Watch: the Getting to Yes! seminar

19 Jun

Navigating and making good decisions with your owners corporation can be one of the biggest challenges of apartment living. So how can we do it better?

In this session, you’ll get an overview of the legislated decision-making process, as demanded by the Victorian Owners Corporation Act.

But perhaps more importantly, we’ll explore what else could be done to smooth the path for a decision. What can help owners engage with the matter, understand and address different perspectives, and feel like they are moving forward together rather than breaking into factions.

Speakers:

Julie McLean, Strata Community Association Victoria, Immediate Past President
Elena Pereyra, architect and co-chair of Cohousing Australia
Jeanette Corcoran, Director, Owners Corporation Network

This seminar recording was produced as part of the High Life Expo 2024. Download the session slides. The full video and related resources are all included below.

Disclaimer: This page and website contains general information only. It is not legal advice nor a substitute for obtaining legal advice. High Life Expo hosts (Let Me Be Frank and Strata Community Association Victoria), our partners and experts do not accept liability for any action taken based on information presented on this website or for any loss suffered as a result of reliance on this website. This information is provided in good faith in June 2024 and is likely to date, especially if strata regulation is updated.

Audience Q&A

How can we engage absentee investor/owners of OCs more involved in the shared governance and decision making of the management of Units and instead leave it solely to the resident-owners as in the case in many OCs?

Different owners, whether owner occupiers or landlords/investors, will have different drivers. It’s important to understand who you’re working with, and not to make assumptions about landlords/investors. Don't treat investors as one homogenous group. Are they locals? And you can talk to them? Are they international investors?

You might have to think about translating communications if you have a high percentage of investors that that live in a non-English speaking country.

Wherever possible, reach out via email or phone and get to know some of the more engaged landlords/investors in your building. Think about asking them to join the committee. It's amazing how many people are shy about nominating publicly, but are quite chuffed when asked personally.

A good committee structure is one that represents the full spectrum of lot owners (the collective owners) not just the owner occupiers.

All that said, it’s likely investors will have an interest in maintaining property value and ensuring their apartment will attract a good rental rate and long-term tenancies. For example, renters are starting to ask about EV charging so as a landlord, I’d be supporting the installation of EV charging in my building. And don’t forget to remind landlords on your owners corporation that their investment is likely to be a tax deduction.

How do you actually quantify "increase in property values and rental premiums" on hypothetical propositions?

You can get an appraisal from a real estate agent or a property valuer. They will have experience of similar "changes" made and the difference it made in rent and increase in uplift. It’s likely you will need to pay for an official valuation.

You can also look for related research. For example, the Domain Sustainability in Property Report from May 2024 found a unit/apartment with energy-efficient features will sell for $70,000 more than average. When it comes to sustainability initiatives, not all real estate agents have the knowledge to understand the value added as the industry is still in transition when it comes to understanding the implications of sustainability.

Is ordinary res, 50% of committee or 50% of owners?

Both. To pass an ordinary resolution is a quorum first - which is 50% or more of the elected committee (for committee meeting) and 50% or more of the total votes on the plan for a general meeting. Then once you have the quorum present, the ordinary resolution is passed by simple majority.

Consumer Affairs Victoria has information about resolutions. Their website states “Ordinary resolutions that cannot be delegated to a committee, manager or lot owner require agreement by owners or proxies representing at least 50 per cent of lots or lot entitlements”.

Does the legislation in Victoria recognise an owner abstaining to vote? Or is it just yes / no? How does this get calculated into special and unanimous resolutions?

If you (or anyone else) abstain from voting, your vote will not be counted towards the required majority. Essentially, there is no difference between a no vote and abstaining from voting as they will have the same effect.

Ballot and voting information is available on the Consumer Affairs Victoria website.

Is it a statutory requirement to consult ALL owners on major decision making / costs i.e: Installation of a Security System?

The notice you're sending out has to go to everybody. So yes, you've got to give everyone the opportunity to be involved. But of course, not everyone is going to come along to a meeting or submit a ballot. You need to work with your committee / owner corporation manager to confirm the type of resolution needed, which will determine the amount of ‘yes’ votes you need to move forward (see illustration below.

Is a balcony considered 'Common Property'?

