Owners Corporations rely on committees for decision making, policy direction, and budgeting.
Do all owners corporations require a committee?
According to the Owners Corporations Act (Vic) 2006, an owners corporation comprising of over 12 lots must have a committee, and an owners corporation of 12 lots or less may have a committee.
How many people are on an owners corporation committee?
The committee must comprise of between 3 and 12 members.
How do members join to the committee?
Committee elections are held at each and every AGM (compulsory for owners corporations over 12 lots, and optional for owners corporations with 12 lots or less). If a member leaves the committee between AGMs because they either sell their property, or simply choose to resign, the remaining members may choose to vote to co-opt another member to the committee. If a member resigning leaves only 2 remaining members on the committee, these two members must vote to co-opt another member to replace the vacancy.
Other than by replacing a casual vacancy, there is no way to join the committee between AGM elections.
Can anyone join the committee?
Committee members must either be a lot owner, or a proxy holder for a lot owner. There cannot be more than one member of the committee from any one lot.
Even large buildings only have a maximum committee size of 12 members.
Decision making
Owners corporation decisions can be made by:
- the committee via a resolution (either at a committee meeting or by a committee ballot);
- the committee tabling a policy which is then ratified via a resolution (either at a committee meeting or by a committee ballot);
- all owners via a general, special or unanimous resolution at an AGM or SGM;
- all owners via a general, special or unanimous resolution via a ballot; or
- the owners corporation manager.
Note: There are limitations. Details on what decisions the committee can and can’t make is is explained here.
The owners corporation committee has the fiduciary duty to the owners corporation of making decisions for the benefit of all owners.
Both the committee and the owners corporation manager can make decisions on behalf of the owners corporation – the committee by means of a ‘delegation of powers’ motion passed by the owners corporation at an AGM, and the manager by means of a contract and delegations from the committee.
OWNERS CORPORATION COMMITTEE
– Makes decisions
– Creates policies
– Provides direction for the manager
OWNERS CORPORATION MANAGER
– The OC’s professional adviser
– Empowers committee’s decisions
– Enacts committee’s decisions
The owners corporation committee makes decisions, and gives direction to the manager.
Typical decisions for an owners corporation committee
- Choosing an insurance policy
- Directing OC manager to obtain or approve quotes
- Engaging legal advice
- Commissioning reports for a maintenance project
- Approving proposals from residents
- Preparing an annual budget for AGM to vote on
- Ratifying expenditure policies for the owners corporation
Are the individual committee members liable if they make bad decisions?
Even though committee members are volunteers, they have a fiduciary duty to make decisions in the interest of all lot owners.
The Owners Corporations Act states that committee members must act ‘in good faith’. As long as decisions are made on a good faith basis, the committee members are protected under law. The owners corporation manager should advise members if there appears to be any risk that a particular decision may not be in good faith.
A well-functioning committee working together with the owners corporation manager, making decisions for the benefit of all owners, helps to create and maintain the best communities.
Speak to Melb OC about how we can work with your committee.
