Owners Corporations, sometimes also referred to as Body Corporates, are legal entities responsible for the management of common property for residential, commercial, retail or other mixed-use premises. If you live in an apartment, unit or flat, you are most likely a member of an Owners Corporation.

Being a member of an Owners Corporation comes with various financial and legal responsibilities. A paramount legal requirement when selling a property subject to an Owners Corporation is to ensure that the Vendor’s Statement specifies all relevant Owners Corporation information including, but not limited to, rates and annual general meeting resolutions. This information is generally contained in an Owners Corporation Certificate, which is prepared by the Owners Corporation Manager (‘OCM’).

These requirements do not apply, however, where the Owners Corporation is inactive.

What is an Inactive Owners Corporation?

Pursuant to Sale of Land Act 1962 (Vic), an Owners Corporation is considered inactive if it has not, in the preceding 15 months:

1. Held an annual general meeting,
2. Fixed any fees, and
3. Held any insurance.

Although not a specific requirement of the Sale of Land Act 1962 (Vic), only Owners Corporations with two lots will satisfy the above criteria. Owners Corporation insurance is a mandatory requirement for all Owners Corporations comprising three or more lots, pursuant to the Owners Corporation Act 2006 (Vic).

Requirements of an Inactive Owners Corporation

Unlike active Owners Corporations, when selling a property, a Vendor of property subject to an inactive Owners Corporation must only disclose that the property is part of an inactive Owners Corporation. They are not required to disclose any other information.

In addition to the exemption for Vendor’s Statement disclosure, two-lot inactive Owners Corporations are also not required to take out public liability and reinstatement and placement insurance for common property. Although not a statutory requirement, it is often advisable that you ensure there is public liability and building insurance in place, to mitigate the risk of significant legal and financial liability.

How can Sharrock Pitman Legal assist?

If you require assistance with an Owners Corporation, or have any other queries in relation to Inactive Owners Corporations, please feel free to call Andre Ong on (03) 8561 3317 or alternatively fill in the contact form below.

The information contained in this article is intended to be of a general nature only and should not be relied upon as legal advice. Any legal matters should be discussed specifically with one of our lawyers.

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