Thoughts on an Owners Committee Policy and Maintenance (revised)- AHB 2020

Much of this article discusses the formal maintenance requirements of an Owners Corporation when it crosses the boundary that makes it a "Prescribed Owners Corporation". Although there are other requirements regarding the method of accounting and and annual audits that may add to the cost of running the building, the maintenance planning and fund, independently of prescription, are a sign of prudent management.

On January 20th next year it will be ten years from the signing of Occupancy Permit No 13265/09 OP. A bit of luck with the timber cladding and we could see all of our nascent issues behind us and it will be time to reflect on where we are going.

To help with these reflections I suggest that the Owners Committee should have a stated objective that will imply past troubles are behind us.

"The intention of the Committee is to ensure that our building will be maintained as the well built, mid-range building its architect intended it to be."

Or some similar statement. The reason is to provide a public rationale for the OC's existence beyond the requirements of the Act. It should be stated when the OC report is delivered at the AGM and be a reference point for performance over the year.

There is another important decision for apartment owners. If one is a "house" owner, maintenance to keep things in order is taken for granted. Periodic painting, fixing the unexpected leak and so on are regular tasks budgeted for without serious thinking. Many, probably most owners also plan for enhancements; the added on games room, the new air-conditioning system, a swimming pool. This paper discusses the way in which normal and future maintenance is planned and budgeted. It would make sense to consider enhancements as part of the building's future.

It is inevitable that the time will come when owners or their executors will sell their property at 34 Union Street. Apart from the visual inspection there are two items a prudent buyer will ask for; the "Owners Corporation Certificate", a mandatory document that must be provided on request and will contain sufficient information to ensure the buyer will get no surprises, and the size of the "Reserve Account" the amount set aside for future maintenance.

If the annual total of levies for an Owners Corporation reaches $200,000 or there are 100 or more units that body is "prescribed" and a formal maintenance plan is mandatory. If GST is included our annual levy of $3,589.74 makes us a "prescribed corporation".

The next few paragraphs come from the Victorian Consumer Affairs Guide to Owners Committees.

Maintenance plans

An Owners’ Corporation maintenance plan must cover:

• 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.

Only prescribed owners corporations must have a maintenance plan and maintenance fund, but Consumer Affairs Victoria recommends that as part of responsible asset management all owners corporations have a maintenance plan.

If an owners’ corporation has a maintenance plan then it must have a maintenance fund to cover the cost of works in the plan.

The owners’ corporation is required to report on implementation of its maintenance plan, if it has one, at each annual general meeting.

The plan that could already be compulsory has some imperatives; identify major items that could require substantial repair or replacement and an estimate of when and at what cost.

The regulations associated with the Act provides the following list:

Prescribed information for maintenance plan

For the purposes of the definition of major capital item in section 37 of the Act, the following classes of items are prescribed—

(a) common property structures, including the roof, stairways, balustrades, and window frames;

(b) common property services, such as shared water, gas and sewerage pipes, pumps, drains, electrical and telephony infrastructure;

(c) common property assets, such as fences, pools, and water tanks.

Here are some candidates:

Item

Current condition

Possible repair or
replacement date

Estimated cost

New life expected

Lift front

Lift rear

Hot water system

Grey water system

Garage door

Roof

Fire pump

Fire warning system

Decking

Balustrades (inner)

Balustrades (outer)

Others?

Total:

A first look at this list could be alarming. The bottom line will show hundreds of thousands of dollars to be spent on future maintenance, but relax. If you draw the table of future requirements with a time axis and a dollar amount for each period it gets much more manageable.It still requires a Credible Plan and a special Maintenance Account, a requirement that the writer regards as essential even when not prescribed.

INDEX