VIC: Q&A Strata Insurance and AGMs for a Small Owners Corporation

These questions are about individual strata insurance and AGMs for a small strata scheme in Victoria.

Table of Contents:

• QUESTION: How do I find out who owns the other unit in our duplex so we can share the cost of our building insurance?
• QUESTION: Do all OC’s need to have a valuation done if they have not had one in the last 5 years? If not, are they in breach of the act?
• QUESTION: Can a townhouse on land subdivided off the original block be insured separately if it is a service-only OC with no common area? How can this be done?
• QUESTION: For a small 4 unit strata scheme, are we legislated to hold AGMs or carry out any other activities in terms of the owners corporation?
• QUESTION: In a small scheme, if all 3 units have separate insurance, does the common property driveway need separate insurance too? Should all lot owners contribute to the common property insurance?
• QUESTION: Who is responsible for insurance to cover townhouses that are on their own title? I believe lot owners would be responsible for individual strata insurance.
• QUESTION: I have just purchased a unit and have been told by the real estate agent the body corporation was never exercised and the other owners got their own individual strata insurance. How can this be?
• QUESTION: Although we have an Owners Corporation, we have no common property. How does insurance work? Do we need individual strata insurance? Should Public Liability be part of this?

Question: How do I find out who owns the other unit in our duplex so we can share the cost of our building insurance?

I own a duplex. We have always divided the building insurance for the duplex between both owners. A few years ago, I put my unit up for rent. As I no longer live at the address, I’ve only just discovered that my next-door neighbour sold their unit and the new owner rents out their property as well. Our renewal for building insurance is due and I am trying to locate the details of the new owner.

Is there some way to find out who owns the property so I can contact them about the insurance? In the meantime, what do I do to ensure the property is sufficiently insured? If I pay the insurance in full, how do I recover the proportion owed by the other owner?

Answer: Do a land titles search.

The best way to identify the owner of a property is to do a land titles search. A title search shows the information held in the Victorian Register of land at the time the search is made. This includes registered proprietors’ names and addresses, mortgage details and information about other encumbrances affecting the land. There is a cost to undertaking a search.

Land Victoria holds this information and manages the process. For information on how to do a land titles search go to Land Victoria’s website and follow the link: Find land title information.

Alternatively, you could approach the tenants or the real estate management agent and ask them for them to pass on a message to the owners explaining that you would like to contact them.

Regarding insurance, as the owner of a duplex you are part of a two lot or Tier Five Owners Corporation, which are exempt from many of the legislated requirements of more complex owners corporations, including the requirement to take out reinstatement and replacement insurance or public liability insurance. This means that there is no obligation on owners to take out insurance and therefore no avenue for you to recover any money that you choose to spend on joint insurance.

Nevertheless, it is a good idea to take out joint insurance where you share any common property, such as a shared wall, shared driveway or shared services. Joint insurance in such circumstances is generally cheaper than individual insurance. Also, where you insure individually, it can be difficult to get coverage for those shared areas. However, if you cannot contact your neighbour or they choose not to take out joint insurance, you should discuss with your insurance broker about insuring your own property.

Gary Howell
MBCM Strata Specialists
E: [email protected]
P: 1300 777 276

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

Question: Do all OC’s need to have a valuation done if they have not had one in the last 5 years? If not, are they in breach of the act?

Does the new legislated requirement in Victoria for Owners Corporations with 3 or more lots that came in on 1 December 2021 require them to conduct an Insurance valuation at least every 5 years?

Should all OC’s that have not had a valuation at all or in the last 5 years have one over the next few months?

Is there an amnesty/indulgence period allowed or does it mean that every OC that has never had a valuation and doesn’t have one before 1 December 2022, is in breach of the act?

Answer: All OC’s that have not had a valuation at all or in the last 5 years should immediately obtain a valuation.

Those subsections were in fact unchanged by the Owners Corporations and Other Acts Amendment Act 2021 which commenced on 1 December last year.

An exception was introduced by that Act. It is encapsulated in the notation to subsection (1): A tier five OC is exempt from compliance with s.65.

A tier 5 OC is defined in s.7(6) of the Owners Corporations Act 2006 (OCA) as:

1. an owners corporation for a 2-lot subdivision; or
2. a services only owners corporation.

