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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 Act in Sections 4 and 6 respectively.

But did you know an Owners Corporation can also undertake other functions, called “a service”, to its members and occupiers when not obliged to do so? This article covers the functions and powers of the Owners Corporation as well as the provision of these services.

Functions of Owners Corporations

The functions and powers granted to an Owners Corporation are set out in the Act. The functions are in section 4 which is:

Functions of Owners Corporation

An Owners Corporation has the following functions—

Powers of Owners Corporations

In order to carry out these functions, an Owners Corporation is provided with powers as set out in section 6:

Powers of Owners Corporation

An Owners Corporation has:

Perusal of the above sets out the functions of the Owners Corporation are generally concerned with common property, insurance and administrative duties. The powers granted enable the fulfilment of those functions.

Complying with Other Laws

Section 6 obliges an Owners Corporation to comply with any other law. An example is if a building notice is served on the Owners Corporation by the municipal building surveyor, any objection to the notice is in accordance with the power in section 6(a)(iii) as there is no specific reference in the Act which grants an Owners Corporation or obligation to deal with a notice.

This can apply to work required to be undertaken outside of common property if there is a legal obligation imposed by the operation of law. An example is maintaining a fire service supply to the street connection. Despite part of the main being located outside of common property, from the property boundary to the street connection, the Owners Corporation is obliged to maintain it.

A function and consequent power to act is only conferred when there is an obligation on the Owners Corporation to do so. Unless it can be found in the Act or the operation of another law, an Owners Corporation does not have the power to act for the benefit of members, however desirable it may be.

Owners Corporation Providing Services

If an Owners Corporation wishes to undertake functions which are not set out in section 4 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.

If a subset of members is provided with the service, the Owners Corporation may consider it fair the participating members meet the cost in proportions determined by the Owners Corporation. For example, if it is intended to undertake cleaning of windows on balconies within owners lots and not all members have a balcony, or the number of windows on balconies differ, it may be appropriate to require a member meet the cost of the service provided.

If it is intended to recover the cost of the service provided, the basis should be determined when approving the service to avoid later dispute.

Will the service be provided to members of the public?

If an Owners Corporation has a gymnasium which members of the public as well as owners are able to use, 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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