Unfortunately, there is no simple answer, as every building is different. You need to review your plan of subdivision to understand what is common and what is private (i.e part of your lot) in your building/owners corporation. You can find a copy of the plan of subdivision in your contract of sale or on your owners portal or contact your strata manager.

For additional links to resources for interpreting strata plans (up to 1988) visit the Victorian Government’s land registration page and you can find some handy diagrams to explain definitions in the Subdivision Regulations 2021.

Common property includes any parts of the land, buildings and airspace that are not lots on the plan of subdivision. It may include gardens, passages, walls, pathways, driveways, stairs, lifts, foyers and fences. The common property is collectively owned by the lot owners as tenants-in-common.

Usually, the problem with balconies is about the waterproof membrane which has been determined by VCAT in a number of cases to be the responsibility of owners.

Who is the expert to approach to define ownership of certain areas and associated costs for repairs/updates?

Firstly, check you have a copy of your plan of subdivision. You can find a copy of the plan of subdivision in your contract of sale or on your owners portal or contact your strata manager. If done well, it should make clear what is common and what is private (i.e part of your lot) in your building/owners corporation.

If you need clarification (and your building is relatively new i.e. less than 10 years old), go back to the land surveyor who originally created the plan of subdivision. Seek a quote from them to provide an interpretation of the plan of subdivision. Often, the surveyor will still have the plans on file and will be able to provide an answer expediently.

Otherwise, you will need legal advice. It’s critical to go to a strata specialist. Just because they're a property lawyer does not mean that they are a strata lawyer. So definitely look for the expertise in strata or owners corporations.

Also note there are those lawyers who specialize in the Pre Plan stage, which is all about the town planning part. And then there are those who specialize in the operational aspects. Look for a lawyer who focuses on the operational aspects, because they'll be across the VCAT cases, and will know how boundaries have been interpreted.

In terms of costs for repairs and updates, you can get quotes from a relevant contractor. Alternatively, you can work with experts experienced at developing maintenance plans. Simply googling “owners corporation management plan consultant Victoria” will get you a list of experts or ask your owners corporation manager for a list of potential consultants.

How do we get that expert advice on who owns what?

Firstly, check your plan of subdivision. If done well, it should make clear what is common and what is private (i.e part of your lot) in your building/owners corporation.

What are the best electronic polling options that offer convenience and transparency? (And ideally free or cheap).

There is a difference between survey (polling) and voting electronically at a meeting or by ballot.

Attendees suggested a range of resources that could be used for survey purposes:

This blogspot article about survey software
Survey Monkey
Googleforms
Jotform

To use a platform to record a legally enforceable vote will require the platform to be able to produce a record of who (lot/name), if they are a proxy and their vote – Yes or No. Ideally the platform would also identify if they are entitled to vote (financial). There needs to be a mechanism to allow for a poll vote as well (voting by entitlement). These platforms aren’t free. Some may already be integrated into your strata managers software or your building managers software.

Are there any different approval thresholds for sustainability special resolutions? (Which I understand there are in NSW).

In Victoria we don't have a lower threshold at this point set for anything that requires a special resolution, as they do in New South Wales.

Don’t forget that you have a voice to your political representatives! You – apartment owners and renters are becoming increasingly important in our cities and your numbers are growing. And as the number of people living in apartments increases, so does your voice. If you think strata legislation needs to be updated in Victoria, you can always raise this with your State representative.

In the general work of the committees, what voice can or should a tenant representative have?

According to the Owners Corporation Act in Victoria, there is no pre-determined roles for tenants so it’s down to the owners corporation/committee to decide how to engage and involve tenants. This can make it vexed issue for some buildings.

Tenants can absolutely participate in a committee and subcommittees to talk about their preferences and bring their expertise to the table. They cannot vote when it comes to making a formal resolution unless they hold a proxy from an owner.

There is often a lack of workforce when it comes to the huge amount of volunteer hours to get projects off the ground within strata. Given this, if you have active, engaged tenants with expertise/time to contribute. Different people bring different strengths, knowledge, and capacities. You might find that there is a different cohort within the community, that that are renters, and they bring energy that isn't otherwise present in the building. In this case, think about how they can play a role in supporting projects in your building, and be part of the (emerging) community.

Should Levy Payment Arrears be covered by the Strata Insurance?

If this question is about covering the legal costs to retrieve overdue fees then no. Insurance policies only activate when there is an insurable event – for example if someone sued the owners corporation for a trip slip or fall – then the insurance policy would kick in.

