Who Should Sign the Contract? Owners Corporations vs Lot Owners and Repair Responsibilities in Victoria

When something breaks down in a strata or apartment building, the question of who organises and pays for the repair is often straightforward in theory but surprisingly tricky in practice. One issue that causes real confusion is this: when a repair is needed, should the contract with the tradesperson be in the name of the Owners Corporation (OC), or in the name of the individual lot owner?

Getting this right matters. It affects legal liability, insurance coverage, GST entitlements and who can be held accountable if the work goes wrong.

What does the OC actually own?

Under the Owners Corporations Act 2006 (Vic) (OC Act), an Owners Corporation is responsible for the management, maintenance, and repair of common property. This includes things like:

• External walls, roofs and structural elements
• Common area gardens, driveways and car parks
• Shared pipes, drainage and building services that run through common property
• Lifts, foyers and shared facilities

Individual lot owners, on the other hand, are responsible for everything within their lot - internal walls, fixtures, fittings, and anything that exclusively serves their property.

The boundary between common property and lot property is defined by the plan of subdivision and the OC rules. When in doubt, reviewing the plan of subdivision (available through Land Use Victoria) is the first step.

Who signs the Contract?

Generally, the entity responsible for the asset should be the entity that enters into the contract. If the repair relates to common property, the contract should be in the name of the Owners Corporation - not an individual committee member, not the OC manager personally, and not a lot owner.

If the repair relates to a lot owner’s property, that lot owner enters into the contract directly. This isn’t just administrative tidiness - it has real consequences:

• Liability: If a contractor causes damage or injury while working on common property, the OC as the contracting party holds the legal relationship with the tradesperson. If the contract were in a committee member’s personal name, they could face personal exposure.
• Insurance: OC insurance policies (which are mandatory under the Act for most OCs) cover common property. A repair contract in the OC’s name aligns with the insured asset. Mismatches can complicate claims.
• GST and tax: An OC that is registered for GST can claim input tax credits on repair costs - but only if the tax invoice is correctly addressed to the OC. If the invoice goes to a lot owner, the GST credit is lost.
• Accountability: Contracts create enforceable rights. If the work is defective, the OC (as the contracting party) can pursue the tradesperson. A lot owner who signed on behalf of the building without authority may have no standing - or worse, personal liability.

What about repairs that affect both?

This is where things get genuinely complicated. Consider a leaking pipe inside a wall - it might run from common property into a lot, or vice versa; or a balcony, where the structure may be common property but the waterproofing membrane may be the lot owner’s responsibility under the plan.

In these situations:

• Identify the asset first: Check the plan of subdivision and the OC rules. If there’s genuine ambiguity, seek legal advice before engaging contractors.
• Don’t assume the OC covers everything: Many lot owners are surprised to discover that internal waterproofing, balcony tiles, or certain services are their responsibility.
• Consider a split contract: In some cases, separate scopes of work can be contracted separately - the OC for the common property component, the lot owner for their portion.
• Avoid informal arrangements: A committee member calling in a favour, or a lot owner engaging a tradesperson for what turns out to be common property work, can create disputes, unrecoverable costs, and insurance headaches.

Understanding the role and authority of OC Managers

OC managers typically act as agents of the Owners Corporation. When they engage contractors on behalf of the OC, they should be doing so under the authority granted in their management agreement. Contracts should still reflect the OC as the principal, not the manager personally.

If you’re a lot owner being asked to sign a contract for work that you believe is common property, push back and seek clarification. And if you’re on a committee approving repairs, make sure the paperwork reflects the OC - not just whoever picked up the phone.

Bringing it all together

In Victoria’s Owners Corporation framework, the name on a repair contract is more than a formality - it reflects legal responsibility, insurance alignment, and financial accountability.

As a general rule:

• Common property repairs - the contract should be in the OC’s name.
• Lot-specific repairs - the contract should be in the lot owner’s name.
• Anything ambiguous - clarify the asset ownership before signing anything.

When navigating complex owners corporation matters, obtaining timely legal advice can make a significant difference to the outcome. The team at Spectrum Lawyers is available to assist lot owners, committees and managers with practical and strategic advice aimed at resolving disputes efficiently and minimising unnecessary cost and conflict.