If you have ever looked at purchasing an apartment, flat or townhouse, then you may have noticed that there is also an annual fee you will have to pay to the owners corporation, otherwise known as body corporate. But what exactly is an owners corporation? This guide prepared by our construction cost consultants has all the answers you will ever need on the subject so keep reading to understand the world of owners corporation.
What is an owners corporation?
Formerly known as body corporate, an owners corporation is the authoritative body that manages the common property within an apartment complex or block of units/flats. The specific common property will be stated in the contract of the development you are buying into, but can typically include any area of the development that is jointly used by all residents such as gym facilities, driveways, foyers, stairs or any similar common areas.
Essentially, it is the responsibility of the owners corporation to maintain the common property to ensure it is up to appropriate living standards as well as compliant with any regulatory codes established by the local council. They also set rules of what you can and cannot do on the property. For example, our last article looked at the limitations you have when renovating (and how our construction cost consultants can help you). So, who makes up an owners corporation?
Members of an owners corporation
You may not realise it, but an owners corporation is actually made up of yourself and other residents who own strata titles (which we will touch on a little later) within the development. When you purchase a property that is owned by an owners corporation, you are purchasing a piece of land that has been divided into smaller parts so that all the residents can own a part of it.
How to become a part of the owners corporation committee
As an owner of a part of the whole land, you are entitled to become involved with the owners corporation if you so wish. The members of an owners corporation are assigned by all the owners via an election. These elected officials are chosen to represent the whole property and will tend to its daily requirements.
If your development has 13 or more lots, then a committee must be elected. For developments with less than 13 lots, electing a committee is optional. A committee must have anywhere between three and 12 members including a chairperson and secretary to function.
The committee members are chosen at the annual owners corporation general meeting. It is within the power of the committee to invite other strata title holders (or their proxies) to the committee during a general meeting via a vote. Similarly, the committee also has the power to initiate votes to remove committee members.
What is a strata title?
The term strata title is often confused with owners corporation and the two expressions are commonly used interchangeably. However, they are actually quite different. When you purchase an apartment, unit/flat or townhouse, you are purchasing a part of a strata title. Sounds the same as an owners corporation, right? Well not exactly, because the strata title is the actual title itself stating that you are a part-owner of the land and common property. So, whilst strata title and owners corporation are very similar, they are actually different things.
What are owners corporation fees?
When you purchase a part of a larger property, you must also pay a levy. There are three types:
- Administration: This covers the daily expenses associated with running the development such as insurance, utilities and ground upkeep.
- Sinking fund: A sinking fund is an account that is consistently added to by all strata title owners and is saved for when urgent works are required such as structural repairs.
- Special purpose: The special purpose levy is for rare occurrences where major structural repairs are required or if there is a legal case against the owners corporation.
Are you looking for construction cost consultants?
Buying into an owners corporation can be an overwhelming experience as there is a lot to understand that is not applicable with other properties. If you are looking to renovate or build on a portion of the land you own, then we highly recommend you engage our construction cost consultants at Accent Estimating to ensure a smooth and comprehensive process.
If you would like to know more about our cost consulting and estimating services, then please give us a call on 0413 953 869 or fill out our online contact form so we can get back to you as soon as possible.