM with minimum 14 days’ notice
• □ Prepare all required disclosure documentation
• □ Compile building manuals, warranties, and as-built documentation
• □ Arrange handover of physical keys and digital access
• □ Make required disclosures about manager relationships
• □ Consider appointing professional manager (mandatory for Tier 1)

Ongoing (10-Year Period):

• □ Maintain good faith obligations if retaining majority lot entitlement
• □ Do not vote on defect-related resolutions
• □ Do not appoint yourself or associates as manager
• □ Ensure all service contracts comply with three-year maximum terms
• □ Cooperate with defect rectification and warranty enforcement

Understanding and properly implementing these requirements from project inception through final settlement may help developers avoid costly disputes, maintain positive relationships with purchasers, and ensure compliant handover to lot owners who will collectively manage the development’s future.