It seems that many people don’t know their rights and obligations as property owners – this is a problem. Who are these owners?

People buy into apartments for many reasons. For some it’s a choice, which for others it might be the housing type they can afford. Some owners will have done their research into their obligations as an owners, while others come in blind and need to learn once they’re in.

Helping people understand their role and obligations within an apartment building/owners corporation is a huge challenge. Australia is undergoing a cultural shift towards apartment living and all levels of government need to play a role in raising awareness. As can industry bodies and all of us who are living in and or working in strata! There’s lots to do in terms of education and encouraging deeper involvement from all owners and residents to ensure good governance, maintenance and liveability.

We are about to have our first AGM for a new building. I'd like to see a set of KPIs for our OC manager (who is new to us). Does anyone know of relevant KPIs for OC managers, so we are able to judge the performance of the OC Manager to guide decisions on further contract terms?

The contract includes KPI relating to compliance with the Owners Corporation Act and Regulations. The types of KPI's you are likely thinking about probably aren’t in the contract.

The best approach is to develop the KPI's together with your manager. Please remember, there may be additional charges depending on your expectations and ultimately the agreement as to what your manager is doing. This should be clear and agreed with your manager so there are no billing surprises.

Your committee might want to consider and discuss with your manager things like:

Communication expectations and response timeframes
The number of days you want information sent prior to committee meetings
Expectations around minutes
How you want the AGM to run (face to face, hybrid or 100% online)
The site involvement you want
How you want invoices paid and what amount that you want sign off for
The debt recovery process e.g. at what point debt recovery takes place.

The decisions you make, will have implications for the mangers fees. Remember your strata manager works for you and should want to understand what you need, how they can deliver, and then make sure there is clear written agreement on this. And find a management company that shares your values – not all management companies are the same.

We have 420 apartments completed in 2020. There was no long term maintenance plan implemented by the first committee sufficient to plan for the replacement of assets over time. When the current committee developed the plan and presented it at last years AGM it was voted down because it increased OC levies by between 30-40%. We commissioned a second LTMP to get a second opinion and the costs went up. So we have 2 plans from quantity surveyors that is currently unsupported by a large enough % of owners to vote it down. We are now looking at 'dumbing down' a plan which is not designed to replace all the assets but will be acceptable to owners. Any suggestions on how to get the owners to support the committee's recommendations?

Having a maintenance plan is statutory requirement, so whilst there is not a penalty (at the moment from government) the owners are exposed on two fronts:

The insurance company may withdraw their policy or you may not be able to get a policy. Your duty of disclosure requires you to notify the insurer of your non-compliance. No insurance means all owners will be underwriting the risk. It is important to communicate this risk to all members of the owners corporation.
The second issue is exposure to damages from another lot owner who has suffered a loss (usually renting or commercial activity or loss of values when selling) because of the lack of maintenance planning.

It is in the owners interest to put something in place and gradually increase until it covers the building adequately. In the meantime, the insurance will likely go up and claims may be denied based on lack of upkeep.

If the Owners Corporation does not pass the plan and the funding for the plan, the committee will have no choice but to seek an order from VCAT requiring the OC to comply with Act or to appoint an administrator.

So key points to communicate:

We all have a significant financial stake in this building. If we don’t maintain it well, our investment will be at risk. And lack of regular maintenance will likely result in the need for a much larger urgent levy down the track when something inevitably goes wrong
Getting ahead of issues, will result in overall costs savings and better quality homes and investments for us all
It is a legal requirement for us to have a maintenance plan. We are currently non-compliant
Without legal compliance, our insurers can withdraw their policy. We’re required to disclose our non-compliant. Without adequate insurance we, all owners, are carrying the risk personally
We are also currently exposed to litigation from any lot owner who believes they have suffered a loss because of the lack of maintenance planning

We have lived in so many buildings with 25 to 50 apartments and governance is non-existent via the committees and strata mgrs.

It’s very true that some buildings / owners corporations are very poorly managed. Our hope is that by coming together to discuss these issues and possibilities, we can help buildings/communities that are struggling do better, learning from those buildings/communities who have got strong governance. There are great examples of well managed buildings here in Melbourne.

