Maintaining and improving common property in an owners corporation
If you own an apartment or a townhouse you are most likely a member of an owners corporation and collectively own the common property with the other lot owners as “tenants-in-common”. As the collective owners of common property i.e. the owners corporation, you have a duty to manage, administer, repair and maintain common property.
1. How are common property areas determined by an owners corporation?
Common property includes any parts of the land, buildings and airspace that are not lots (private property) on the plan of subdivision. Examples of common property may include the building structure and associated plant & equipment, gardens, passages, walls, pathways, driveways, lifts, foyers and fences.
Understanding who is responsibilities for repairs
The plan of subdivision shows the boundaries between private land and land collectively owned. It also includes a schedule of each lot owner’s interest in the common property and the portion of expenses they are obliged to pay.
All owners, especially members of the committee, should review the plan of subdivision and have a good understanding of common property boundaries and what areas and assets are the responsibility of the owners corporation.
While it seems simple enough to determine responsibility, it is not always straight forward as confusion arises as to whether a building element is common property or part of a lot. A well-prepared maintenance plan which correctly identifies common property areas and assets, can help owners corporation understand what their responsibilities are.
2. What are the maintenance responsibilities for common property by an owners corporation?
Under the Owners Corporations Act 2006, an owners corporation must repair and maintain:
• Common property
• Fixtures, fittings and services related to the common property
• Equipment and services that benefit some or all the lots and common property
• Any property or asset that is its responsibility.
The types of maintenance requirements that an owners corporation is accountable for can be divided into 3 categories:
- Corrective maintenance: This is daily maintenance to keep your building at an acceptable standard such as cleaning foyers, maintaining lawns and landscaping, changing light bulbs, and annual lift servicing.
- Scheduled maintenance of capital items: To prevent major capital items from failure or disrepair such as painting the exterior of the building, replacing railings, major repairs to the roof, pool or other facilities.
- Emergency corrective maintenance: This must happen immediately for health, safety, security reasons. It includes repairs to avoid rapid deterioration of the structure or fabric; for example, roof repairs after storm damage, or repairing broken glass. Generally, these costs should be covered by replacement and reinstatement insurance.
3. What are the planning maintenance requirements of an owners corporation?
Owners corporations are required to create a maintenance plan, a maintenance fund, and hold regular inspections.
Create a maintenance plan
Under the Owners Corporation Act 2006, only “prescribed owners corporations” (large schemes with more than 100 lots or raise more than $200k) are required to have a maintenance plan, however any owners corporation with more than 10 lots would benefit from a maintenance plan to help them plan works and determine what fees need to be raised to support the works.
Your maintenance plan should include the following:
- Major capital items requiring repair or replacement over the next 10 years
- The present condition of those items
- When the items or components will need to be repaired or replaced
- The estimated cost of their repair and replacement
- The expected life of those items or components once repaired or replaced.
Create a maintenance fund
If an owners corporation has a maintenance plan, they must have a maintenance fund which is money put aside to support future capital works requirements. Any part of the annual fees that is designated for the maintenance plan, money received under insurance policies for damage to property, and interest earned on the fund must be paid into that fund.
An ordinary resolution at a general meeting is required for money to be paid out of the maintenance fund for items listed in the maintenance plan so maintenance items must be on the AGM agenda. A special resolution is required for payments from the maintenance fund for an urgent matter not listed in the maintenance plan.
Hold regular inspection checks
Once the plan and budget are determined, an owners corporation should develop a maintenance cycle to inspect common property, carry out maintenance requirements, regularly survey residents about maintenance issues, and ensure maintenance is an agenda item at every annual general meeting so the owners corporation can agree to the upcoming expenditure.
4. What happens if there is a failure to maintain common property in an owners corporation
Good maintenance helps retain the value of the building and makes the property more enjoyable to live in. Poor maintenance or neglect can lead to serious damage and safety hazards. Ensuring common property is adequately managed so that it serves its purpose and having the appropriate level of public liability cover for the common property is critical as a wide range of people have access to it and accidents often result in significant claims – not to mention the legal expenses.
An owner took legal action against an owners corporation for damage to the owner’s property caused by water penetration via a balcony (a common occurrence).
The court concluded that the balcony was common property and had not been adequately maintained and therefore the lot owner had a cause of action in negligence against the owners corporation for damage to her lot.
Failure to maintain common property can have more serious consequences such as injury or death.
Although public liability insurance covers incidents on common property, all owners are liable as tenants-in-common so maintenance requirements should not be taken lightly.