What is the issue?
Unfortunately, stories regarding dysfunctional Owners Corporations are becoming more and more common.
A dysfunctional Owners Corporation can result in a litany of problems, from untidy gardens and unpainted walls, all the way through to damaged common property (or even apartments or townhouses) that just never seem to get fixed.
What is an Owners Corporation?
Owners Corporations are legal entities which are tasked with managing the common property of a residential, retail, commercial or industrial development. In your average block of flats, the Owners Corporation may be responsible for ensuring hallways and stairwells are clean, the gardens are looked after and the outside of the building is clean and well maintained. As you can see, a very important job!
Owners Corporations can often be managed by a small collective of resident owners of premises who are sometimes unaware of their obligations. Sometimes, they can be ineffective professional managers who are not proactive in addressing maintenance and other associated issues. In these circumstances, an Owners Corporation may become dysfunctional or may even cease to function at all.
What can I do about a dysfunctional Owners Corporation?
Should an Owners Corporation cease to function or become dysfunctional, the Victorian Civil and Administrative Appeals Tribunal (VCAT), under section 173 Owners Corporations Act 2006 (Vic), can order that an Administrator be appointed in place of the Owners Corporation. Such an application can be brought by a lot owner, by a creditor of an Owners Corporation, or by any person with an interest in land affected, including the Owners Corporation itself.
VCAT has wide discretion to appoint an Administrator pursuant to terms and conditions that it considers fit, including the length of any particular appointment. Once appointed, an Administrator can exercise all the powers of an Owners Corporation, including levying lot owners for payment of additional money.
What must I prove in order to have an Administrator appointed?
Unfortunately, the Owners Corporations Act 2006 (Vic) does not provide clear guidelines as to what must be shown in order to justify the appointment of an Administrator. Accordingly, we must look to VCAT, in its decisions about such matters, to see whether it has developed any standards that must first be met to justify the appointment of an Administrator.
Generally speaking, in order to appoint an Administrator in place of an Owners Corporation, VCAT must be satisfied that the Owners Corporation be affected by some incapacity or be so dysfunctional as to render the provision of appropriate services to lot owners as effectively non-existent.
As you can see, it is a high bar. The general everyday issues that often beset Owners Corporations, such as the failure to perform maintenance or repair work promptly, will not ordinarily be enough to warrant the appointment of an Administrator, though rights may exist to take action against the manager or the Owners Corporation itself.
Although most of its decisions regarding dysfunctional Owners Corporation relate to a failure to pass special resolutions (due to vested interests or the surprise deaths of lot owners), it is clear that VCAT is ready and willing to replace an Owners Corporation with an Administrator should it be satisfied that the Owners Corporation is failing to perform its duties and obligations adequately or at all.
How can Sharrock Pitman Legal help me?
At Sharrock Pitman Legal, we have an Accredited Specialist in Property Law. Over many years now, we have helped many people with Owners Corporation matters, and it would be our pleasure to assist you. We provide fixed prices and offer substantive free benefits to all customers who run a business. Click here for full details. Having trouble with your Owners Corporation? Contact us today to speak with one of our lawyers or give us a call on 1300 205 506.
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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For further information contact
Andre Ong
Andre is a Principal of Sharrock Pitman Legal.
He heads our Property Law Group and is an Accredited Specialist in Property Law (accredited by the Law Institute of Victoria). He also deals with Commercial Law. For further information, contact Andre Ong on his direct line (03) 8561 3317.
