Developers favoured, owners’ an afterthought

By The Knight – owners’ corporation managers

Last month the Owners’ Corporations and Other Acts Amendment Bill 2019 passed the third reading in the upper house of parliament and has since received royal assent.

While there are some welcome amendments, which will come into effect by December 1, 2021, the Bill unfortunately does not do enough to protect consumers or keep pace with a rapidly growing industry.

In good news for those living in an owners’ corporation (OC), the changes will prevent an OC manager (OCM) from being appointed for a period that exceeds three years, the developer may not receive any payment from the appointed manager and any relationship between managers and developers must be disclosed.

These changes will all help ensure that qualified, experienced OCMs are appointed based on merit, and not simply appointed as the highest bidder, or due to other financial benefit to the developer.

The bill will also make it mandatory that large OCs prepare a maintenance plan and strike a levy to meet its obligations, reducing the occurrence of urgent, and expensive, repairs which owners must find the money to pay for, in addition to their regular levies.

While much focus was given to increasing the fiduciary duties of OCMs to protect owners, not enough was given to addressing the same duties of other parties, such as developers and building managers, where unscrupulous contracts are still rife.

Indeed, some last-minute amendments – which seem to have slipped through without proper consultation with the broader industry – favour developers and commercial operators, allowing them to retain the right to lock future owners into lengthy contracts.

Raised in the name of protecting the hotel and resort management sector, who argued that the three-year cap on contracts would break their business, these amendments enable developers to enter contracts with letting managers, caretakers, building maintenance, facilities management, and other providers, with no maximum term or parameters on fees and charges.

“These changes open the door to the sale and purchase of management rights to Victoria which has plagued the Queensland sector for several decades,” Strata Community Association Victoria (SCAV) president Gregor Evans said in a media release on behalf of the SCAV. “We know what follows – OCs blindsided by expensive contracts, locked in for long periods of time and stripped of their right to choose or the ability to properly performance manage.”

Those who spoke to the Bill in parliament commented on the extraordinary amount of time its passage has taken, highlighting where the OC industry sits on the government’s priority list.

This has been blamed upon “further consultation”; however, the original consultation was completed in 2019, and there were no further advertised public consultations, nor seeking feedback from groups who provided written submissions. Why was the industry not included in this additional consultation?

Ultimately, there were only six people present on the day of the reading to have the backs of the one-and-a-half million Victorians that this bill affects. Once again, the government has failed to properly recognise multi-dwelling properties as residential homes rather than commercial interests.

Disappointingly, although perhaps not surprisingly, precedence has been given to the rights of developers and commercial operators who stand make considerable profit of these amendments, over the residents who stand to pay the price •

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