Body Corporate Voting Rights and Why You Should Use Them

body corporate voting rights and why to use themLast week I was asked for a source of the Queensland legislation that says 100% of owners need to give permission before a scheme can be terminated.

I don’t actually like the “show me the legislation” question, but in this case it’s contained within the BCCM Act itself (from section 77 if you’re interested) and was easy to do.

If you do read it though you’ll note that it doesn’t actually say 100% of owners need to agree for the sale to proceed.

It says the body corporate must pass a resolution without dissent.

Now you may be thinking, duh, same thing, but you’d be wrong. Yes everyone who votes must vote yes, but there isn’t any requirement for everyone to vote.

In fact I did a search there other day where a building with 140 lots passed a resolution without dissent with only 15 affirmative votes.

15 out of 140 potential votes! That’s not even enough for a quorum.

Some of you might be scratching your head wondering how a vote could pass when the meeting doesn’t even have a quorum, and still others might be thinking “what’s a quorum”?

Which all leads me to believe there might be a bit of confusion about how motions are passed within body corporates. Let’s if I can shed some light.

Body Corporate Voting Rights

One lot equals one vote.

It doesn’t matter how many owners there are for a lot, that lot still only has one vote. If two votes for one lot are received they will both be invalidated. That may sound unfair but how do you decide which is valid? You can’t, so they both go.

Those are your body corporate voting rights.

However, it’s unfair for any one owner not to pay their way, so if you have overdue levies you will be stripped of all your voting rights except for resolutions without dissent.

At least once every year lot owners are called to vote on certain matters. Annual General Meetings include statutory motions that every scheme must consider plus anything else that any of the owners, or the Committee, feel might be worth considering.

You also elect the Committee.

Occasionally urgent matters crop up and and an EGM might be held to get lot owner approval.

Those are your voting rights. It’s seems simple.

Yeah, not so much. There’s so many other factors to consider.

Getting the Preliminaries Right

General meetings have whole rituals that must be completed before they even get to the meeting. I’ve written more about them here.

It’s important to note that if the preliminaries are not followed correctly then the entire meeting and any motions passed within can be invalidated.

Meeting Quorums

Apart from notice the other requirement for a general (and Committee) meetings to proceed is a quorum, or minimum number of voters present.

A quorum for a meeting is 25% of voters.

If you’ve submitted a voting paper you’re considered “present”, however, at least two voters actually physically need to show up for the meeting to be able to go ahead.

If there isn’t a quorum within 30 minutes of opening the meeting then the meeting is adjourned, which simply means called off.

It will be reconvened exactly seven days later.General Meeting Quorum

So if the meeting was on Monday at 9.00am and was adjourned, then it is reconvened the following Monday at 9.00am.

The key point here is reconvened general meetings don’t require a quorum. No one can show up for the reconvened meeting, no further votes need be received, and the meeting will still proceed.

This is a very important point, which I’ll discuss in more detail below.

For the purposes of this discussion I’ll assume that proper notice is given and the motions themselves comply with legislation and won’t be ruled out of order.

How a Motion Passes Will Depend on The Type of Resolution

OK, so we’re all good, we’ve had our notice, got a quorum and we’re ready to count these votes.

How you count them will depend on what sort of motion they are. There are three main types of resolution;

  • Ordinary resolution
  • Special resolution
  • Resolution without dissent

Ordinary Resolution

When counting votes for an ordinary resolution then it’s one vote per lot and a simple majority passes the motion.

For instance, seven votes are cast, four are yes, three are no, that motion is passed.

If the votes are tied the motion failed.

But wait, there’s more, a lot owner can ask for a poll vote to be taken for an ordinary resolution. That means the total contribution lot entitlements of those voting yes and those voting no are compared. A simple majority passes.

What that means is if my contribution lot entitlement is 1 and yours is 2, your vote is twice as valuable as mine.

Types of motions passed by ordinary resolution

Ordinary resolutions are your bread and butter of body corporate decisions. Things like issuing the yearly levies, obtaining reports, appointing body corporate managers or auditors and even spending substantial amounts of money can be decided by ordinary resolution.

