Running An OC
Owners corporation committees
An owners corporation with 13 or more lots must elect a committee at each annual general meeting (AGM). It is not mandatory for owners corporations with less than 13 lots to elect a committee.
A committee must have at least three but not more than 12 members, a chairperson and a secretary. The committee members must be lot owners (or hold a proxy from a lot owner) and once elected, hold office until a new committee is elected. There must not be more than one committee member from any one lot. A lot owner, or anyone acting as a proxy for a lot owner, may nominate for election as a committee member before or at the annual general meeting. The committee can:
•invite owners corporation members to join the committee if there is a vacancy
•appoint sub-committees (sub committees cannot vote)
•invite other lot owners or proxies of lot owners to advise and assist in carrying out its functions and powers (invited members cannot vote)
The owners corporation may, at an annual general meeting or special general meeting, resolve to add or remove a committee member or replace or remove a committee.
Duties of committee members and volunteer managers
A member of an owners corporation committee or sub-committee must act honestly and in good faith, exercise due care and diligence, not make improper use of his or her position as a member to gain directly or indirectly an advantage for themselves or for any other person and report to the owners corporation at each annual general meeting.
Immunity of committee members
If you serve on an owners corporation committee, the law gives you some protection from liability. This immunity will only apply if the person acted in good faith.
Removing committee members
Lot owners can remove a committee by ordinary resolution, which requires support from at least 50 per cent of lots or lot entitlements, at an annual general meeting.
If there is a casual vacancy on a committee, the remaining members of the committee can invite another lot owner or a person holding a proxy for a lot owner to be a member of the committee.
The vacancy does not have to be filled if three or more members remain on the committee.
Unanimous resolution:
•must have the exact text set out on the notice of the meeting
•requires 100 per cent agreement by lots (all owners or their proxies)
•is used for fundamental decisions, such as selling common property, buying land, or altering boundaries, lot entitlement and lot liability.
Special resolution:
•must have the exact text set out on the notice of the meeting
•requires 75% agreement
•is an ‘interim special resolution’, at a meeting or by ballot, it attracts agreement by owners or proxies representing at least 50% of lots and no more than 25% against.
Interim special resolution
•requires a notice to be sent to all lot owners within 14 days and can only be acted on after 29 days
•fails if the secretary receives a petition by owners or proxies representing 25% of the votes against an interim special resolution within 29 days of the meeting or ballot.
Ordinary resolutions that cannot be delegated to a committee, manager or lot owner:
•require more than 50% agreement
•is an ‘interim ordinary resolution if passed at an AGM that does not have a quorum.
Interim ordinary resolutions:
•require a notice to be sent to all lot owners within 14 days
•can only be acted after 29 days if no petition representing 25% of votes is received to call another meeting.
Ordinary resolutions that can be delegated to the committee, manager or lot owner:
•the delegate can make a decision without further consultation.
Proxies
A lot owner can appoint a person of their choice to represent them. This person ‘holds the lot owners proxy’ and their vote is counted as of that lot owner.
To nominate a proxy, the prescribed Owners corporation proxy is required to be completed and delivered to the owners corporation secretary. A proxy will lapse 12 months after the form is delivered, unless an earlier date is specified.
Notices of committee meetings must advise that a lot owner can appoint a proxy.
Delegation of powers
Delegations enable a chairperson, secretary, manager or committee to make decisions on behalf of the owners corporation and carry out day to day tasks without calling an AGM.
An owners corporation should consider delegations of its powers at each AGM.
Powers of attorney
A person acting under a power of attorney for a lot owner may vote on their behalf at a general meeting or on a ballot.
A power of attorney can only act for more than one lot if they are a member of the lot owner’s family.
Annual general meetings (AGMs)
All owners corporation must hold an annual general meeting of all lot owners if it receives or pays out money during the financial year. The time between the annual general meetings for an owners corporation must not exceed 15 months.
The meeting must cover:
•income and expenditure of the owners corporation during the past financial year
•assets and liabilities of the owners corporation at the end of the past financial year
•maintenance works and the maintenance plan
•a report from the committee
•a report from the owners corporation manager
•complaints and emerging issues.
At the annual general meeting a committee is appointed and the maintenance program & budget for the next financial year is considered.
If not all items are covered during the annual general meeting, a special general meeting may be arranged to attend to these items.
Meeting Notice
The Notice of annual general meeting (or a special general meeting) must be in writing and either handed or sent to lot owners at least 14 days before the meeting (email is acceptable). The notice must include all relevant details in terms of date, time, venue as well as financial statements, proposed budgets, special reports etc (use ‘model’ Notice form).
