Buying a Unit With an Inactive Owners Corporation

By the Pearson Chambers Conveyancing team.
Published 18 April 2026

We get asked this most weeks by first home buyers looking at older walk ups in Footscray, Coburg, Reservoir and Caulfield. The Section 32 arrives, the owners corporation paperwork looks half empty, and the agent still wants a signature before the weekend.

The short answer: In Victoria, an owners corporation is only 'inactive' for Section 32 purposes if, in the 15 months before the vendor statement, it has not held an annual general meeting, has not fixed any fees, and has not held any insurance. All three need to be true. If that test is met, the seller can usually disclose the inactivity in the Section 32 instead of attaching a full certificate; if it is not met, missing or stale owners corporation paperwork can become a serious disclosure issue that needs legal review before you sign.

What does an inactive owners corporation mean in Victoria?

An owners corporation exists as soon as a plan of subdivision creates common property. If you're unsure about what an owners corporation is, think shared driveways, stairwells, roofs, gardens, foyers and drains.

In everyday conversation, people say 'inactive', 'dormant' or 'not really running'. For Victorian sale law, the word that matters is 'inactive'. Section 32F of the Sale of Land Act 1962 sets a narrow test. In the 15 months before the vendor gives the buyer the Section 32, the owners corporation must have done none of these things:

held an annual general meeting
fixed any fees
held any insurance

Miss one limb and the owners corporation is not legally inactive for disclosure purposes. A six flat block in Brunswick might not have held a proper meeting in years, but if someone renewed the building insurance last spring, the seller usually cannot rely on the 'inactive' shortcut.

That point matters because the paperwork changes. A genuinely inactive owners corporation is disclosed one way. A badly run but not legally inactive owners corporation is disclosed another way, through certificate material that should let you see fees, insurance, minutes and warning signs before you commit.

How do you spot an inactive owners corporation in the Section 32?

The fastest place to start is the Section 32 vendor statement and, where one is supplied, the owners corporation certificate. Consumer Affairs Victoria says buyers should ask for a new certificate before settlement or inspect the records if the paperwork looks old.

In our practice, we do not look at one empty line and assume the owners corporation is inactive. We look for a pattern.

1. Is there evidence of an AGM in the last 15 months?

If the owners corporation receives or pays money, it should be holding annual general meetings, and the gap between AGMs must not exceed 15 months. Minutes from the most recent AGM should usually be attached where a certificate is provided. If there are no minutes and no sign a meeting happened, that is one warning sign.

2. Is there current insurance?

For most owners corporations with common property, Victorian law requires insurance. Consumer Affairs Victoria says public liability cover for common property must be at least $20 million, and most owners corporations apart from many two lot subdivisions also need reinstatement and replacement insurance. If a policy schedule is missing, expired, or obviously inconsistent with the building, slow down.

3. Have any fees or levies been fixed?

No annual fees, no maintenance fund movement and no levy history can point towards inactivity. It can also point towards poor record keeping. Either way, you want to know whether repairs have kept piling up in the background.

4. Does the paperwork look complete and current?

An owners corporation certificate is meant to be a snapshot, not a mystery novel. If you can see missing attachments, stale dates, unexplained blanks, or contradictions between the certificate and the meeting minutes, treat those as red flags on the owners corporation certificate. We've had clients come to us after a Saturday inspection run through the inner north where the certificate looked harmless at first glance, then turned out to be months out of date once we compared the dates properly.

What can it cost you after settlement?

An inactive owners corporation does not disappear just because nobody has been running it properly. Once you own the lot, you can end up paying for the work needed to get things moving again.

The usual pressure points are:

insurance has to be put in place or refreshed
overdue maintenance finally has to be funded
a budget has to be adopted
records may need to be rebuilt
a manager may need to be appointed
old disputes or defects can surface once owners start looking properly

In a small older block, that often means the first serious levy feels like a cold shower. It might be roof works in Preston, a cracked shared driveway in Oakleigh, stormwater issues in Reservoir, or balcony repairs in a 1970s block in Caulfield. The risk is not the label 'inactive' by itself. The risk is buying into years of delay without pricing that risk in.

This is also why buyers should think beyond the annual fee figure. A building with low current fees can still be expensive if the owners corporation has done very little for a very long time. Our guide on body corporate financial health checks is useful for that second layer of review.

What are your options before settlement?

Most buyers have three real paths: step back, renegotiate, or proceed with eyes open.

Step back if you still can

If the contract was a private sale and you are still within the cooling off period, Victorian buyers generally have three clear business days from the day after signing, with a deduction of $100 or 0.2% of the purchase price, whichever is greater. That right does not apply to auctions and some auction related contracts.

Outside cooling off, the question becomes whether the Section 32 is materially wrong or incomplete in a way that gives you a right to pull out. That is fact specific. An owners corporation that is properly disclosed as inactive is one thing. An owners corporation described as inactive when the records show current insurance or recent fees is a different problem.

Renegotiate before you go unconditional

This is often the most practical move. If you still want the property, your conveyancer can push for a cleaner deal rather than a blind leap.

