The rules of an owners corporation are an opportunity for a community of lot owners to set out their vision for, and expectations about, how they will live together.  In this article, we will explore why owners corporation rules are important, how you can check what rules apply to an owners corporation and how to change them.

What is an owners corporation?

An owners corporation (formerly known as a body corporate) is typically created when a plan of subdivision that contains common property is registered by the Land Titles Office. An owners corporation is the legal entity responsible for managing and administering common property on a plan of subdivision.

What is common property?

Common property is an area in a development that is owned by and is for the use and enjoyment of all affected lot owners. The plan of subdivision shows which areas of a development are common property and which areas are privately owned lots.

Who controls an owners corporation?

Lot owners have ultimate control of an owners corporation. They exercise this control by voting at a general meeting of lot owners or in a postal ballot. At a general meeting, lot owners may elect a committee of up to 12 individuals to make decisions for the owners corporation. Like lot owners, committees make decisions by holding committee meetings or by conducting a committee postal ballot. Lot owners can also appoint a manager to make decisions for the owners corporation and to carry out some of the owners corporation’s functions.

What are owners corporation rules?

Owners corporation rules are rules made by an owners corporation that are registered with the Land Titles Office. Once registered, they bind the owners corporation, lot owners, tenants, sub-tenants and lot occupiers.

Why are rules important?

Clear and sensible rules are a hallmark of any effective community and can improve the quality of living and working in a development that has common property. Good rules help make everyone’s rights and responsibilities certain and assist to reduce misunderstanding and conflict. Well drafted rules also make running an owners corporation more effective and efficient.

Why don’t owners corporation laws contain all the necessary rules?

Every development is unique. Developments range in size (from 2 lots to 500 or more lots). Some developments include extensive common facilities (such as a swimming pool) and multiple owners corporations whilst others do not. Further, the preferences of one community of lot owners are often different to other communities. Accordingly, the Owners Corporations Act 2006 (Act) includes some fundamental obligations but leaves the detail to be set out in rules tailored for each development.

Terry Zakis
Principal Lawyer

P 03 9944 0848
E terry.zakis@tzlawyers.com.au