Owners Corporation Disputes in Victoria: Rights, Responsibilities and Resolution Options

What an Owners Corporation Is

An owners corporation (formerly called a body corporate) is the legal entity automatically created when land is subdivided into two or more lots with common property under the Subdivision Act 1988 (Vic). It is governed principally by the Owners Corporations Act 2006 (Vic) and the Owners Corporations Regulations 2018 (Vic). Every lot owner is a member by virtue of their ownership of the lot — membership is not optional and cannot be opted out of.

The owners corporation's core functions are to manage, repair and insure the common property, to enforce its rules, to raise and recover levies from members, to keep financial and other records, and to act in the best interests of the members as a whole. It does these things through general meetings of members, an elected committee and (in most buildings) a professional manager appointed under a management contract.

Tiers of Owners Corporation

The Act and Regulations classify owners corporations into tiers, with progressively heavier compliance obligations:

• Tier 1 — more than 100 lots (excluding accessory lots): heaviest obligations, including the requirement for a long-term maintenance plan and maintenance fund.
• Tier 2 — 51–100 lots: maintenance plan and maintenance fund obligations broadly apply.
• Tier 3 — 10–50 lots: financial and insurance obligations apply but maintenance-plan requirements are scaled.
• Tier 4 — 3–9 lots: lighter obligations, still subject to insurance and core duties.
• Tier 5 — 2-lot subdivisions: minimal compliance regime; most provisions of the Act do not apply.

The tier affects budgeting, meeting requirements, maintenance planning and the realistic cost of running the building. Owners and purchasers should always know which tier they are dealing with.

Common Property Versus Private Lot Property

The boundary between common property and private lot property is defined by the registered plan of subdivision lodged under the Subdivision Act 1988 (Vic). The plan is the source of truth — not the building's appearance, not the strata manager's view and not what feels reasonable.

Common property typically includes driveways, foyers, lifts, stairs, gardens, roofs, structural walls, external building fabric, and plumbing, electrical and mechanical services serving more than one lot. Private lot property typically includes the cubic space inside the lot, non-load-bearing internal walls, internal fittings and fixtures, and services exclusively serving the lot.

Borderline items — balcony tiles, balcony balustrades, windows, window frames, the front door, the hot water service, exhaust ducts, air conditioning units, planter boxes — vary from plan to plan and from building to building. Disputes about the boundary are extremely common because they determine who pays for repairs and who is responsible for damage. Where there is genuine doubt, the plan and any registered rules should be reviewed by a property lawyer before money is spent.

Levies and Special Levies

Owners corporations fund themselves through annual fees based on the budget adopted at the annual general meeting, and special fees or levies raised for non-budgeted or extraordinary expenditure such as major repairs, cladding rectification or successful claims against the owners corporation. Levies must be set at a properly convened meeting, calculated on each lot's lot liability as recorded on the plan of subdivision, and raised in accordance with the Act.

Common levy disputes include:

• Special levies raised by the committee without proper authority — many significant special levies must be authorised by a general-meeting resolution, not by committee alone.
• Levies disproportionately allocated to particular lots despite a flat lot liability schedule.
• Levies for works that exceed the owners corporation's functions or that ought to be funded by a private lot owner whose lot has caused the loss.
• Inadequate funding — recurring shortfalls leading to deferred maintenance and successive emergency special levies.

Owners who consider a levy improper can dispute it through internal dispute resolution, raise it with Consumer Affairs Victoria, or apply to VCAT for orders. Non-payment of a disputed levy is high-risk: interest, recovery costs and additional fees accrue and the owners corporation can sue for the debt regardless of the underlying merits.

Repairs and Maintenance

The owners corporation must repair and maintain the common property, and it has powers to enter lots in defined circumstances to do necessary works. Disputes commonly arise about:

• Whether a particular item is common property or lot property (see above);
• Whether works are "necessary" or merely improvements that require a different resolution threshold;
• The standard and timing of repairs — particularly where a lot is being damaged by a recurring common-property defect;
• Recovery of repair costs from a lot owner whose lot has caused damage to common property; and
• The interaction with insurance — repairs that should be claimed under the owners corporation policy, and those that should not.

Tier 1 and Tier 2 owners corporations must have a long-term maintenance plan and a separate maintenance fund. Repeated failure to maintain the plan or to fund it adequately is itself a ground for dispute.

Water Leaks

Water leak disputes are among the most common, most expensive and most stressful owners corporation issues. The first step is always to identify the source — typically with a plumber's report — and to address ongoing damage urgently to prevent further loss. Liability for repair and for consequential damage to lot property depends on where the leak originates:

• If the leak originates from common property (a structural wall, the roof, a shared waste stack, common drainage), the owners corporation is responsible for the repair and typically for the consequential damage to lot property;
• If the leak originates from a private lot (a flexible hose, a leaking shower membrane, a faulty appliance), the relevant lot owner is responsible.

