Owners Corporation Managers
The Role and Responsibilities of Owners Corporation Managers with the following information provided by Consumer Affairs Victoria.
Contract of appointment
You must be appointed in writing or using the approved Contract of appointment – owners corporation manager (Word, 114KB).
Your contract should avoid terms that:
- are unfair
- cause significant imbalance of rights and obligations between the parties in the contract.
The contract should also avoid terms that permit you, but not the client, to:
- terminate the contract
- renew or not renew the contract
- vary the contract terms
- avoid or limit performance under the contract.
Your contract must comply with the Owners Corporations Act 2006.
Duties
As a paid owners corporation manager, you must:
- register with the Business Licensing Authority (BLA)
- lodge an annual statement with the BLA
- advise the BLA, via myCAV, of any changes to your details required to be kept by the BLA, within 14 days
- be appointed by an instrument or by contract of appointment in the approved form
- report to the owners corporation at each annual general meeting
- have current professional indemnity insurance for no less than $2 million
- hold all money on behalf of an owners corporation on trust
- account separately for money held for each owners corporation you manage.
Functions and powers
As an owners corporation manager, you are appointed by the owners corporation to carry out its functions in managing and administering the common property. These include maintenance and repairs, collecting fees, maintaining insurance and keeping financial records.
Your functions and powers are:
- set out in the Owners Corporations Act 2006 and Owners Corporations Regulations 2018
- set out in the rules of the owners corporation
- authorised by the owners corporation at a general meeting and recorded in the minutes
- authorised by the committee (if there is one) and recorded in the minutes
- delegated by the owners corporation at a general meeting and set out in an instrument of delegation.
As a manager, you should also be aware that the owners corporation always retains its powers and functions.
Acting as a financial services licensee or representative
The Australian Securities and Investments Commission (ASIC) advises that under the Commonwealth Corporations Act 2001, as a manager you are deemed to provide financial services to owners corporations if you talk about insurance, process claims, seek quotations or do anything with insurance apart from write out the cheque on behalf of the owners corporation for an insurance premium.
To act for owners corporations in relation to insurance matters, you must:
- be appointed as an Australian Financial Services (AFS) licensee, or an authorised representative of a licensee
- have an updated contract in force with the licensee
- notify the licensee about any cross-endorsement when representing two or more licensees with consent
- have completed necessary training programs.
The AFS licence also requires managers to make certain disclosures, report to ASIC and give owners corporations a written financial services guide. Significant penalties apply for failing to have a licence or authorisation.
For more information, visit the AFS licensees page on the ASIC website.
Rules of professional conduct – owners corporation managers
As an owners corporation manager, you must comply with the Australian Consumer Law and Fair Trading Act 2012 and the Owners Corporations Act 2006, as well as meeting your contractual obligations. You must engage in fair trading practices, make full disclosures and not engage in unconscionable, misleading or deceptive conduct.
Australian Consumer Law
The Australian Consumer Law and Fair Trading Act 2012 sets out standards of conduct that:
- protect consumers
- prohibit unconscionable, misleading and deceptive conduct
- provide for statutory conditions and warranties in consumer contracts, and
- void unfair terms in consumer contracts.
Under the Australian Consumer Law and Fair Trading Act 2012, suppliers, including managers, must not engage in misleading or deceptive conduct that may be harmful to owners corporations or their members.
Potential areas of misleading or deceptive conduct include statements made about:
- fees or prices for services
- services provided within the quoted fee, and/or
- qualifications or experience of the manager.
Owners Corporations Act
The Owners Corporations Act 2006 also sets out standards of conduct for managers, which are:
- to act honestly and in good faith
- to exercise due care and diligence
- not to make improper use of your position to gain, directly or indirectly, an advantage personally or for any other person.
As an owners corporations manager, you must:
- be honest and make full disclosure to the owners corporation or committee of issues and potential conflicts
- know your legal obligations and those of the owners corporation
- promptly inform the owners corporation about issues so members can make decisions and act on them
- assist the owners corporation to comply with its legal obligations
- get professional advice or more information when in doubt, and
- act in the interests of the owners corporation, committee and the lot owners.
To meet these standards of conduct and to improve disclosure and reporting at the annual general meeting, you should record and report on:
- the number of owners corporations certificates issued and fees charged
- the number of telephone calls and the amount of correspondence from lot owners and occupiers raising issues that may lead to complaints
- how many people request access to records of the owners corporation, and
- any amount of commission or rewards you receive from suppliers for services to the owners corporation (including the amount of insurance commission).
Professional associations
You are encouraged to contact your professional association for information on codes of practice, contracts, management services, training, reporting, standard documentation and dispute resolution processes.
Financial information – owners corporation managers
Disclosure
As an owners corporation manager, you must disclose:
- your costs for services to the owners corporation or its committee
- any commercial or financial interest in other professionals’ practices that you refer clients to
- any inducements from suppliers whose products you recommend or use.
Failing to make disclosures or obtain informed financial consent from clients may raise issues of misleading and deceptive conduct.
The Director of Consumer Affairs Victoria can bring proceedings before the Magistrates’ Court or the Victorian Civil and Administrative Tribunal (VCAT) for a breach of the Owners Corporations Act 2006 or the Australian Consumer Law.
VCAT can make orders including:
- penalties
- damages
- injunctions
- refunds
- corrective advertising
- enforceable undertakings.
Financial reporting
As a manager, you will usually be responsible for preparing financial statements for the owners corporation. You must prepare and keep records and prepare financial statements that:
- cover all income, expenditure, assets and liabilities
- provide accurate reports of the financial situation
- separate maintenance fund records and accounts
- explain all financial transactions for taxation purposes
- can be conveniently and properly audited.
Auditing of financial statements
You must keep financial records to enable prescribed owners corporations to have their financial statements audited at the end of each financial year.
All other owners corporations can choose whether or not they want an audit.
Audits must be carried out by:
- a registered company auditor
- a firm of registered company auditors
- a person who is a member of CPA Australia, the Institute of Chartered Accountants in Australia or Institute of Public Accountants, or
- any other person approved by the Director of Consumer Affairs Victoria.
Bank accounts
All fees levied by an owners corporation must be paid into a bank account of the manager or owners corporation. As the manager, you hold all money in trust for the owners corporation and must account separately for the money held for each owners corporation.
If money is held in trust or for the benefit of another person, then general law duties arise, including:
- inquiring into the terms and state of the trust
- obeying the terms of the trust
- not making a personal profit or advantage from the trust
- accounting for and providing information on the trust
- keeping accurate and up-to-date records
- administering the trust personally
- exercising reasonable care not to mix trust monies
- acting impartially.
