Owners Corporations and Other Acts Amendment Bill 2019 | Bill

Ms VAGHELA (Western Metropolitan) (17:00): I rise to speak on the Owners Corporations and Other Acts Amendment Bill 2019. There are over 1.5 million Victorians who live in or own property in an owners corporation. That is almost 25 per cent of us. This bill has gone through a long process. This bill reforms several key aspects. It rationalises the regulation of owners corporations, it improves the quality of owners corporation managers and it enhances protection for owners corporations. It expands and improves developers’ duties to the owners corporations they create, and it enhances protection for owners corporations. It improves the governance and financial administration of and the internal relations in owners corporations, and it improves and rationalises the regulation of owners corporations in retirement villages. These reforms will help improve the governance of the owners corporation buildings and make them more financially responsible and sustainable.

I thank each and every person involved in working on this important piece of legislation. This legislation is much needed. It will protect renters, retirees, property owners and families. This bill changes the definitions of owners corporations to a more tiered approach. This will bring more clarity and transparency. The bill creates five different tiers of owners corporations. These tiers are based on the size of the lots that they manage. I believe that this is a prudent way of regulating owners corporations. Not all owners corporations are the same. Larger owners corporations should be subjected to a greater number of requirements than smaller ones. Larger owners corporations will be subject to a greater number of requirements with regard to committees, annual financial statements and such, whilst smaller ones will be subjected to less stringent regulation. Most owners corporations are small. Only a few qualify for tier one, which is 100 lots or more. This is a more rational and responsible way of regulating the owners corporations, and is a consistent way to maintain standards of reporting and accountability.

This bill will help in protecting property owners through a maintenance fund. Owners corporations will be required to deposit sufficient fees into their maintenance fund to implement the approved maintenance fund. This will reduce the need for significant and unexpected fee increases, which can cause financial hardship for some lot owners. Most lot owners come from modest backgrounds. They have mortgages to repay, families to feed and bills to pay. Sudden, unexpected or black swan events can completely disorientate the budgets of some lot owners. The maintenance fund will provide protection against such shocks.

This bill will also bring protections against abuse from managers. People should not face detriment due to poor management or bad behaviour on the part of a manager. The management is in place to aid the people, not to harm them or to put them at a disadvantage. This bill will strengthen the disqualification and insurance provisions of the current registration scheme for professional owners corporation managers. This bill will also protect people from unfair contract terms. It will prohibit certain unfair terms in owners corporation management contracts and give VCAT the power to rule generally whether other terms in management contracts are unfair. This reform is critical to making sure that the fiduciary duties of the managers are upheld.

This bill also prohibits owners corporation managers from pooling the funds of separate owners corporations under their management into one bank account. This pooling of funds reduces transparency and creates opportunities for bad behaviour. Equity between lot owners will also be enhanced. The ability of a majority lot owner to prevent an application to VCAT for changes to the settings will also be removed where all other lot owners have consented to the change. This bill will also implement several reforms to improve the governance and financial administration of owners corporations, which include restricting proxy farming and committee proxies and prohibiting contractual limitations on lot owners’ voting rights. It includes enabling owners corporations to make rules controlling smoke drift from private lots, and it also includes enabling owners corporations to separately levy lot owners for a range of costs directly attributable to the particular use of certain lots.

This bill will further improve decision-making within inactive owners corporations by giving owners corporation managers authority to make interim decisions in certain circumstances. This bill will also make sure that the owners corporation rules are not oppressive or unfairly prejudicial to lot owners or residents. It also stops unfair discrimination against a lot owner or resident. Additionally, this bill will expand the duties of owners corporation committee members to include a duty to act in the owners corporation’s best interests. Expansion of these duties will help the owners corporations committee members do the right thing for owners corporations and stakeholders. This bill will also clarify relationships and reduce disputes in owners corporations in multistorey apartment buildings.

The bill will support owners corporations’ duty to repair and maintain common property by permitting them to enter private lots on reasonable notice where necessary to enable repairs to common property. It will reduce the maximum size of owners corporation committees from 12 to seven members and allow the chair or secretary of the committee to arrange committee ballots. It will exempt owners corporations from the need to engage the internal dispute resolution process for matters they initiate. The bill will improve dispute resolution in owners corporations by enhancing the internal dispute resolution process set out in the model rules, including provision for a grievance subcommittee. It will enhance compliance with owners corporation rules by increasing the maximum penalty for breaches to $1100 and allowing owners corporations to retain penalties. It will enhance owners corporations’ ability to initiate legal actions by applying different voting thresholds for actions in different courts.

The bill will reduce inequities for non-defaulting lot owners by permitting owners corporations to recover reasonable prelitigation costs from defaulting lot owners and to adopt payment plans in hardship cases. The bill expands the obligations of developers to owners corporations in line with the New South Wales approach but including other obligations and prohibitions and extending the duration of developers’ obligations from five to 10 years.

The bill also brings changes to improve and rationalise the regulation of owners corporations in retirement villages. Retirement villages are a very important part of Victoria, including the Western Metropolitan Region. They are a place to create strong, tight-knit communities. They are a great place for retirees to be a part of community with ease. These seem like minor changes, but they are extremely vital. They will make the lives of thousands of retirees easy. They will keep retirees protected from dodgy developers or hostile managers. This bill provides a clearer separation between owners corporation meetings, retirement village meetings and village resident committees. It also aligns the power of village operators who control owners corporations in retirement villages with the aims of the Retirement Villages Act 1986.

This is an astoundingly all-inclusive bill which implements critical reforms. This bill is an outcome of a massive review process which took several years. Many people have given their input to make this bill what it is. It is backed by people from all walks of life. Owners corporations will benefit from these reforms, as will those that reside in places managed by them. I fully support this bill. I commend the bill to the house.