Insurance claims under the owners corporation policy and individual contents policies typically run in parallel. Disputes about the source — particularly where the leak could plausibly be either common property or lot property — often require independent expert evidence and can be referred to VCAT for binding determination.

Building Defects

Building defects in newer Victorian developments may give rise to claims under the Domestic Building Contracts Act 1995 (Vic), the Building Act 1993 (Vic) and statutory warranties, with reference to the regulatory framework of the Victorian Building Authority. The owners corporation generally has standing to pursue defects affecting common property and to coordinate with lot owners whose lots are also affected.

Defects strategy typically involves:

1. An independent building consultant's report identifying and costing the defects;
2. Written notification to the builder and other potentially responsible parties under the warranty regime;
3. A claim under any applicable insurance, cladding rectification or government program; and
4. If unresolved, VCAT or Supreme Court proceedings within the applicable time limits.

Strict limitation periods apply — including the 10-year long-stop under section 134 of the Building Act 1993 (Vic) from the date of issue of the occupancy permit. Many defects claims fail simply because they were not commenced in time. Early specialist legal advice is essential.

Short-Stay Accommodation

Short-stay accommodation in apartment buildings is a long-standing source of conflict. The Owners Corporations and Other Acts Amendment (Short-Stay Accommodation) Act 2018 (Vic) gives owners corporations rights to seek compensation for losses arising from unruly short-stay conduct, and the Victorian government has introduced a state-level short-stay levy and continues to consult about further regulation.

Owners corporations cannot generally impose a blanket ban on short-stay through rules alone. Restrictions on use are typically a combination of: the planning scheme; any registered restrictive covenant on the title (see our guide on restrictive covenants on Victorian property); building-specific arrangements; and the model and additional rules registered against the plan. Lot owners and purchasers considering short-stay should obtain advice on the full stack of restrictions before committing.

Noise, Nuisance and Pets

Noise, nuisance, behaviour and animals are governed by the model rules in Schedule 2 of the Owners Corporations Regulations 2018 (Vic)and any additional consolidated rules registered by the owners corporation. Pet rules have moved significantly: a blanket "no pets" rule is difficult to enforce, and any refusal of a pet must be reasonable on the facts.

Where rules are breached, the typical sequence is: an informal approach to the offending lot occupant; a written request to comply; a formal breach notice under the Act if the conduct continues; an internal dispute resolution process; and, if still unresolved, an application to VCAT for orders. VCAT can order compliance, compensation and, in serious cases, costs.

Parking and Storage Spaces

Parking and storage disputes turn on whether the relevant space is:

• An accessory lot attached to a principal lot on the plan of subdivision and owned by the lot owner;
• A part of common property subject to an exclusive-use right granted under the rules; or
• Unallocated common property available to all members on a first-come basis.

Misuse — particularly long-term storage on common driveways or visitor bays used by tenants — is a routine flashpoint and is usually addressed through rule enforcement and, if necessary, VCAT.

Committee Decision-Making and Conflicts of Interest

Most owners corporations elect a committee to handle day-to-day decisions between general meetings. The committee acts within the delegations set out in the Act, the rules and any general-meeting resolutions. Committee members owe duties of good faith, due care and diligence to the owners corporation, and must disclose any material personal interest in any matter the committee is deciding — for example, where a committee member's family business is being engaged for repair works.

Decisions tainted by undisclosed conflicts of interest can be challenged at general meeting and, ultimately, at VCAT. Significant matters — including special fees above prescribed thresholds, changes to common property, and certain rule changes — must be put to all members at a general meeting and cannot be decided by the committee alone.

Access to Records

Section 146 of the Owners Corporations Act 2006 (Vic) gives lot owners (and certain other persons) a right of access to specified owners corporation records, including the register of members, minutes, financial statements, contracts, insurance policies and correspondence. The manager or secretary must make records available within statutory timeframes on payment of any prescribed fee.

Refusal or unreasonable delay is itself a breach. Access to records is often the practical first step in investigating any owners corporation dispute — for example, to inspect manager invoices, the maintenance plan, or the resolutions allegedly authorising particular works or special levies.

Managers and Management Contracts

Most Victorian owners corporations engage a professional manager under a management contract. A registered owners corporation manager owes statutory duties under the Act, including duties of good faith, due care and diligence and disclosure of conflicts of interest. Common disputes include the scope of services and fees, unauthorised expenditure, opaque arrangements with insurance brokers or repair contractors, failures to pursue debt recovery, refusal to convene meetings and procedural disputes on termination of the management contract.

Owners corporations can terminate a manager in accordance with the contract and the Act, and can apply to VCAT in serious cases (including for appointment of an administrator). Owners with concerns about manager performance should obtain a copy of the current management contract, recent invoices and the disclosure statements before raising the dispute formally.