A services only OC is defined in s.3 of the OCA as meaning an OC for a subdivision that has no land or building that is designated as the common property and either—

1. the initial owner of the subdivision has arranged for a utility company to install common meters that are designated as the common
2. the subdivision has a common supply or common service that is unmetered.

Doubtless, that is the basis of your observation regarding OCs with 3 or more lots.

And so, as subsections (2) and (3) are not new there is no transitional provision proving any amnesty. The requirement to obtain a valuation has in fact existed since the OCA first came into operation on 31 December 2007.

There is no prescribed penalty for non-compliance with the obligation to obtain a valuation, but the importance of having an indemnity sufficient to do the following (required by s.59 of the OCA) can scarcely be overstated:

• the cost necessary to replace, repair or rebuild the property to a condition substantially the same, but not better or more extensive than its condition when new; and
• the payment of expenses necessarily and reasonably incurred in the removal of debris and the remuneration of architects and other persons whose services are necessary, being incidental to the replacement, repair or rebuilding of the damaged property.
• reinstatement and replacement of the OC’s portion of any shared services.

In short, I agree that all OC’s that have not had a valuation at all or in the last 5 years should immediately obtain a valuation.

Tim Graham
Bugden Allen Graham Lawyers
E: [email protected]
P: 03 9086 5832

Question: Can a townhouse on land subdivided off the original block be insured separately if it is a service-only OC with no common area? How can this be done?

We have two older units with a common driveway and a separate townhouse built on a block of land on the front of the block. It was subdivided off the original block but does not share any common property. There is a secondary ‘services only’ owners corporation between the two units and townhouse which was set up purely for Water easement.

Can the townhouse be insured separately as it is a service-only OC with no common area?

Answer: By unanimous resolution, an owners corporation may resolve that, if there is no common property, each lot owner must arrange for the lot owner’s own insurance.

Section 59 of the Owners Corporation Act requires the owners corporation to insure “Buildings”. Section 54 defines an insurable building as:

Building includes any building on the plan of subdivision and—

(a) any improvements and fixtures forming part of the building; and

(ab) any shared services; and

(b) anything prescribed as forming part of a building—

If the lot owner homes do not form part of the plan of subdivision, they can be insured separately, otherwise, the only other exemptions for the requirement to arrange insurance are:

• Section 63: By unanimous resolution, an owners corporation may resolve that, if there is no common property, each lot owner must arrange for the lot owner’s own insurance.
• Section 64: This Division does not apply to an owners corporation if the land affected by the owners corporation is affected by another owners corporation which has the insurance required by this Division.

Tyrone Shandiman
Strata Insurance Solutions
T: 07 3899 5129
E: [email protected]

Disclaimer: This information is of a general nature only and neither represents nor is intended to be personal advice on any particular matter. Shandit Pty Ltd T/as Strata Insurance Solutions strongly suggests that no person should act specifically on the basis of the information in this document, but should obtain appropriate professional advice based on their own personal circumstances and the specific coverage afforded under their policy wording. Shandit Pty Ltd T/As Strata Insurance Solutions is a Corporate Authorised Representative (No. 404246) of Insurance Advisernet Australia AFSL No 240549, ABN 15 003 886 687.

This post appears in the September 2022 edition of The VIC Strata Magazine.

Question: For a small 4 unit strata scheme, are we legislated to hold AGMs or carry out any other activities in terms of the owners corporation?

We’ve bought a unit in a 4 unit strata complex in Northern Melbourne. The only common property is the driveway and the only expense is the strata insurance policy covering all 4 units.

Are we legislated to hold AGMs or carry out any other activities in terms of the owners corporation?

Answer: We recommend that your Owners Corporation at least hold an annual general meeting resolving to raise a budget to cover the common driveway and strata insurance expenses.

The Owners Corporations Act 2006 (Act) requires that the Owners Corporation pass resolutions when it takes actions. Passing resolutions and recording them through meeting minutes or ballot results record the decision of your Owners Corporation when it raises funds for expenses each year.

Further, an Owners Corporation is only capable of making legal decisions and validate its actions when it passes resolutions.

Therefore, at a minimum we recommend that your Owners Corporation at least hold an annual general meeting resolving to raise a budget to cover the common driveway and strata insurance expenses.

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

This post appears in the March 2022 edition of The VIC Strata Magazine.

Question: In a small scheme, if all 3 units have separate insurance, does the common property driveway need separate insurance too? Should all lot owners contribute to the common property insurance?

