The Owners Corporation Act (the 'Act') was passed on 14 September 2006 and received assent on 19 September 2006. The Act, in effect, replaces and enlarges upon the regulations under the Subdivision Act 1988 with regard to bodies corporate (now called 'owners corporations').

The Act changes the structure, function, rights and obligations of bodies corporate and will affect property owners, managers, and property developers of residential properties, commercial properties, retirement villages, shopping complexes, office space, industrial complexes and mixed-use developments.

The Act comes into operation on 31 December 2007.

The Act will directly affect the one in five Victorians who own, live in, manage or develop bodies corporate. Here we examine the Act and highlight the Act's key provisions.
Why the act has been passed.

The Act is intended to address the inadequacies in the Subdivision Act 1988 in an environment of increasing numbers of bodies corporate and increasing complexity in the way they are structured and managed.

The Act :

* addresses both the obligations and rights which are common to all OCs, and recognises the different requirements of two-lot, general and large OCs; and
* outlines the structure, function, rights and obligations of lot owners, OCs, managers and committees.

Existing Legislation: Subdivision Act 1988

At present, bodies corporate are created and managed largely under a regime established by the Subdivision Act 1988. However since that legislation was enacted the number and complexity of bodies corporate has increased dramatically. It is estimated that in 1988 there were 35,000 bodies corporate covering 200,000 people, and that now there are 480,000 lots, 65,000 bodies corporate and that 1 million people live or work in a building that is covered by a body corporate. The estimated capital improved value of lots affected by bodies corporate is $40 billion. The law relating to bodies corporate has been under review since 2003.

The Act is intended to address inadequacies in the Subdivision Act 1988 regime. In the second reading speech for the Act, Attorney-General Mr Hulls stated that:

'The current regulatory scheme for bodies corporate is not serving Victorians well. The regulatory scheme is sparse and limited in the guidance it provides to bodies corporate and lot owners. Parts of it are not clear or appear contradictory, and in many areas little guidance is provided to individuals trying to run these community organisations we call bodies corporate. At a minimum this Act will fix this situation.'

r Hulls outlined the main themes emerging from the review process as:

* the need for better access to dispute resolution;
* clearer rights, duties and responsibilities of members and the body corporate;
* giving sufficient powers and flexibility to bodies corporate and body corporate committees to allow them to operate effectively;
* improved financial management and protection of body corporate funds;
* long-term maintenance planning; and
* the promotion of more professional standards in the body corporate management industry.

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