Do you own a shop, an apartment, flat, unit or townhouse? Chances are you are already a member of an Owners Corporation.
On 1 December 2021, major changes were introduced to the law governing Owners Corporation. This may have a direct impact on you, both financially and legally.
Some key changes
Five Tier System
Depending on the size and nature of the Owners Corporation (OC), the new 5-tier system prescribes different requirements for committees, financial reporting and maintenance plans.
1 More than 100 occupiable lots (and not a services only OC)
2 51 to 100 occupiable lots (and not a services only OC)
3 10 to 50 occupiable lots (and not a services only OC)
4 3 to 9 occupiable lots (and not a services only OC)
5 2 lot subdivision or a services only OC
If your OC falls within Tier 1, 2 or 3, they must elect a committee at the annual general meeting. You should inquire as to who those committee members are as they are representing your interests. If you have intention to be a committee member, please do not hesitate to call us to discuss as there are now expanded duties expected of a committee member.
If you are a potential member or existing member of a Tier 1 and 2 OC, we recommend you obtain a copy of the OC financial statements and maintenance plan (if already available). The financial statement will reflect the current financial health of the OC while the maintenance plan provides an insight in relation to the anticipated capital expenses for the 10 next years which you may ultimately be partially liable for. This may influence your decision to buy or sell your property in the near future.
If you are a member of a Tier 5 OC, then we have good news for you. Your OC is exempted from complying with a broad range of obligations including, but not limited to, appointment of OC manager, establishment of committee, issuance of Fee Notices, obtaining insurances and accounts auditing.
Expanded powers of OC
Your OC now has additional power to levy an additional annual fee on you if
- Your OC has incurred additional costs arising from your use of your lot; and
- An annual fee set based on your lot liability is insufficient to account for those additional costs
Furthermore, your OC can also levy an additional fee on you for
- An excess amount, or increased premium, resulting from or attributable to an insurance claim (if the claim was caused by a culpable or wilful act or negligence caused by you, your lessee or your guest); and
- Damage caused to the common property by you or your lessee, if
- The damage is not covered by insurance; or
- The cost of the damage is less than the excess amount; or
- The claim solely relates to your lot
While OC has always possessed the power to make rules for the purpose of the control, management, administration, use or enjoyment of the common property or of a lot, you and your guest* will now be jointly and severally liable for satisfying any penalty or compensation payable as a consequence of your guest’s breach if a copy of the rules was not provided to your guest prior to the breach.
As such, it is more important than ever that you screen your lessee or guest before permitting access to your lot, as any misadventure on their part may be attributed to you, resulting in financial implication.
On the bright side, your OC now has additional power to look after your interests including disposal of goods abandoned on the common property and retaining of funds from the sale of disposed items to cover its costs, provided certain procedural steps are followed.
How Nevile & Co can assist you as a client:
The amendments to the OC Act and Regulation are to assist OC to operate more efficiently and ethically to prevent exploitation of lot owners while at the same time, imposing additional obligations on lot owners for the protection of OC. If you are experiencing difficulties with your OC or just want to know more about OC, please email our Lawyer, Mr Alvin Lim at firstname.lastname@example.org.
Disclaimer: This publication contains comments of a general and introductory nature only and is provided as an information service. It is not intended to be relied upon as, nor is it a substitute for specific professional legal advice. You should always speak to us and obtain legal advice before taking any action relating to matters raised in this publication.
*Guests include anyone that you invite on the property but does not include a contractor or a tradesperson engaged by the occupier of a lot