Quorum
A ‘quorum’ is the minimum number of members needed to transact business at a meeting. The quorum for an annual general meeting is at least 50% of the total votes or if 50% of total votes are not available then 50% of lot entitlements.
The annual general meeting can still go ahead without a quorum but it can only make ‘interim decisions’. The owners corporation can act on interim decisions after 29 days only if it has not received either a petition of owners representing 25% of the total lot entitlements to call another meeting or notice of special general meeting.
If the votes are equally split, the chairperson has a casting vote.
Voting
Owners corporation members or their proxies can vote at a meeting or by a ballot. A lot owner owing fees or other money to the owners corporation is not entitled to vote on ordinary resolutions however can still vote on matters requiring a special or unanimous resolution.
Minutes
Minutes of the meeting must be taken as a true record of the meeting (usually taken by the secretary).
If an owners corporation member believes the minutes have been recorded incorrectly, they can use the dispute resolution procedure under the Owners Corporations Act 2006.
Voting by a show of hands
Voting at an owners corporation meeting can be conducted by a show of hands.
The chairperson has the casting vote if the count is equal, the required votes have been obtained or the chairperson is a lot owner or holds a lot owner’s proxy.
Postal ballots
A lot owner calling for a ballot must give written notice of the business or proposed motion to the secretary. The owners corporation secretary must give at least 14 days’ written notice of a ballot. There are specific rules around notice of ballot, the ballot itself, collecting ballot papers, counting ballots, etc.
Working with your owners corporation manager
Owners corporation can appoint a volunteer manager or a paid professional to help handle day-to-day affairs. A volunteer manager does not have to be registered or insured. A paid professional, must be registered and have professional indemnity insurance. This includes a person or company who is rewarded for managing an owners corporation by incentives such as free accommodation, lower fees or discounted use of facilities. Volunteer and paid registered managers have the same legal obligations.
An owners corporation:
•does not abdicate responsibility when it appoints a manager. It is legally responsible for actions taken by a paid or volunteer manager on its behalf.
•may appoint a manager to carry out any powers or functions it is able to delegate at a general meeting. This appointment must be in writing or through a contract of appointment
•usually delegates powers to a manager in a contract or an instrument of delegation (some owners corporations may be self-managed by a committee or a lot owner who has been delegated powers on a voluntary basis).
Manager’s role
The manager coordinates the owners corporation’s daily affairs, including collecting and banking fees, arranging property maintenance and, in certain circumstances, organising meetings.
A manager can usually:
•prepare and distribute notices, agendas and minutes
•attend to correspondence
•arrange quotations for repairs and maintenance
•take out and maintain required insurance
•pay all invoices
•prepare and distribute financial statements and budgets
•provide owners corporation certificates
•keep and maintain the owners corporation register
•keep and maintain records
•arrange audits and reports required by law
•prepare and implement a grievance procedure, and
•ensure compliance with the Owners Corporations Act 2006, the Owners Corporations Regulations 2007 and rules.
An owners corporation manager’s legal powers and functions depend on whether the owners corporation has a committee.
If there is no committee, then the manager’s role is:
•delegated by the owners corporation at a general meeting
•to carry out his or her duties, powers and functions
•to report to the owners corporation.
If there is a committee, the manager’s role is:
•set out in the rules of the owners corporation
•determined or delegated by the owners corporation at a general meeting
•determined or delegated by the committee
•to report to the committee as required
•to report to the annual general meeting.
Delegating powers to a manager
The owners corporation must delegate duties, powers and functions to a manager in an approved form or instrument of delegation. This enables the manager to act on behalf of the owners corporation.
The owners corporation cannot delegate:
•functions or powers requiring a special or unanimous resolution
•matters requiring decision of the owners at a general meeting.
Anybody can be a volunteer manager. If the volunteer manager is also a member of the owners corporation, they are not personally liable for anything they do in good faith as a volunteer manager under the Owners Corporation Act.
A manager may delegate some or all duties, powers and functions to an employee.
The powers delegated to the manager should be considered at each AGM.
Appointing an owners corporation manager
The appointment requires an ordinary resolution at a meeting or by ballot.
The owners corporation can delegate its decision to appoint a manager to the committee, a sub-committee or to a lot owner.
Removing a manager
A manager may be ‘removed’ by not renewing their contract of appointment (or prior to expiration of contract if the manager is not performing to the contract.
Once a manager’s appointment is terminated, the manager has 28 days to return all funds and records to the owners corporation.
