We often hear the phrase “the body corporate will take care of it” when speaking with real estate agents and property managers whether in Committee Meetings or at industry functions and events. It is something we have heard repeatedly over the years from the well-presented sales agents to the detail-focused property managers.
But what does this phrase actually refer to, and what does it mean in practice? Let’s take a closer look.
Key Takeaways:
- “Body corporate” is simply the older term for owners corporation which legally exists wherever there is shared property whether actively managed or not.
- Self-managed body corporate often lack proper records and adequate insurance which can delay sales and expose owners to financial and liability risks.
- Larger or more complex properties benefit from a professional body corporate manager to maintain compliance, maintenance and financial oversight.
Body corporate, owners corporation or strata management?
Strata terminology differs across Australia, which is why the same concept is known by different names depending on the state. In practice:
- Queensland uses body corporate
- New South Wales uses strata scheme or owners corporation
- Victoria uses owners corporation
Before the Owners Corporations Act was introduced in 2006–2007, Victorian owners corporations were formally called body corporates.
The legislation changed, but everyday language did not. Much like long-standing place names such as Bombay or Burma, the older term remains in use through familiarity.
Because of this, the term body corporate is still widely used in real estate and property discussions. Even within the industry the term appears occasionally because it is still widely understood.
The table below shows how each state refers to the legal entity, its Committee and the management company.
How an owners corporation is formed
An owners corporation is created automatically when the Plan of Subdivision shows any area marked as Common Property. This applies to developments of all sizes, from two-lot townhouses to large apartment buildings.
In Victoria, Plans of Subdivision can be accessed through Landata (Victorian Land Registry Services). These plans show the layout of the development, the individual lots and any shared areas. A plan on its own does not create an owners corporation. It is the presence of Common Property that does.
Common Property can include:
- shared driveways or pathways
- stairwells, lobbies or access areas
- lifts or shared services
- gardens or open spaces
- roofs or structural elements
- shared utility infrastructure
The examples below show how Common Property is identified in both an apartment plan and a townhouse plan.
In both of the above plans of subdivision one is a vertical apartment building and the other a horizontal layout of townhouses where Common Property is present. This is what gives rise to the owners corporation, or what people commonly refer to as the body corporate.
Whether the owners choose to appoint a professional manager is a separate decision made collectively by the owners.
What does an “inactive” owners corporation mean?
An owners corporation always exists in a legal sense, but some developments describe themselves as inactive. This usually refers to how the owners corporation operates rather than its legal status.
An inactive or self-managed body corporate often:
- does not appoint a professional manager
- does not collect regular body corporate levies
- handles maintenance only when issues arise
- keeps limited or informal records
This approach is common in smaller residential developments where shared property is minimal and owners believe formal management is unnecessary.
However, it can lead to operational and compliance challenges.
Key risks for self-managed or “inactive” body corporates
Self-management can reduce costs, but it also creates responsibilities that are often overlooked. Two areas in particular can lead to difficulties for owners.
1. Preparing the Owners Corporation certificate (Section 32)
When a lot is sold, the vendor must provide an Owners Corporation Certificate as part of the Section 32 Vendor Statement. This certificate must include accurate information about:
- insurance
- fees and levies
- financial statements
- maintenance responsibilities
- disputes or breaches
Without proper record keeping, preparing the certificate can be time consuming and may delay a sale.
In many self-managed developments there is no single person responsible for collating this information, which adds to the challenge.
2. Adequacy of building and public liability insurance
Insurance is one of the most significant areas of exposure in self-managed body corporates. Many do not have:
- adequate building insurance
- an accurate sum insured
- public liability insurance for shared areas
Insurance gaps can result in:
- personal liability for owners
- rejected or reduced claims
- significant out-of-pocket expenses
- disputes between owners about responsibility
In our experience, smaller townhouse and apartment blocks are most likely to have insufficient or outdated policies, particularly where no public liability coverage has been arranged for shared driveways or access areas.
Ensuring appropriate insurance is in place is a core requirement for every owners corporation, regardless of size.
When to consider appointing an body corporate manager
You may need a body corporate manager when the work involved in running the property is becoming difficult for owners to manage on their own.
This is often the case when there are growing maintenance needs or when decisions are taking longer to resolve. It can also be a sign that a manager is needed when key tasks are not being completed.
Common signs include:
- maintenance that keeps getting delayed
- records that are incomplete or hard to maintain
- finances or levies that need clearer oversight
In these situations a manager can provide structure and support so the body corporate continues to run smoothly.
How Committees assess or appoint a body corporate manager
At Change Body Corporate, we help Committees review their current management arrangements and assess whether they have the right support for their property.
Our consultants provide independent guidance, review operating costs and performance and assist with transitions where a change of manager is needed.
If your Committee is considering new management options or would like clarity on its current arrangement, visit us here.