Internal Dispute Resolution

All owners corporations must have an internal dispute resolution process; the model process in Schedule 3 of the Owners Corporations Regulations 2018 (Vic) applies by default. The process typically involves a written complaint, an opportunity for the other party to respond, and a committee or general meeting decision.

Compliance with the internal process is generally expected before Consumer Affairs Victoria conciliation or VCAT proceedings, and tribunals will often refer matters back if the internal steps have been skipped. Internal dispute resolution is not just a procedural hurdle — many disputes resolve at this stage simply because positions get documented and reviewed properly for the first time.

Consumer Affairs Victoria Conciliation

Consumer Affairs Victoria (CAV) provides information about owners corporation law and offers a free conciliation service for many disputes. CAV cannot make binding orders, but conciliation is often successful because a neutral third party helps the parties reach a documented agreement. CAV conciliation is commonly used after internal dispute resolution but before VCAT proceedings. Some applications to VCAT require a CAV certificate confirming that conciliation has been attempted or is not appropriate.

VCAT Proceedings

The Victorian Civil and Administrative Tribunal (VCAT) is the principal forum for binding determination of owners corporation disputes, under Part 11 of the Owners Corporations Act 2006 (Vic). VCAT can make orders for:

• Payment of levies and recovery of debts;
• Compliance with rules and breach notices;
• Repair, maintenance and rectification of common property;
• Access to records;
• Removal of unauthorised works on common property or affecting common property;
• Compensation for nuisance, damage and loss;
• Variation or invalidation of resolutions and rules;
• Appointment, removal or supervision of a manager or administrator; and
• A wide range of incidental and procedural orders.

Applications are made on the relevant VCAT form with supporting evidence. Many matters settle at a compulsory conference; others proceed to a final hearing. Strict time limits apply to some claims, particularly building defects.

Costs and Practical Risk Management

VCAT proceedings are designed to be more accessible than Supreme Court litigation, and parties generally bear their own costs in the Owners Corporations List unless a costs power is exercised. That said, building defect and complex matters routinely involve expert evidence — building consultants, plumbers, structural engineers, valuers, accountants — and significant legal costs over the life of a matter. Special costs orders can be made for unreasonable conduct.

Owners considering a dispute should honestly weigh the realistic value at stake against the likely costs, the time commitment, the impact on relationships in the building and the risk that even a favourable order may be difficult or expensive to enforce. Our companion guide on the costs consequences of Victorian litigation is essential reading before any major escalation, and our broader guides on buying property in Victoria and selling property in Victoria cover the surrounding conveyancing framework. Title-level issues that may overlap with owners corporation disputes include easements on Victorian property, property boundary and fencing disputes, caveat removal in Victoria and the restrictive covenants guide referenced above.

When to Get Legal Advice

Early legal advice is worthwhile before:

• Signing a contract to buy a strata lot;
• Issuing or responding to a breach notice;
• Voting on significant special levies, rule changes or changes to common property;
• Serving or receiving a building defect notice;
• Terminating or appointing a manager;
• Commencing or responding to VCAT proceedings;
• Any committee decision that could be challenged for process or conflict of interest;
• Selling or administering a deceased estate apartment with unresolved owners corporation issues.

Early advice is materially cheaper than late advice and almost always preserves more options.

Who This Affects

For apartment and townhouse owners, the principal risks are unexpected levies, prolonged repair disputes, water damage and committee decisions that affect the value and amenity of the home.

For committee members, the principal risks are breach of duty, conflicts of interest and personal exposure for decisions taken without proper authority. Documenting decisions, disclosing interests and seeking advice on significant matters is the best protection.

For owners corporation managers, the principal risks are contract performance disputes, disclosure failures and reputational damage from poorly handled defects or insurance matters. Robust contract terms and proactive communication materially reduce exposure.

For landlords, owners corporation issues can disrupt tenancies, expose the landlord to tenancy claims for uninhabitable premises and reduce rental returns. Coordination with the owners corporation and the rental provider's obligations is essential.

For purchasers, due diligence on the owners corporation — fees, minutes, maintenance plan, insurance, defect history, short-stay use and litigation — is at least as important as inspecting the lot itself.

For executors, owners corporation issues frequently complicate the sale of an estate apartment and require active management during administration. Early identification of unresolved disputes preserves estate value and protects the executor from beneficiary claims.

How Parke Lawyers Can Help

Parke Lawyers advises Victorian lot owners, committees, owners corporations, managers, landlords, purchasers and executors on the full range of owners corporation issues — levy and special levy disputes, repairs and maintenance, common-property and lot-property boundaries, water leaks, building defects, short-stay, noise, pets, parking, manager performance and termination, access to records, internal dispute resolution, CAV conciliation, VCAT applications and enforcement. Our property and conveyancing and litigation and dispute resolution teams work together so a matter can move efficiently from rule interpretation and committee strategy to negotiation or to contested VCAT proceedings where required.

Frequently Asked Questions