We live in a Unit in a small 3 lot scheme in Victoria.

The only common property is a common driveway used by 2 of the lots. The other lot has seperate access to their garage and does not use the common driveway.

The owner with their own access has not been contributing towards the common property driveway insurance for several years now. They believe that, as their property is independent, and they don’t use the common driveway.

The other Owner has a standalone insurance for his property only. Can I also just get building insurance for my Unit? If yes, does the common driveway need to be insured separately?

Answer: If all 3 lots are within the boundary plan, it means that to comply with the legislation, the Owners Corporation must insure all lots via strata insurance.

Section 59 (1) of the Owners Corporation Act 2006 requires that An owners corporation must take out reinstatement and replacement insurance for all buildings on the common property in accordance with this Division.

If all 3 lots are within the boundary plan, it means that to comply with the legislation, the Owners Corporation must insure all lots via strata insurance. But notwithstanding, if there is no common property the owners corporation can insure the buildings separately in accordance with section 63 By unanimous resolution, an owners corporation may resolve that, if there is no common property, each lot owner must arrange for the lot owner’s own insurance.

Should there be any issues with owners agreeing to take out cover in accordance with their legislative requirements we recommend contacting Consumer Affairs Victoria for further advice on how to navigate the issue.

Read more: Do you need a body corporate for 3 units? Find out the requirements for 3 to 9 lot schemes here: VIC: New Five Tiered System for Owners Corporations

Tyrone Shandiman
Strata Insurance Solutions
T: 07 3899 5129
E: [email protected]

Disclaimer: This information is of a general nature only and neither represents nor is intended to be personal advice on any particular matter. Shandit Pty Ltd T/as Strata Insurance Solutions strongly suggests that no person should act specifically on the basis of the information in this document, but should obtain appropriate professional advice based on their own personal circumstances and the specific coverage afforded under their policy wording. Shandit Pty Ltd T/As Strata Insurance Solutions is a Corporate Authorised Representative (No. 404246) of Insurance Advisernet Australia AFSL No 240549, ABN 15 003 886 687.

This post appears in Strata News #420.

Question: Who is responsible for insurance to cover townhouses that are on their own title? I believe lot owners would be responsible for individual strata insurance.

I own and occupy a townhouse in Victoria within a development containing 10 townhouses each on its own title.

We are part of an owners corporation which has responsibility for the common area consisting of only the driveway, lawn and gardens.

Who should be responsible for building insurance? The Owners Corporation managers believe the Corporation is responsible and has taken out insurance to cover all the buildings but as they are not on the common property I believe it is our responsibility to have our own individual strata insurance.

I would rather not pay 2 premiums but need to be sure who should carry the insurance.

Answer: The answer will depend on your specific strata plan, its boundaries and if there are differing title types.

The answer will depend on your specific strata plan, its boundaries and if there are differing title types.

Section 59 of the Owners Corporation Act (2006) states that

“An owners corporation must take out reinstatement and replacement insurance for all buildings on the common property…”.

If it is the case that the townhouses are within the boundary of the plan, then the building insurance ought to be placed by the owners corporation.

If however, the townhouses are on completely separate titles, then there is no legislative necessity for the owners corporation to place the building insurance.

Section 63 of the Owners Corporation Act (2006) states that

“…an owners corporation may resolve that, if there is no common property, each lot owner must arrange for the lot owner’s own insurance.”

This may arise if there is one strata plan for the townhouses where no common property exists and a separate strata plan for the drive way area.

Go ahead and have a look at your strata plan to see what the exact layout is and apply the legislation as appropriate.

Keep in mind that your owners corporation manager may receive a commission if they arrange your insurance so there is an incentive for them to err on the side having the owners corporation insure the building.

You may also want to keep in mind that it is usually going to be cheaper to insure all buildings by one strata policy rather than individually. Strata policies also tend to have broader cover and be better designed for losses that occur in strata.

Simon Plummer
StrataRatings
E: [email protected]

This post appears in Strata News #246.

Please note that the above is not intended to provide advice of any type and merely discusses the issues raised broadly. Professional assistance should be sought should you require advice.

Question: I have just purchased a unit and have been told by the real estate agent the body corporation was never exercised and the other owners got their own individual strata insurance. How can this be?

