On 20 Feb 2021 the long delayed "Owners Corporations and Other Acts Amendment Bill 2019" was passed and will come into effect on 1 December 2021.
One of the key changes to the existing OC Act is the introduction of a 5 tiered system that allows for degrees of regulation of Owners Corporations depending on number of occupiable Lots.
Here's the basics:
Tier 1 - more than 100 occupiable lots and is not a services only OC
Tier 2 - 51 to 100 occupiable lots and is not a services only OC
Tier 3 - 10 to 50 occupiable lots and is not a services only OC
Tier 4 - 3 to 9 occupiable lots and is not a services only OC
Tier 5 - 2 lot subdivision OR a services only OC
So what does this mean for Insurance Valuation requirements?
Up until the commencement of the Bill on 1 December 2021, the legal requirement is to be fully insured at all times. Therefore a valuation is the best way to discharge this obligation. The current OC Act 2006 does not make a requirement as to the frequency and necessity of obtaining a valuation, except for prescribed OC’s which require a valuation legally at least every 5 years.
Despite the lack of legal requirement, most prudent managers, and committees will still generally seek valuations approximately every 3 years. In fact, the standard 'Contract of Appointment' template provided by the SCA Vic (Strata Community Australia - the main umbrella organisation for Strata/OC Managers) includes an obligation that the Owners Corporation will obtain a valuation no less than every 3 years.
However as of 1 Dec 2021 it will become a legal requirement under the amended Owners Corporation Act 2006 for a valuation to be done at least every 5 years for all Owners Corporations with 3 or more lots (Tiers 1-4).
If an insurance renewal falls between now and then, it may be a good time to see when the last valuation was done (if ever) and get a professional valuation report undertaken.
For all Insurance Valuation queries please dont hesitate to get in touch at: valuations@ensuregroup.com.au or 0411 700 765