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Owners Corporation and service to members

Most owners are aware of the functions of an Owners Corporation such as insuring buildings, maintaining and repairing property for which it is responsible, and record keeping and accounting.

The functions and powers granted to an Owners Corporation are clearly defined in the Owners Corporation Act. But did you know an Owners Corporation can also undertake other functions, called “a service”, to its members and occupiers?

An Owners Corporation, by special resolution, may decide to provide a remunerated service to lot owners or occupiers of lots or the public.

Owners Corporation Providing Services

If an Owners Corporation wishes to undertake functions which are not set out in section 4 of the Act, it may do so by providing what is termed a service to members.

Some of the matters which may be considered as a service to members include:

Section 12 of the Act sets out the power of an Owners Corporation to provide a service to members and is:

Provision of services to members and occupiers

(2)   An Owners Corporation may require a lot owner or occupier to whom a service has been provided to pay for the cost of providing the service to the lot owner or occupier.

This is the authority for an Owners Corporation to undertake activities where an obligation is not imposed by the Act or any other law.

Form of Approval

Section 12 determines a special resolution is necessary to authorise the provision of service. A special resolution requires 75% of members of the Owners Corporation vote in favour of the proposal. A matter requiring a special resolution cannot be approved by the committee and must be put to a general meeting or ballot of members.

Cost Recovery

An Owners Corporation has a discretion as to whether it will recover the cost from members to whom the service is provided. By the use the word “may”, the Owners Corporation is not obliged to recover the cost. The cost of providing the service may be met from the funds of the Owners Corporation without recourse to individual members.

In determining whether the discretion to recover the cost should be exercised, an Owners Corporation may consider the following matters relevant.

Is the service provided to all or only a subset of members?

If all members are provided with a service such as the maintenance of part of the guttering of each member’s lot, it may be appropriate the cost is met from funds or a special levy.  Where approved works will be undertaken by the Owners Corporation and the cost not recovered from members, the budget should include an allowance is sufficient to meet the expense.

Will the service be provided to members of the public?

If an Owners Corporation has a gymnasium which members of the public can use as well as owners, an admission or usage charge could be applied to all users including members of the Owners Corporation. This avoids a dispute that a member who does not avail themselves of the service is subsidising the users.

One-off or Ongoing Provision of Service?

If an Owners Corporation is to provide a service to members, it needs to consider whether it will be provided once or if the service will be provided on an ongoing basis. An example of a one-off service would be a once only clean up of members courtyards. Once it is complete, no further service will be provided.

Alternatively, if an Owners Corporation will maintain areas of owners lots, this is an ongoing service, being carried as required and concludes future works. The resolution approving the service should specify it is ongoing and the basis of cost recovery.

Participation

Approval under section 12 places the Owners Corporation in the position where it is authorised to provide the service. It does not oblige an owner to take the service offered although in some instances non-participation may not be possible. If the service is objecting to a planning application, individual participation is not a matter of election. This is contrasted with works such as cleaning windows on balconies where an owner needs to agree to take the benefit being offered by permitting access.

Where it is intended to provide a service, whether as a one-off or ongoing, which requires members opt-in, it is preferable there is a written agreement the member will take the service offered and provide cooperation such as access to a lot if required. The agreement can also comprehend any cost to be applied.

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