I have a query regarding strata insurance. I have recently purchased a property in Victoria which has an inactive body corporate (stated in the contract of sale). The property is a unit and there are 3 units in total. The common property shared is the driveway.

There is an Owners Corporation Search Report which states that the land is affected by owners corporation and there is no manager. I have been told by the real estate agent that body corporation was never exercised and the other owners got their own individual strata insurance. I thought this was not possible as insurance companies do not provide cover for one property if it is covered by body corporation.

I am looking to move in next week and will try to make contact with the owners prior to that but what should the necessary steps I take to ensure I am covered by insurance when I move in? Do I need to take up strata insurance myself across the entire block, or can I insure for only common property? I am a bit conscious that if something adverse were to happen post moving in and I do not have insurance then I may be left stranded. Can you please advise what the best steps for me might be?

Answer: The Victorian legislation requires that and Owners Corporation insures the common property, all buildings and the Owners Corporations Legal Liability. There is an exception for some two-lot schemes, however, being a three unit property, insurance would be required.

The Victorian legislation requires that and Owners Corporation insures the common property, all buildings and the Owners Corporations Legal Liability. There is an exception for some two-lot schemes, however, being a three unit property, insurance would be required.

Here’s a brief summary.

In the case that the Owners Corporation is not active, it would be prudent to make it active as there are many legislative requirements that need to be complied with. In the case that the owners have limited knowledge of these requirements, it could be a good option to appoint a Strata Manager. In any case, it is very important that the Owners Corporation arranges insurance to ensure there is cover in the case an event occurs.

Simon Plummer
StrataRatings
E: [email protected]

This post appears in Strata News #175.

This article is not intended to be personal advice and you should not rely on it as a substitute for any form of advice.

Question: Although we have an Owners Corporation, we have no common property. How does insurance work? Do we need individual strata insurance? Should Public Liability be part of this?

I live in a home that is made up of 3 houses. It was originally a subdivision. The builder set up the Owners Corporation. There is NO common property at all, no common driveway, nothing. None of us are the original owners, so started looking into individual strata insurance.

It seems this can’t be done – well, at least not without a lot of expense. We have no meetings or anything as there is really nothing to discuss. We all pay for any/all maintenance for our own houses (which are houses, not joined units). We only need to come together once a year to pay for our portion of the building insurance.

We just noticed that there is a $10,000,000 public liability insurance added on to our policy. The conveyancer we just consulted about possibly cancelling the Owners Corporation told us that, as we have no common property, any public liability claim would be against us individually, not the body corporate. If there was a claim they would refuse to pay it as it wouldn’t have occurred on common property.

Hence I asked our broker to remove this from the policy. She told me that it is compulsory and can’t be removed. Is this correct? It doesn’t seem right to me that you have to pay insurance for something you could never claim on.

Answer: As this property is an Owners Corporation, it must comply with the regulations set out in the Owners Corporation Act 2006

As this property is an Owners Corporation, it must comply with the regulations set out in the Owners Corporation Act 2006.

To answer the question we have quoted the relevant expert from the Act. Under the Owner’s Corporation Act of 2006 it states the following:-

OWNERS CORPORATIONS ACT 2006 – SECT 60

Public liability insurance

1. An owners corporation must take out public liability insurance for the common property in accordance with this section.
2. The public liability insurance required under subsection (1) is insurance for any liability of the owners corporation to pay compensation in respect of—

   1. any bodily injury to or death or illness of a person; and
   2. any damage to or loss of property—
      which is sustained as a result of an occurrence or happening in connection with the common property.

3. The owners corporation must ensure that, in the insurance which the owners corporation has under subsection (2), the limit of liability is a minimum of $10 000 000, or if another amount is prescribed, that other amount, in any one claim and in the aggregate during any one period of insurance.

If owners require further clarification or have any questions about individual strata insurance, we suggest contacting Consumer affairs.

Whitbread Insurance Brokers
T: 1300 424 627
E: [email protected]

This post appears in Strata News #222.

Please note this Q&A response is not intended to be personal advice and you should not rely on it as a substitute for any form of advice. Please contact Whitbread Associates Pty Ltd ABN 69 005 490 228 Licence Number: 229092 trading as Whitbread Insurance Brokers for further information.

Read next:

• Owners Corporation Insurance Requirements Victoria
• VIC: Q&A Underinsurance, Building Sum Insured and Strata

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