Understanding Owners' Corporations and Building Repairs in Hong Kong

Understanding Owners' Corporations and Building Repairs in Hong Kong

If you own a flat in Hong Kong, you are almost certainly a member of an Owners' Corporation (OC) — whether you know it or not. The OC is the legal body that manages and maintains the common parts of a multi-storey building, and its decisions directly affect your wallet, your living environment, and the long-term value of your property. Yet many flat owners in Hong Kong pay little attention to their OC until something goes wrong: a leaking roof, a broken lift, or a special levy notice landing in their letterbox. Understanding how the OC works and where responsibilities lie for building repairs is essential knowledge for every Hong Kong homeowner.

What Is an Owners' Corporation?

An Owners' Corporation is established under the Building Management Ordinance (BMO), Cap. 344 of the Laws of Hong Kong. It is a legal entity formed by the owners of a building to manage, maintain, and repair the common parts of the building. Once formed, the OC can enter into contracts, sue and be sued, and levy charges on owners. Not every building in Hong Kong has an OC — some older tong lau and small walk-ups are managed informally by a Deed of Mutual Covenant (DMC) manager or simply by agreement among owners. However, for any building of significant size, forming an OC is strongly recommended and is often required by the DMC.

Common Area vs Individual Unit Responsibility

One of the most frequent sources of dispute in Hong Kong buildings is the question: who pays for what? The general principle is straightforward but the details can be complex:

• Common parts — The OC is responsible for maintaining the common parts of the building, which typically include the roof, external walls, structural elements, staircases, lobbies, lifts, water tanks, fire services installations, and common drainage pipes. Costs are shared among all owners according to their shares in the DMC (usually proportional to flat size).
• Individual units — Each owner is responsible for the interior of their own flat, including internal walls, flooring, plumbing fixtures, electrical wiring within the flat, windows (in most cases), and internal drainage pipes that serve only their unit.
• Grey areas — Problems arise with elements that straddle the boundary. For example, a water pipe that runs through your flat but serves the unit above is generally a common pipe and the OC's responsibility. External wall tiles that fall from outside your flat are usually a common area issue. However, window frames may be the individual owner's responsibility depending on the DMC wording. Always check your building's DMC for specific definitions.

The Deed of Mutual Covenant (DMC)

The DMC is the foundational document that governs the rights and obligations of owners in a multi-storey building. Registered at the Land Registry, it sets out how management fees are apportioned, what constitutes common parts, the powers of the manager, and the rules for alterations to individual flats. Every flat owner should obtain and read their building's DMC — copies can be searched at the Land Registry for a small fee (HK$10 per page for online searches). The DMC often contains specific provisions about repair responsibilities that override general assumptions.

How AGM Decisions Work

The Annual General Meeting (AGM) is the primary decision-making forum for the OC. Under the BMO, the OC must hold an AGM at least once every 15 months. Key decisions made at AGMs include:

• Approval of annual budget — This covers routine maintenance, management fees, and minor repairs.
• Appointment or reappointment of the management company — The OC can choose to retain or replace its property management agent.
• Major repair works — Any significant expenditure, such as external wall repairs, lift modernisation, or re-roofing, typically requires approval at a general meeting. Under the BMO, a resolution is passed by a majority vote of owners present and voting (based on shares, not headcount).
• Election of the Management Committee (MC) — The MC is the executive arm of the OC, responsible for day-to-day oversight between general meetings. MC members serve voluntarily and are elected from among the owners.

A quorum of 10% of shares is required for an AGM. If you cannot attend, you can appoint a proxy to vote on your behalf. Attending your building's AGM — or at least reading the minutes — is one of the most important things you can do as an owner.

Special Levies for Major Repairs

Routine maintenance is funded from the regular management fee. But when a building needs major repair work — such as replacing the waterproofing membrane on the roof, repairing spalling concrete on external walls, or upgrading the fire services system — the cost can run into the millions of Hong Kong dollars. If the building's reserve fund is insufficient, the OC will impose a special levy on all owners.

• Calculation — Special levies are typically calculated based on DMC shares. An owner with a larger flat pays proportionally more.
• Payment terms — The OC may allow payment in instalments, especially for large sums. Some buildings spread major repair levies over 12 to 24 months.
• Government assistance — The Hong Kong Housing Society operates the Building Maintenance Grant Scheme and Building Maintenance Loan Scheme to help owners of older buildings fund essential repairs. The Urban Renewal Authority (URA) also offers rehabilitation programmes. Eligible buildings can receive grants of up to HK$40,000 per unit or interest-free loans. These schemes are particularly useful for owners in older districts like Sham Shui Po, To Kwa Wan, and Wan Chai.
• Refusal to pay — Under the BMO, management fees and special levies are recoverable as a civil debt. The OC can take legal action against owners who refuse to pay, and in extreme cases, register a charge against the property. Non-payment is not a viable option.

The Building Management Ordinance: Your Rights and Protections

The BMO provides a framework of rights and safeguards for owners:

• Right to inspect records — Any owner can inspect the OC's financial records, minutes of meetings, and contracts. Transparency is a legal requirement.
• Right to call meetings — Owners holding at least 5% of shares can requisition a special general meeting to discuss urgent issues.
• Protection against mismanagement — If you believe the MC or management company is acting improperly, you can apply to the Lands Tribunal for an order to rectify the situation.
• Mandatory building maintenance — Under the Mandatory Building Inspection Scheme (MBIS), buildings aged 30 years or older and over three storeys may be required by the Buildings Department to carry out inspections and repairs. The OC plays a central role in coordinating compliance.

Practical Tips for Owners

• Attend your AGM — This is your opportunity to influence decisions about your building. Apathy among owners often leads to poor management and wasteful spending.
• Read your DMC — Know your rights and obligations before a dispute arises.
• Build up the reserve fund — Buildings with healthy reserve funds avoid the shock of sudden special levies. A well-managed building contributes to higher property values.
• Report repair issues promptly — Small problems like hairline cracks, minor water seepage, or corroded pipes become expensive emergencies if left unattended. Notify your building management office as soon as you spot an issue.
• Seek mediation for disputes — The Home Affairs Department offers free mediation services for building management disputes. This is often faster and cheaper than going to the Lands Tribunal.