Paper 2 - Owners Corporations for Owners

An owners corporations is a legal device that allows individual unit or apartment owners to own and have control over a part of a conglomerate residential development (known usually as a Unit Plan).

Unit plans fall into two categories, Class A, usually a multi-story building in which the boundaries of apartments are defined as the centre point of their walls, floors and ceilings, and Class B, where the units may share one or more walls with adjacent buildings, but for the main part stand alone. Generally speaking, no part of any other unit may be superimposed on a class B unit. Either kind of unit may have other areas, not necessarily physically attached, that nevertheless form part of the unit. These subsidiaries, as they are called, can be garages, storage sheds, gardens, and the like.

The total area of the unit plan is divided into units and common property, with the latter managed and maintained by the owners corporation, which holds it as agent for all the owners as tenants in common in shares proportional to their unit entitlement.

The functions and ways of working of an owners corporation are set out in the Unit Titles (Management) Act, but some other legislation (like the Privacy and Work Health and Safety Acts) applies in particular cases.

An owners corporation has rules which explain in large degree what owners can and can’t do and how the owners corporation works.  The rules can be amended by special resolution (two thirds majority of a quorum) at a general meeting provided the amended rule is not in conflict with the Act.  All owners and unit occupiers are legally bound to comply with the rules, and wise unit owners will make sure to familiarise themselves with them. Please see Paper 5 - Rules and House Rules and Unit Titles (Management) Act, Schedule 4 Default Rules.

When you buy a unit, whether you like it or not, you become a member of the owners corporation, with a unit entitlement that determines the proportional contributions you must make to the corporation's finances and, in some circumstances, the value of your vote.

The owners corporation is responsible for the enforcement of its rules and the maintenance and management of its common property, as well as of certain parts of any multi-story apartment buildings it may have.

Owners corporations must have an AGM each year at which the performance of its functions is reviewed, budgets for the coming year are approved, and an executive committee is elected to exercise the corporation’s functions until the next AGM.

All owners of units are members of the owners corporation, but each unit gets only one vote, and where there are joint or corporate owners they must nominate to the corporation which one is authorised to vote on behalf of that unit.  On most motions at general meetings, a unit’s vote cannot be exercised if any amount due to be paid to the corporation remains unpaid. 

Notices of meetings of the corporation must include an absentee voting paper and a proxy form to allow members who cannot attend (or choose not to) to have their vote recorded and or to appoint another person (but not a manager or service contractor of the corporation) as their proxy, to attend and vote in their place. Many corporations use proxy forms designed to allow the person appointing the proxy to indicate how he or she wants the proxy to vote on particular agenda items.

The business of a general meeting can only be conducted if there is present a quorum of not less than half of the persons who are entitled to vote, that is, the unit owners or the persons nominated to represent the units, and persons appointed as proxies by those persons.

If there is not a quorum, after a half hour wait the meeting can proceed under reduced quorum procedures.  Decisions made in these circumstances must within 7 days after the meeting be advised to all members, who then have a further three weeks to lodge a petition signed by at least half of the persons eligible to vote overturning the decision.  Failing the lodgement of such an appeal, the reduced quorum decisions take effect four weeks after the meeting.

Owners should note that with a quorum needing only half the members, and most decisions requiring only a simple majority, most decisions can be made by just over one quarter of the members, and even important matters that call for a special resolution, like changing the rules of the corporation can be decided by one third of the members. And if the decisions are made under reduced quorum rules, a very small minority of members can effectively dictate to the majority.

Members who are entitled to vote, but do not attend, or do not appoint a proxy or who appoint a proxy without directions as to voting, or who do not discuss with their fellow members the acceptability of reduced quorum decisions are in effect accepting whatever decisions are made by whatever number of members do vote.  Owners who have abdicated their right to participate in the governance of their unit plan and chosen not to take part in the decision making process have little or no grounds for complaint if they do not like whatever decisions may be made by those members who do take part.

Note: Voting procedures, including the use of proxies and absentee votes, are elaborated in Paper 4 – Decision-making by Owners Corporations.

Notwithstanding that implied acquiescence, members who are aggrieved by the way the corporation is acting can appeal to the ACAT (see Paper 4) for an order directing the corporation (i.e. the executive committee) to cease an offending action, or perform a function of the corporation as required by the Act.

In an extreme case, if members representing one quarter of the unit entitlement agree, they can requisition a general meeting of the corporation to discuss and perhaps solve the issue.

But, whether you like it or not, in the end, having bought a unit you have become a member of an owners corporation, and as such you have agreed to accept the realities of living under the rules of the fourth level of government as adopted in the community you have joined. 

(Revised: 22 May 2015)