Special Resolutions

The next level up from ordinary resolutions is a special resolution.

A special resolution is passed if:

  • Yes votes account for 2/3rds of those votes cast (excluding abstains)
  • Those who voted no weren’t more than 25% of lots
  • Those who voted no weren’t more than 25% of the contribution lot entitlements

Each test must be answered yes for the vote to pass.

So for instance…if 100 votes are cast out of 150 lots with a total contribution entitlement aggregate of 300 (2 per lot) and 60 voted yes, 30 voted no with 10 abstaining, then:

  • 2/3rds of the votes cast is 60 ((60+30) x 2 ÷ 3=60) (ignore those who abstained)); that’s a pass
  • 25% of lots is 37.5 with only 30 voting no; that’s also a pass
  • The total contribution lot entitlement of those who voted no is 60, less than 75 which is 25% of the 300 aggregate; again this is a pass

In reality of course these votes are much more complex since contribution lot entitlements can be very unequal.

Types of motions passed by special resolution

More important issues are decided by special resolution including changes to by-laws, expenditure over $2,000 per lot or a motion to appoint a body corporate manager to act as the Committee.

Resolution without Dissent

A resolution without dissent is a motion where all the votes must be yes. If anyone votes no the motion is lost.

If you have overdue levies you can still vote on a resolution without dissent, which is a clear indicator of how important these motions are.

These are motions that are going to impact on the holdings of the joint lot owners, consequently every lot owner must be given an opportunity to have their say.

Types of motions passed by resolution without dissent

A resolution without dissent is required to do anything with the common property. Examples are granting an area as exclusive use, selling a portion of the common property or dissolving the body corporate altogether.

But … The Courts may overturn dissent

Simply voting no to a resolution without dissent is not always the end of the matter.

If you are the only one who objects, and your neighbours believe you’re only did that to upset them, then they can apply to the court to have your vote disregarded.

In Boulevard North [2009] QBCCMCmr 21 (27 January 2009) it was noted

If satisfied a motion requiring a resolution without dissent was not passed because of opposition that in the circumstances is unreasonable, an adjudicator may make an order giving effect to the motion as proposed or a variation of the motion as proposed (schedule 5(10),Act).

And indeed the ability for the court to disregard an objector applies even to the decisions about termination of the scheme.

The problem with voting at general meetingBody Corporate Voting Rights

Remember we talked about quorums above?

That’s the key problem with voting at general meetings. It is very common for body corporates not to achieve a quorum.

And, if a meeting is adjourned, when it’s reconvened the requirement for a quorum is waived.

Referring to my example above, a building with 140 voters, has a quorum of  35, yet 15 votes are received. The meeting is adjourned and reconvened a week later and quorum requirements are waived. Those 15 votes are sufficient to carry a motion which is so important to the scheme, a resolution without dissent, that even the black sheep are entitled to vote.

It’s crazy. A motion was passed that effectively sliced off a portion of the common property and allocated it to someone and the vast majority of owners just didn’t care, or more likely didn’t realise.

This is how small groups end up controlling body corporates.

If no one else can be bothered to vote those that do vote control what the body corporate does. And in most cases they’re also the ones writing and submitting the resolutions that nobody then bothers to vote on, meaning they are literally writing the direction of the body corporate.

 

That’s how you end up with sudden hikes in levies or even massive special levies; it wasn’t out of the blue, you just weren’t paying attention!

It is true that the legislation has clear boundaries on what body corporates can do but that assumes that the scheme is acting within those boundaries, which is not always the case.

There is no one watching, no policing. You’re on your own here guys.

So pay attention. And then vote!

THE BASICS OF BODY CORPORATES

A little knowledge can go a long way


I see so many stressful and frustrating issues in body corporate records that result from simple misunderstandings it hurts my head. If I could do one thing to help it would be to teach everyone the basic rules, so they can avoid all these dramas.


