What is the difference between an Inactive and Self-Managed Owners Corporation?

What is an Owners Corporation?

An Owners Corporation manages (previously known as Body Corporate) the common property areas of residential, commercial, and retail premises. Members of the Owners Corporation appoint a manager to oversee these common property areas.

Some examples of common property can include driveways, gardens, stairwells pathways, and fences. Whilst these common property areas are found on your subdivision plan, you do not own them outright. Instead, you are a member of the owners’ corporation and have liabilities to bear, such as repair and upkeep, and entitlements towards its use.

What does it mean when an Owners Corporation is inactive?

An Owners Corporation is inactive when:

  • There has not been an annual general meeting held;
  • No fees are fixed; and
  • No insurance has been obtained in the last 15 months

This is commonly found in two-lot subdivision plans where the requirements around annual general meetings, fees and insurance are relaxed.

What does it mean to have a Self-Managed Owners Corporation?

While you can appoint a professional owners corporation manager to assist with managing the common property areas, some owners prefer to manage it themselves. Those who do adopt the name of ‘Self-Managed Owners Corporation’.

Both small and large subdivisions can have the Owners Corporation self-managed. It comes down to the preferences of all the owners within the subdivision plan.

Pros and Cons of a Self-Managed Owners Corporation

The benefits of self-management include:

  1. Cost-saving opportunity: By opting for self-management, you can save on third-party management fees.
  2. Increased control: Self-management allows lot owners to have more control over the management of the Owners Corporation, including whom to take our common property insurance with, how to prioritise the maintenance and upkeep of common property areas, etc.

The challenges of self-management include:

  1. Non-compliance with regulatory practices: It is likely that owners’ corporation members have a limited understanding of the industry practices to maintain a compliance owners corporation, which can result in penalties.
  2. Management of multiple stakeholders: While it is feasible to self-manage the owners’ corporation where its committee members are less than 10, it can become increasingly difficult to replicate the same where there are multiple lot owners.. This can result in delayed decision-making processes on matters related to the Owners Corporation.

W Legal Group can help

If you like to know more on Owners Corporation or how to self-manage, please reach out to W Legal Group via phone or email at hello@wlegalgroup.com.au.

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