An owners corporation is the legal entity that combines all the lot owners in a strata scheme.
Owners corporations (also called strata corporations, corporations, body corporates and strata companies) are automatically created when a plan of subdivision contains common property.
Common property may include driveways, paths, foyers, stairs, lifts, and common garden areas. Every strata scheme has an owners corporation. All owners are automatically members of the corporation, but tenants are not.
In large subdivisions, more than one owners corporation may be created.
An owners corporation operates like any other business. It can make rules which are binding on the corporation, owners and tenants regarding the use of common property and the lots, providing that the rules do not contravene legislation governing strata titles or other laws.
It is undeniable that the success of an owners corporation is dependent on committed and informed members who participate in meetings, ‘own’ the decisions that are taken, and are willing to resource and support the long term maintenance and management of the property.
Owners corporations have a legal responsibility to:
Maintain all common property including the structure of any buildings on the land
Insure the whole of the property for the full replacement value
Administer the finances and common funds of the group of owners
Administer the secretarial functions including the conduct of meetings of members, documentation of minutes, and dealing with all correspondence
Resolve disputes involving members of the owners corporation and enforce the owners corporation rules.
The owners corporation also has a responsibility to maintain proper records, including financial records, orders served, and minutes of meetings.
The corporation raises funds by levying contributions against all lot owners. The amount that each lot owner contributes to maintenance funds is calculated according to the ‘ownership and utility interests’ accompanying the strata plan.
All owners can vote on management decisions at an Annual General Meeting (AGM), but decisions are usually made on behalf of the owners corporation by a committee of owners who are elected at the AGM. However, some small strata schemes do not have committees.
Some strata schemes also manage the day-to-day financial, maintenance, and other administrative duties themselves, but given these are complex, most choose to use the services of a professional Strata Manager.