Who this guide is for: This guide is designed for Victorian owners corporation members, committee members and property owners looking to identify potential financial, maintenance, governance and planning issues.
A Victorian owners corporation can face significant financial and maintenance challenges when issues are repeatedly deferred or future costs are not properly planned.
While many red flags are common across Australia, Victorian owners corporations operate under specific requirements around maintenance plans, maintenance funds, annual and special fees, records and committee responsibilities.
Key Facts
- Victorian owners corporations can levy annual and special fees.
- Tier one and tier two owners corporations must have a maintenance plan and maintenance fund.
- A maintenance plan should help identify and budget for necessary works.
- Special fees are designed for extraordinary or unexpected expenditure.
- Committee members have duties including acting honestly and in good faith and exercising due care and diligence.
- Construction costs and building condition can affect whether existing maintenance funding remains adequate.
What are the biggest red flags in a Victorian owners corporation?
1. Special fees are becoming routine
Special fees exist for extraordinary or unexpected expenditure.
They are not automatically a sign of poor management.
However, if owners are repeatedly paying special fees for works that could reasonably have been anticipated, the owners corporation should examine its budgeting and maintenance planning.
2. The maintenance fund doesn’t reflect upcoming works
For owners corporations with a maintenance plan, the maintenance fund is designed to fund works identified in that plan. Tier one and tier two owners corporations must have a maintenance plan and maintenance fund.
A major warning sign is when the building’s planned works significantly exceed the funds available.
A maintenance plan is only as useful as the assumptions behind it. With construction and maintenance costs changing over time, owners corporations should regularly consider whether their funding still reflects the work ahead. Read more about preparing your maintenance fund for rising construction costs – Is Your Owners Corporation Maintenance Fund Ready for Rising Construction Costs?
3. The maintenance plan hasn’t kept pace with the building
A maintenance plan should reflect the building’s actual condition, equipment, services and future requirements.
Consumer Affairs Victoria recommends considering the age and condition of the building and equipment, previous reports and previous maintenance works when preparing a maintenance plan.
If the plan no longer reflects the building, it may not provide a reliable basis for financial planning.
4. Maintenance is continually deferred
Deferred maintenance can become more expensive as deterioration progresses.
The maintenance cycle should involve identifying assets, assessing condition, planning works, budgeting and implementing those works.
5. Committee decisions are poorly documented
Victorian committee members have duties including acting honestly and in good faith, exercising due care and diligence and acting in the interests of the owners corporation.
Clear records help demonstrate how decisions were made and what actions were agreed.
6. The committee doesn’t understand its role
Committee members don’t need to know everything about building management.
They should, however, understand their responsibilities and seek appropriate information when necessary.
Consumer Affairs Victoria specifically recommends that new committee members receive copies of the legislation and attend training or information sessions.
This makes committee education a particularly relevant red-flag topic in Victoria.
7. Owners don’t understand their fees
Annual fees cover general administration, maintenance, insurance and other ongoing costs. Special fees cover extraordinary or unexpected expenditure.
If owners cannot understand why fees are being charged or what upcoming expenditure they support, the financial position may need greater transparency.
8. The owners corporation’s records are difficult to understand or locate
Records can help owners understand:
- current fees
- special fees
- previous decisions
- maintenance
- upcoming works
- financial commitments.
Victorian owners corporations are required to maintain records and provide access under the relevant framework.
9. The same maintenance issue keeps returning
Repeated leaks, lift faults, roof problems or other recurring issues should prompt investigation into the underlying cause.
The question is:
Is the owners corporation repeatedly paying for repairs without resolving why the problem keeps occurring?
10. Insurance and maintenance are being confused
Insurance should not be treated as a replacement for good maintenance.
When something goes wrong in a building, understanding whether the issue is a maintenance responsibility or an insurance matter can be challenging. Our maintenance versus insurance guide explores the distinction and some of the common scenarios committees encounter – Maintenance vs Insurance in Strata: What Committees Need to Know
What should Victorian owners do if they spot a red flag?
Start with the owners corporation’s records and financial information.
Look at:
- annual budgets
- annual fees
- special fees
- maintenance plans
- maintenance fund information
- meeting minutes
- building reports
- upcoming works.
Then determine whether the issue is isolated or part of a pattern.
While Victoria has its own owners corporation requirements, many of the warning signs discussed here apply across strata communities. For a broader look at what owners and committees should watch for, read our complete guide to red flags in strata — Red Flags in Strata 15 Warning Signs Every Owner and Committee Should Know
Victorian red flags: Frequently Asked Questions
Are special fees a sign of poor owners corporation management?
Not necessarily. Special fees are intended to cover extraordinary or unexpected expenditure. Repeated special fees may indicate that budgeting or maintenance planning should be reviewed.
Which Victorian owners corporations need a maintenance plan?
Tier one and tier two owners corporations must have a maintenance plan and maintenance fund. Tier three, four and five owners corporations are not required to have one but may choose to do so.
What should a Victorian maintenance plan consider?
It should consider matters including the age and condition of the building and equipment, previous reports, previous maintenance works and expected life of relevant components.
What are the responsibilities of an owners corporation committee?
Committee members must act honestly and in good faith, exercise due care and diligence and act in the interests of the owners corporation.