It can be hugely stressful to be part of an owners corporation that doesn’t function as you’d like it to. Unfortunately the best thing you can do in this instance is to find an ally or two in your building and work together to make change. You may want to shop around for a new manager who can support governance overhaul, consider joining SCA committee training or becoming a member of Owners Corporation Network so you have more support.

Waste management: Our South Melbourne Streets are filthy, our public bins are not emptied enough particularly post weekend. We run a huge risk of disease and feral introduction if we further sort our household waste (as proposed by Port Phillip Council) in apartment living.

For waste management issues, your local council is always the best place to start. Port Phillip has some apartment-specific advice and support.

Reground provides services to apartment buildings looking to improve waste practices. You’ll also find waste advice for strata on the High Life Expo resources page.

How should conflict of interest (ie Committee member advocating improvements for their own benefit) be handled on an OC Committee - given that the member can contribute on other issues?

Having a strong chair who can facilitate a good meeting can help. Ask for conflicts to be declared up front at the start of meetings. Having an agreed code of conduct and disclosure or ‘way of working’. Sometimes, it’s a conflict that reminds us to create a way of working, if we don’t already have one in place.

In Victoria we don't have a published code of conduct for owners corporations, but there is one in Queensland under the Body Corporate and Community Management Act, and New Zealand has just brought one in under their legislation. What we do have in Victoria is committee duties which imply that somebody with a conflict of interest could not perform and act in good faith.

Victoria Point in Docklands has a code of conduct which is reviewed each year alongside the AGM. We also have principles around how subcommittee work, which is strengthening the way we make decisions. At the beginning of every committee meeting we have a declaration for conflicts of interest, and as a committee we can hold each other accountable.

This example is also a reminder about the importance of trying to develop a strong community of owners who are participating in the decision-making processes. The more people that are engaged, the less likely you are to having one of two people about to push their own agenda. Ultimately, we want our committees to have a strong social licence to operate and we can only do this if we act in good faith and are transparent.

In an OC is made up of 3 buildings, does the committee need to have members from each 3 buildings? A chair from each building…? Who makes decisions about money spends for each building?

This is quite common. In multi owners corporations there's one overarching (or unlimited) owners corporation. Then each of the buildings will represent through a limited owners corporation, so that scheme, no doubt, probably has 4 owners corporations, and they are each legal entities, and each of them are required to have a committee.

Unfortunately, there is no simple answer to the question and it requires case by case consideration. Potentially the unlimited owners corporation could make all the big decisions and have localised committees that sort of do the operational aspects of their building. Ultimately, expert legal advice on how to structure your committee’s and define their role is recommended.

Because these kinds of structures require multiple volunteer committees, getting enough hands to manage the legal entities and physical infrastructure is a massive challenge.

Our local council introduced free plants each year so people can support local nature corridors - it enabled our divided and fractured community to find the only area where they can work together.

This is a great example of finding something that will bring different people together, and potentially lead to stronger future collaboration. We really encourage everything to think about what things might connect and unite in your building’s community. Start with something easy and inviting.

Thoughts on engaging a third party to organise the clothing swaps or other such engagements that are currently out of scope for Strata managers?

While there may be a theoretical need for third party services that are social in nature, funding these initiatives can be a challenge. It’s important to note that owners corporations can only collect and spend money to deliver on the prescribed functions and as outlined in the Owner Corporation Act of Victoria, which broadly includes:

to manage and administer the common property
to repair and maintain the common property and associated equipment and services
to take out, maintain and pay premiums on insurance required
keep an owners corporation register
provide an owners corporation certificate

Services that fall into these functions could include education of residents around the functions. For example an education night about pets in apartments – this could be fun and interactive like a quiz or dog show or more serious featuring a keynote speaker such as a Vet sharing health tips.

If the service being provided falls outside of these functions, it needs to be funded separately from the owners corporation. This could include setting a social fund separate to the owners corporation or developing an income stream through something like the container deposit scheme, or residents paying directly for services.

However, many residents in strata communities have introduced (without cost) “swap boxes” for kitchen utensils, books, tools and baby clothes etc. These need to be approved by committee first and then communicated by the committee endorsing the activity. If just start something without approval, you are likely to be breach of the rules.

Is there a document that clearly defines an OC Committee’s compliance requirements?

The best current resource is Consumer Affairs Victoria’s committee guidance. SCA Vic committee training may also be helpful.