VIC: Signing a Contract on Behalf of the Owners Corporation

This video and article is about signing an agreement or contract on behalf of the owners corporation in Victoria.

• QUESTION: I am an owner occupier on the owners corporation committee of an apartment complex in Victoria. What are the committee’s rights regarding the building manager’s contract? Can the building manager on-sell their contract to another vendor without committee approval?
• QUESTION: We changed waste collection services. The new collection company does not empty every bin, every time even though we’ve signed a contract with them stating they do. How can we ensure they do what the contract states?
• QUESTION: Can a Prescribed Corporation OC with a contracted strata manager use the Owner’s Seal to source quotes and establish contracts while the strata manager is dysfunctional in its responsibilities?
• QUESTION: We recently changed OC Manager in Vic and the contract was signed without the application of the seal. The motion at the Special General meeting did not include the requirement that owners had read the contract and agreed with it. Is this sufficient?
• QUESTION: In Victoria, is it efficient for one lot owner to sign an agreement or contract on behalf of the owners corporation?

Question: I am an owner occupier on the owners corporation committee of an apartment complex in Victoria. What are the committee’s rights regarding the building manager’s contract? Can the building manager on-sell their contract to another vendor without committee approval?

Answer: The committee should obtain a copy of the building manager’s contract from the facility management company.

The committee should obtain a copy of the building manager’s contract from the facility management company. The committee should review the contract/service agreement to confirm if a clause exists setting out whether an assignment of the agreement requires consent from the committee/owners corporation.

Novation involves a full transfer of the service agreement from the current facility management company to another party/company. The new party or company takes on the building manager’s role but under a new agreement. Typically, this means from the date of novation, the incoming party or company will assume both:

• rights and benefits; and
• obligations and liabilities.

To novate a contract/agreement, all parties to the original contract and the new contract must consent. Parties can typically achieve this by signing a deed of novation.

An accredited owners corporation manager can assist you in obtaining a copy of the current contract/agreement and reviewing the document for the relevant clauses. The committee may wish to engage a lawyer that specialises in owners corporation and/or contract law to assist in reviewing the contract/agreement to assist the committee in understanding their rights and obligations.

Ben Quirk
OccamStrata
E: [email protected]
P: 03 7045 3371

This post appears in Strata News #658.

Question: We changed waste collection services. The new collection company does not empty every bin, every time even though we’ve signed a contract with them stating they do. How can we ensure they do what the contract states?

My owners corporation recently changed waste collection companies. During the process, we did our due diligence and made sure we were comparing like for like with companies and the submitted scopes of work. 

We chose a company and, once engaged, discovered they refuse to empty half-full bins. This has led to our bins regularly overflowing, especially on weekends when there is no collection.

This was not mentioned in their quote, only the number of bins they would empty. If we want them to pick up every bin, every time, they will increase their price, even though we’ve signed a contract based on the initial scope. Is there anything we can do to prevent having to pay more?

Answer: Arrange the meeting as soon as practicable.

The ideal situation is to arrange a meeting between the waste removal company and a delegate of the owners corporation or two, usually the chairperson and treasurer. Ensure the committee agrees to a scope of work and have your needs written clearly in the contract. One of those needs would be to have all bins that have been placed out for collection emptied, regardless of how much waste is in them. Should there be a limit to the number of bins being collected by the service provider, this also should be made clear. You may also consider the number of recycled waste bins and electronic waste (e-waste) bins, if they provide them.

There is no reason for bins to have any amount of rubbish in them after collection so long as they are placed in the agreed location for collection and are in the agreement. Arrange the meeting as soon as practicable.

Matt Osborne
Elite BMA
E: [email protected]
P: 0420 520 976

This post appears in the February 2023 edition of The VIC Strata Magazine.

Question: Can a Prescribed Corporation OC with a contracted strata manager use the Owner’s Seal to source quotes and establish contracts while the strata manager is dysfunctional in its responsibilities?

Answer: An Owners Corporation can source quotes and establish contracts without involving the Owners Corporation (Strata) Manager.

Section 10 of the Owners Corporations Act 2006 states the following:

Power to execute documents etc.

An owners corporation may in its own name and on behalf of its members execute any document or do anything necessary or convenient to enable it to carry out its functions, powers, rights and obligations, and the document or thing has effect as if executed or done by the members.

Note

An owners corporation executes a document by the use of its common seal.

In light of the above, an Owners Corporation can source quotes and establish contracts without involving the Owners Corporation (Strata) Manager.

Gregor Evans
The Knight
Email
P: 03 9509 3144

This post appears in Strata News #421.

Question: We recently changed OC Manager in Vic and the contract was signed without the application of the seal. The motion at the Special General meeting did not include the requirement that owners had read the contract and agreed with it. Is this sufficient?

Answer: It is best practice that a resolution is obtained stating that the Owners Corporation read, understood and accepted the contract.

In our view, it is best practice that a resolution is obtained stating that the Owners Corporation read, understood and accepted the contract. That said, the absence of such and or the seal would generally not invalidate the contract, on the condition that the Owners Corporation’s acceptance of the contract is evidenced by a resolution at the general meeting.

Rochelle Castro
RC & Co Lawyers
E: [email protected]
P: 1300 072 626

This post appears in Strata News #421.

In Victoria, is it efficient for one lot owner to sign an agreement or contract on behalf of the owners corporation?

Section 21 Subsection 1 of the Owners Corporation Act requires two lot owners witness the use of the common seal when signing or executing an agreement or contract.

That said it is efficient for one lot owner to sign an agreement or contract on behalf of the owners corporation on the condition that the owners corporation resolve by a general meeting or by ballot that they have read, understood and accepted the terms of the agreement or contract and that they authorize the particular lot owner to sign that document on their behalf.

Rochelle Castro
RC & Co Lawyers
E: [email protected]
P: 1300 072 626

This post appears in Strata News #415.

Have a question about signing a contract on behalf of the owners corporation in Victoria or something to add to the article? Leave a comment below.

Read next:

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