With that in mind I've put together a short eBook that sets out the basics everyone owning in a body corporate really should know. It won't make those big issues go away, but it will give you a firm grounding from which to communicate.


It's completely free, so please, download it now!

Download Now

Comments

  1. Our building has 73 owner occupied and 24 in the letting pool.
    The committee is of the view we the residents would benefit from changing from an Accommodation module to a Standard module.
    What is your opinion and if it is yes change how do we go about it?
    Thanks
    Regards Jan

    • Hi Jan
      Thanks for your comment. Yes if most of you are owner occupiers then you likely could benefit from a change to Standard module.

      To change your regulation module the body corporate must pass a special resolution at general meeting. You’ll have an issue with the Caretaking and Letting Agreements for your building because they will be for 25 years or part thereof, whilst for a Standard module they may only be for a maximum of 10 years. I’m afraid I don’t know how you go about changing them. It’s probably best to discuss with a solicitor who deals in Management Rights.

  2. May Peterson says:

    Hi Lisa,
    We recently purchased Management Rights on the border of NSW. The couple whom we purchased the business off were also running the Body Corporate as Chairman, Treasurer & one lot owner as Secretary, there is no one else on the Body Corporate. It was noted that the Chairman & Treasurer were to stand down from the Body Corporate 3 months after we purchased. They overturned that decision & are still running it, because they have large blocks of land which they have now attached to the property so as they can save money on providing services to there future development.
    We have just tried to have a AGM were the 3 Committee members would not accept any Nominations calling for Committee positions. They overruled them by using there 350 votes that they had from there attachment properties. Any other matter that was tried to put forward was dealt in the same way, overruled even to the request of having an audit. As a result most of the lot owners walked out of the meeting in protest, as it has come to a head that the Body Corporate is not only become a dictatorship, it is corrupt on every level & totally dysfunctional. Our motivation now is to get a Professional Body Corporate to take over. The Chairman & Treasurer of the Body Corporate is now on the property on a daily basis to not only try & intimidate us but to try & find any little thing to use against us, as well as slandering our reputation to various Lot owners. His motivation now is to drive us out. I would like to know if you have any words of advise on the best way to handle this situation? One thing we have learnt is to never buy a property who don’t have a professional Body Corporate!

  3. Lesley Kerr says:

    Hi Lisa
    I am an owner in a three townhouse complex. I have a situation where the treasurer who is not an owner, nor related to an owner, is being paid $600 per year for the role of treasurer.
    I have never had a nomination paper from either the “treasurer” nor the secretary.
    I feel that this “treasurer” and the BC secretary (an owner) are spending BC funds to the benefit of one owner being the BC secretary. Can a non-owner actually be the treasurer? And how can I get on the committee? The Chairperson is the owner of the other townhouse. Many thanks for any help you can give me this is my first experience with a BC and I am totally bewildered as to how this “treasurer” and the secretary are able to spend the money. Cheers.

    • Hi Lesley

      I’m as confused by this situation as you seem to be. To appoint an Office Bearer you would need to vote at the AGM. The same for the payment. You would have the opportunity to vote on the issue a the AGM. The body corporate cannot just decide to pay someone without giving all owners the right to vote.

      The only people who are eligible to be on the committee are lot owners, those appointed to act for lot owners or family members of lot owners. If the Treasurer is none of these people then they’re not eligible to be on the committee let alone receive payment for it.

      To object you would need to lodge an application for Adjudication with the Office Commissioner Body Corporate.

      Every year, prior to the end of financial year, the Secretary is must send a letter to all lot owners asking for nominations for Committee. All you need do is send back the nomination form, or letter if there is no form, nominating yourself. With three lots you will automatically be included on the committee without the need for a vote.

      • Lesley Kerr says:

        Thank you Lisa. There are so many other breaches of the BCCM as well.
        I note that before proceeding to adjudication one needs to attempt self resolution. Should I write a letter to the non owner treasurer and demand that she hands over the records to me? I have already emailed her to let her know that she simply cannot be on the committee let alone be treasurer and have had absolutely no response. I am not sure of the wording of what order I would be seeking from Adjudicator???