That can include:

requiring the seller to obtain fresh owners corporation material
requiring current insurance to be confirmed before settlement
adjusting the price to reflect likely catch up costs
adding a special condition that deals with who pays for levies struck around settlement
asking for retention money to be held back where the risk is obvious but the final cost is not

We have seen this work well in small townhouse developments where everyone knew the paperwork was behind, but nobody had priced the problem. A short delay and a sharper special condition can be far cheaper than taking the keys and sorting it out later.

Proceed, but only after proper checking

Sometimes the location still wins. Stock is tight, the layout works, and you're willing to take the risk if the numbers stack up.

If that's where you land, try to get as much clarity as possible before the contract becomes unconditional:

a building inspection that comments on shared areas, not just the inside of the lot
a fresh read of the certificate and attachments
meeting minutes, if they exist
a sense of likely insurance and management arrangements
a careful look at whether there are known disputes, leaks, defects or proposed works

In Melbourne terms, this is the difference between buying the nice Art Deco unit near the tram and buying the repair bill attached to it.

Can an inactive owners corporation be reactivated?

Yes. Some are reactivated by agreement between owners. Others end up at VCAT.

The practical first step is usually an AGM with proper notice, a budget, insurance, and a decision about who is going to manage the owners corporation going forward. Consumer Affairs Victoria's guidance on activating an owners corporation focuses on exactly those building blocks.

If cooperation breaks down, the Owners Corporations Act gives VCAT power to make orders about disputes and the operation of an owners corporation. The cleanest timing is often before settlement with the seller's cooperation, or after settlement once the buyer is the owner. Pre settlement buyers need to be careful here, because having a signed contract is not the same thing as already being the lot owner.

What does a Melbourne conveyancer actually do here?

When this issue lands on our desk, the job is to work out how bad it is, how urgent it is, and what it means for your contract options.

A sensible review usually includes:

checking whether the owners corporation is truly inactive under the Sale of Land Act test, or just badly administered
reading the certificate and attachments for missing dates, stale insurance, levy issues and obvious gaps
checking whether the disclosure in the Section 32 lines up with the supporting documents
advising on cooling off, negotiation, or rescission risk before settlement
drafting protective special conditions where the buyer still wants to proceed

We've seen this come up most often in older small blocks where everybody assumed someone else was taking care of the owners corporation. Then the property hits the market, the paperwork gets ordered in a rush, and the buyer is the first person to ask the awkward questions.

Frequently asked questions

What is an inactive owners corporation?
Under section 32F of the Sale of Land Act 1962, an inactive owners corporation is one that, in the 15 months before the vendor statement, has not held an AGM, has not fixed any fees, and has not held any insurance. All three parts need to be true. If only one or two are true, the owners corporation may be poorly run, but it is not 'inactive' in the strict disclosure sense.

Can you buy a property with an inactive owners corporation in Victoria?
Yes. The sale can still go ahead. The real issue is risk after settlement, because you may be buying into missing insurance, delayed maintenance, weak records, or future levies.

How do you reactivate an inactive owners corporation?
Usually by getting the owners together, giving proper notice of a meeting, putting insurance in place, setting a budget and deciding who will manage the owners corporation. If that cannot be done cooperatively, VCAT may be able to make orders under the Owners Corporations Act to get the owners corporation functioning again.

Do I have to pay levies on an inactive owners corporation?
If no levy has been struck, there may be nothing payable yet. That does not mean the cost disappears. Once the owners corporation becomes active and starts fixing overdue issues, fees or special levies can follow, and who pays can depend on timing and the contract terms.

What happens if the owners corporation has not held an AGM?
It is a warning sign, especially if the gap is more than 15 months. On its own, it does not always let a buyer end the contract. It does tell you to look harder at insurance, fees, minutes, maintenance and whether the Section 32 disclosure is actually accurate.

Can I rescind my contract if the owners corporation is inactive?
Not automatically. A buyer may have rights if the Section 32 is materially wrong or incomplete, but a correctly disclosed inactive owners corporation is a different situation from a misleading one. This is one of those moments where fast, property specific advice really matters before settlement.

About the Pearson Chambers Conveyancing team

Pearson Chambers Conveyancing helps Melbourne buyers and sellers with contract reviews, Section 32 advice, auction purchases, private sales and settlement support across Victoria. We work with first home buyers, upsizers, downsizers and investors every day, and a big part of that work is spotting paperwork problems before they turn into expensive surprises. Questions about inactive owners corporations sit squarely in that day to day conveyancing work.

Sources we consulted

Need help before you sign?

If you're buying a unit, apartment or townhouse in Melbourne and the owners corporation paperwork does not feel right, contact Pearson Chambers Conveyancing for tailored guidance and a complimentary Section 32 contract review.

Email: contact@pearsonchambers.com.au

General information only, current as at the date of publication. Victorian conveyancing rules and legislation change frequently. Please contact the Pearson Chambers Conveyancing team for advice on your specific contract.