Creation of Owners Corporations

An Owner's Corporation ('OC') is created under the Subdivision Act 1988 (which the Act amends) in the same way that a body corporate was created i.e. a plan of subdivision may provide for the creation of one or more OCs, and a plan of subdivision which contains common property must provide for the creation of one or more OCs. An OC will automatically come into existence upon the registration of a plan of subdivision.

The Act outlines the functions of the OC, which include an obligation to repair and maintain the common property and equipment and services, take our insurance as required by any Act, keep an OC register and provide an OC certificate, and any other function conferred by any law. These functions are substantially similar to the functions of a body corporation under the Subdivision Act 1988. However the Act substantially expands and regulates the conduct of these functions.

In carrying out its functions and powers, an OC must act honestly and in good faith and exercise due care and diligence.

An OC may delegate by instrument any power or function of the OC to the Committee, Chairman, Secretary, member, manager or employee of the OC. An instrument of delegation must be issued at the AGM.
Existing Bodies Corporate

Under the Act:

* existing bodies corporate will become OCs and will be subject to the new legislation;
* existing body corporate rules will continue to the extent that they are not inconsistent with the new legislation; and
* any body corporate certificate issued immediately before the commencement day of the new legislation will be deemed to be an owners corporation certificate.

Tiers of Owners Corporations

Under the Act there are three tiers of OCs:

* OCs over two-lot subdivisions: these OCs are exempted from compliance with a number of requirements under the new legislation;
* OCs generally;
* Prescribed OCs: certain OCs (as prescribed in regulations which are not yet available) will have additional obligations. Prescribed OCs are expected to be the larger OCs.

Financial management

An OC (other than a two-lot OC) must keep proper accounts and prepare a financial statement for the annual general meeting. An OC may, and a prescribed OC must, have the financial statement audited.

An OC may, and a prescribed OC must, prepare a maintenance plan setting out certain information including anticipated major capital expenses within the next 10 years. A maintenance plan does not have effect unless it is approved by the OC. An OC with an approved maintenance plan must establish a maintenance fund into which certain funds must be paid.
Asset management

An OC must repair and maintain the common property and all related chattels, fixtures, fittings and services, and any service which is for the benefit of more than one lot and the common property.

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