Change Agenda

The following is a summary of the key issues that need to be addressed in the review of the MUD Act:

Sinking Funds

  • Greatly improving Sinking Fund provision and reporting including:

    • Ensuring that Sinking Funds are set up from the outset based on an independent Building Investment Fund/Life Cycle report;

    • Requirement that such a Life Cycle report be prepared at least every five years;

    • Sinking Fund contributions should be included in the annual service charge with stronger guidance provided to OMCs regarding appropriate contribution levels;

    • Sinking Fund monies should be held in a deposit account and financial accounts should show cash at bank in that account.

National Regulator

  • Establish a National Regulator for OMCs to maintain a register of OMCs and ensure that the legal obligations on OMCs are being undertaken and that the rights of and obligations on apartment owners are upheld;

  • The Regulator would need to impose clear obligations on OMCs each year to return data, confirm compliance with fire regulations, ensure directors receive governance training and confirm that appropriate insurances are in place with the power to intervene where OMCs are failing to meet their obligations;

  • The Regulator could take the lead in co-ordinating issues of national strategic importance for the apartment sector including undertaking research;

  • Such a regulator could have a role as a mediator or tribunal for dealing with disputes involving service charge arrears or the application of house rules which are crippling some OMCs;

  • And the Regulator could provide support and advice to OMCs on technical and safety issues.

Interim Regulator

Given the urgent issues facing OMCs and apartment owners -- escpecially the challenges around governance matters -- The MUD Act Reform Group is calling for a regulator to be in place initially on an interim non-statutory basis and its operations funded by a levy on owners’ management companies to:

  • Put a register of OMCs in place to enable the State to communicate directly with management companies;
  • Address some of the pressing governance issues facing OMCs and their residents like conflicts of interest amongst OMC directors.

There are precedents for important bodies to be set up on an interim, non-statutory basis -- like the Approved Housing Bodies Regulatory Authority, the Electoral Commission and the Land Development Agency -- so that they can commence their operations while the legislative process progresses.

The MUD Act Reform Group is proposing that the same be done with regards to the OMC Regulator. 

Other Changes

  • Providing clarification on the role of OMC Directors – for example can they receive remuneration for their role, can Directors also be service providers to the OMC and can non-members be appointed as Directors;

  • Support for OMCs who wish to borrow to fund necessary capital projects;

  • Review the current Schedule 3 of the 2011 Act which sets out the range of documentation to be handed over by the original developer to the OMC and examine possible sanctions on the developer for the non-transfer of this documentation;

  • Require OMCs to prepare a building reinstatement valuation at least every five years for the purposes of the block insurance policy.