        Cheers.

        • Hi Lesley

          I would write to the committee and make it clear that you do not believe the person who is the Treasurer is eligible to be on the committee.

          Wait for their reply, if any.

          When you make an application to the Commissioner consider what outcome you would like. Obviously that person no longer as Treasurer. You yourself appointed as Treasurer instead? Repayment of the monies paid?

          You may ask for whatever you would like. The Adjudicator will interpret the law and decide if what you’re seeking is possible. It is a good idea to keep things simple and clear.

          You also need to find out what regulation module your scheme is registered under.

          • Lesley Kerr says:

            Hi Lisa
            It is the standard module. I did write to both the non-owner “Treasurer” and the BC secretary to let them know that the non lot owner cannot be on the committee and of course did not receive a reply. I am trying to complete the Form 22 Conciliation.
            Who is the respondent? It says I cannot lodge against BC committee nor the BC manager.
            Do I use the name of the non-owner “Treasurer” and tick the body corporate box?
            This is so confusing. I have spoken to so many people and they have never heard of a person who does not own a lot being on a BC committee. Any advice is greatly appreciated…

          • Hi Lesley

            The respondent would be the Body Corporate. I would put an “outcome sought” as remove the non-owner as Treasurer and appoint someone else, possibly you (or of course anything else you think fit).

            Lot owners do all sorts of things with their body corporates, some of it lawful and some not. The key point is unless a lot owner like yourself raises an objection they get away with it.

  4. Fiona Burrow says:

    HI
    We have 5 units and we are voting to decide if we engage a strata manager. We have voted and 3 say yes and 2 say no. The 2 that say no make up 50% of the unit entitlements and the 3 that say yes make up the other 50%. How do we decide who wins the vote?

    • Hi Fiona

      A majority has not been reached, the motion has failed.

      If it was a motion with alternatives and the motion passed but a choice between the two alternatives was needed a flip of a coin is allowable. But the motion must clearly be the will of the majority.

      The motion will need to be put forward again at the next general meeting.

  5. If an owner has a pecuniary interest in a vote at an AGM, are they required to declare it? and abstain from voting?
    I am referring to a benefit that no other owner would get.
    e.g. all owners have unrestricted access to a swimming pool. One owner(a hotel operator with several units) charges his guests to use the pool.
    If the AGM voted on rules governing the use of the pool and charges for use, would the hotel operator be required to declare and abstain?

    • Hi David

      Good question! I’m not aware of any requirement to disclose and abstain from voting relating to general meetings. In fact there would be several instances where matters would have a financial benefit for owners and they can still vote. Off the top of my head entry into Caretaking and Letting Agreements where the Caretaker may vote if they are a lot owner.

      Certainly committee members are required to disclosure and abstain on voting in those circumstances in committee meetings. The need applies when a conflict of interest would arise.

      From what you’ve outlined here I’m not sure there’s a conflict of interest.

      Also, the body corporate cannot restrict use of the common property for any reason. They’re allowed to set rules for use, including time frames, but that restriction relates to other by-laws such as quiet enjoyment of the property. The idea that they might charge to use the pool is spurious. Body corporates are expressly forbidden from making an income and certainly not from charging owners for use of their own property!

      The legality of a third party doing it is arguable as well. If they hire the lot are they not taking on the rights of the lot owner? For however long? It is not allowable to create two ‘classes’ of residents – those who own and those who let.

      That’s my understanding David, and please do take it with a grain of salt. I am not a legal professional and have only brief outline of the situation.

