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Strata Law

What is an Owners Corporation, and What does it Do?

One of the fundamentals associated with Strata Law in NSW is the concept of an owners corporation.

So if you’re looking at buying into any kind of strata scheme or getting into the development and construction of strata property, then you need to understand what the owners corporation is and what it does.

What is an Owners Corporation?

Owners corporations come into play when there are multiple owners in a building (a strata scheme). They come into existence the moment any sub-division is registered with the NSW titles office containing “common property”.

As you might expect in such a situation, some things need to happen that don’t fall on any single owner and need to be the collective responsibility of all the owners.

To deal with that, we have the idea of the owners corporation. It is the name given to the “entity” made up of all the owners of the lots in the strata scheme.

Although it is not a company in the strict sense, that is a good analogy for it. In a company, you have any number of directors and shareholders who have roles to play, but ultimately the company is capable of doing things on its own accord.

Similarly, the owners corporation is made up of all the owners and makes decisions within input from the owners, but ultimately is capable of acting as its own entity.

If the building containing the strata scheme was alive – it would probably be the owners corporation.

What does the Owners Corporation Do?

In a strata situation, you have certain things that can’t (and probably shouldn’t) just be the responsibility of a single owner to deal with.

The owners corporation is there to perform those tasks.

Generally speaking they include:

  1. administering the affairs of the scheme – keeping records, owners’ details, insurance and fire safety compliance, providing information to new owners or potential buyers, and other administrative requirements;
  2. implementing and enforcing the by-laws of the strata scheme;
  3. managing the “common property” – that is, the property that can be accessed, enjoyed or used by all of the owners. This might include cleaning, garden maintenance, general repairs and the like;
  4. collecting money to allow it to do (1), (2) and (3); and
  5. conducting meetings to allow it to do all of the above.

So how does it do that?

How do Owners Corporations Make Decisions?

All decisions made by an owners corporation are made in a meeting at some point. That meeting might have taken place a while ago, but ultimately it was still held.

If you need to, you can generally find or request the meeting minutes where a particular thing was decided.

There are two bodies that make decisions:

  1. The committee – this is a group of people that represent the owners in the owners corporation. They make the day to day decisions that affect the running of the scheme. You can read more about the committee here.
  2. General Meetings/Members Meetings – this is all of the owners making decisions together by voting on particular issues.

Many of the day to day matters can be dealt with by the committee in meetings – this avoids the owners having to participate in every single paper-clip buying decision that is made as part of the normal administration.

However, other decisions (for example, appointing members to the committee) need to be made in a general meeting of members.

Decisions are made by a vote. How many votes you need to pass a resolution sometimes depends on the specifics of the by-laws, the topic under consideration and the type of meeting that is being held.

Do I Have to Participate in the Owners Corporation?

You won’t generally be forced to attend meetings or be on a committee if you don’t want to.

That said, there are some sensible reasons why you might want to participate.

First – it helps build solid relationships with the other owners in your building.

Second – it gives you an idea of what’s going on and what the plans are.

Finally – at a very practical level if you haven’t participated in the process at all, it can be difficult to get anyone to listen to you down the track if you have a concern or would like an issue addressed.

So while meetings can sometimes be a little bit dull, we generally suggest that it’s worth the small time investment for owners to participate in the decision making process.

Trouble with your Owners Corporation?

Unfortunately sometimes issues and disputes can develop between some owners and others, or between owners and the committee of the day.

These can be complicated, so it’s generally good to get advice on what your options are. There are a number of avenues that can help you resolve these disputes before they blow out of proportion.

If that’s you, or you need help with getting your owners corporation on the right track, get in touch with us today.

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