QUEENSLAND –V- THE WORLD – Victoria
Author: Col Myers
Date: July,2010
In the June
edition, my article highlighted the fact that there were an estimated 2350 management
rights complexes in Queensland whereas NSW was next in line with no more than 200
management rights.
This article
looks at
Victoria where it is estimated that they are
no more than 25 management rights complexes.
I will look
at the constraints and obligations imposed on developers in Victoria whilst they
control the Body Corporate, particularly when it comes to entering into caretaking
and letting agreements.
I will also
look at the legislative requirements (or lack of them) in
Victoria applying
to the term of these agreements and the ability of caretakers and letting agents
to “top up” the term.
DEVELOPERS’ OBLIGATIONS
TO OWNERS
The Owners Corporations
Act 2006 (Act) provides that an Owners Corporation has the following functions:-
§
to manage and administer the common property; and
§
to repair and maintain:-
Ø
the common property;
Ø
the chattels, fixtures, fittings and services relating
to common property and its enjoyment …
The Act provides
that an Owners Corporation may appoint or employ persons to assist the Owners Corporation
in carrying out its functions.
Hence, an
Owners Corporation can appoint a caretaker to clean and maintain the common property.
Also the Act provides that an Owners Corporation,
by special
resolution, may decide:-
§
to provide a service to lot owners or occupiers of lots
or the public, or
§
to enter into agreements for the provision of services
to lot owners or occupiers of lots.
Hence, an Owners Corporation has authority to enter into
a Letting Agreement.
The Act specifies
that the developer must convene the first meeting of the Owners Corporation within
6 months of the registration of the plan.
At this meeting, the developer must provide (amongst
other things) a Maintenance Plan (which is compulsory only for
prescribed Owners
Corporations – being Owners Corporations with more than 100 lots or which collect
more than $200,000 in annual fees per financial year), as well as any contracts,
leases and licences binding or benefiting the Owners Corporation.
The key section
of the Act that relates to management agreements states that a developer
must act honestly
and in good faith and with due care and diligence in the interests of the Owners
Corporation in exercising any rights under the Act. This obligation also includes
the developer taking reasonable steps to enforce any domestic building contract
entered into by the developer in respect to the plan - but only while the developer
is the owner of the majority of lots in the Owners Corporation and until the end
of 5 years following registration of the plan.
Consequently,
other than the obligations on a developer to act honestly, in good faith and with
due care and diligence, there are no developer control period restrictions in Victoria.
TERMS OF AGREEMENTS
The Act has
no limitation on the terms of agreements – including service contracts such as a
Caretaking Agreement and a Letting Agreement.
THE ABILITY TO
TOP UP AGREEMENTS
Again, because
the Act has no restriction on the term of agreements, there is likewise
no restriction on the ability to top up agreements by way of variation.
FINANCIERS RIGHTS
There is
nothing in the
Act that compels an Owners Corporation to enter
into a financiers deed.
Consequently, an Owners Corporation can reject outright
any request by a financier of a Caretaker to enter into such a deed.
LEGISLATION RELATING
TO USE OF PROXIES BY DEVELOPERS AND CARETAKERS WHEN ENTERING INTO OR EXTENDING AGREEMENTS
The Act provides
that a person (including a developer) must not require or demand that a lot owner
give the person or another person a power of attorney in favour of the person or
other person or a proxy for the purpose of voting at a meeting or in a ballot of
an Owners Corporation.
Consequently,
developers are outlawed from using proxies to control meetings, particularly the
first annual general meeting (when Caretaking and Letting agreements and generally
entered into).
The Act also
provides that proxies must be delivered to the secretary of the Owners Corporation
and are effective from the beginning of the first meeting of the Owners Corporation
held after it is delivered to the secretary and lapses 12 months after being given
or, if there is an earlier date specified in the authorisation, on that date.
This section
also provides that a person who is not a lot owner and who holds a proxy for a lot
owner may not vote on matters affecting himself or herself relating to:-
§
the delegation of powers and functions under Section 11;
or
§
the appointment, payment or removal of a (strata) manager
under Part 6.
As Caretakers
or Letting Agents are not recognised under the legislation, there is no particular
provision in relation to Caretaker’s or Letting agent’s use of proxies.