An owner’s corporation (OC) formerly known as a body corporate in Victoria is responsible for managing the apartment building’s common area, and things like insurance, security, cleaning, maintenance, fire services, and enforcing operational rules. It is controlled by legislation and can be complex.
The legislation for OC management varies from state to state but they look after everything outside an apartment whereas a property manager or the apartment owner is responsible for everything inside the apartment. All the common areas and services in a building are managed, cleaned and maintained by the OC.
All the owners in an apartment building pay a proportion of the OC costs and usually the allocation is based on the table of entitlement and liability as contained in the plan of subdivision. The bigger your apartment the more you pay.
When buying an apartment in Victoria, the contract of sale includes an owner’s corporation certificate which contains a lot of valuable information about the body corporate including a copy of the most recent annual general meeting. Buyers should read this carefully.
The OC is controlled by a committee of elected owners who appoint an OC management company to set and implement the budgeted management program. This budgeted cost is then allocated between all the owners. Each building will have different costs especially if it contains costs for refurbishment or major maintenance works that may be a one off.
Sometimes an OC will implement a long-term maintenance plan and charge all owners a regular amount each quarter that sits in an account (sometimes called a sinking fund) to pay for scheduled maintenance cost such as repainting common areas or equipment replacement. In Victoria, this is compulsory for larger developments (generally over 100 units) and optional for developments under 100 apartments.
When you are comparing apartments and review the OC fees it may or may not include a maintenance fund contribution. It is helpful to know if there is a maintenance fund already established with savings to fund future works. Otherwise, you will have to pay for these works in the future. This information will be in the owners corporation certificate.
The level of OC fees varies because each development will have its own operating costs, management fees, scheduled works and a different number of apartments to allocate the costs to. Sometimes the OC fees may be low because the building is not being well maintained.
In the last few years some OC budgets have included consultants reports to address potential combustible cladding and works which may add one off costs to the annual fees.
An active OC committee and quality management company are critical to ensuring the building remains well looked after and all the rules and processes put in place keep the building secure, well looked after, and a great place to live.