  6. Cameron says:

    Hi All,
    Thanks for this great article and information, Lisa!
    We are an owners lot of only 6 in inner suburbs of VIC. The group decided to take action on one owner who didn’t pay his OC fees and what followed was 9 years of litigation against this owner and subsequent bankruptcy where he was required to sell his apartment to pay for his fees and lawyer fees. I feel that this whole process has been poorly handled by the OC Managers and the Company we engage. Firstly, to allow the owner to get so far down the line and not paying the fees and then to date, where I feel we’ve been held to ramson by this company. They were the first to take the 11k for their so called services in helping us to get to this resolution ( sending a few emails etc ), and now, we are still after over 18 since the monies have been with the Bankruptcy business and yet to see it. Our Owner Corporate Manager has engage a Lawyer, who then, in turn, engages with the Solvency Lawyers. Each of these org’s is making 450 per hr out of our money which is over 30k which is owed to us.
    I question the integrity and believe they are very deceitful in their dealings with us. We want to remove them but we need the money back first. I want to lodge something against this company too for very poor service etc.
    Is VCAT the way to go? I will try moving to OUR BODY CORP the online platform as the amount of money we are continuing to pay this company is absurd. It’s funny, as we pay them for their services but feels like we are being held to ransom while they continue to bleed us dry. I feel that are the lowest form people – bottom feeders using the weak systems to exploit people and make money in a very fraudulent manner….
    Any support or direction would be appreciated… I understand QLD and VIC may have different rulings.

    • Hi Cameron

      That sounds incredibly frustrating and I can see you’re in limbo at the moment.

      Having an owner go bankrupt is an especially trying problem for strata schemes and it rarely ends well. The problem is overdue levies are seldom the only issue. Also stung in these cases is the local council (rates) and the mortgagee. What can happen is the lot is sold, the proceeds from the sale are not enough to cover everyone and wrangling about the mess ensues with the only ones coming out of it unscathed the lawyers. I’m so sorry your scheme has got caught up in something like this and it can seem to drag on forever.

      If a new owner has been found for the lot then maybe writing the whole mess off and moving forward is the most economical way forward.

      Either way if you change strata manager it should not affect the working of the case. The lawyer has been engaged now and they should liaise with whomever the strata manager is, or even the committee.

      Making a claim against your current manager will be a challenge since your first step will be to “prove” that there has been a loss created by the managers actions or inactions. And yes VCAT would be the way to proceed, though I suspect seeing a solicitor would be the next step in the process. Having gone through this more legal action might not be to the owners taste right now.

      Hopefully this frustrating issue will resolve itself soon for you and the owners Cameron. I’m sorry I couldn’t shine a more positive light on things for you.

  7. Hi Lisa
    I find body corporate legislation sets rules but does not have the power to enforce them or couldn’t be bothered. Rules should be there to support but these do not. An owner is on their own. I am in a block of 4 units and even when no voting has occurred a couple of owners get together and contact the body corporate management to change the Minutes and suddenly I was said to vote yes when voting did not even happen. Not only that, work includes a part of land that isn’t common property and I have no power to change that. I spoke to someone from the body corporate commissioners office and to do anything about it I need to submit a complaint and be out of pocket for $155 before I even start the dispute. I have no confidence in being successful because I work in government and I know that legislation us just lip service. It does not support the average person. I will never buy a unt again. Very frustrated. I was told also that a body corporate management will do whatever as they want to be paid. They do not support or help function in accordance with the Act. It’s a joke!!!

    • Hi Marie

      It sounds like you’re having a tough time of it. You are absolutely on your own in unit ownership, and it’s very much them and us if you find yourself disagreeing with the majority. It can be deeply unpleasant. It’s why I don’t own a unit: I don’t have a lot of faith in people especially when they’re in a collective position to control the outcomes I receive.

      I don’t agree that the legislation is just lip service, or that making a formal complaint is not the way to go. For legislators it’s difficult to be in a position of “walking the line” between protecting owners’ rights and creating too much onerous red tape. Bodies corporate are heavily legislated as it is and adding more doesn’t strike me as particularly helpful.

      If your rights have been trampled the framework exists for you to seek recompense. It’s up to you whether you choose to take it.

  8. Hi Marie,

    I live in an apartment building in Queensland with 22 apartments. We have very strong participation by the lot owners in the BC day to day operations even though we have engaged a strata manager.

    In my opinion the voting rights of owners discriminates against those that have the higher lot entitlements even though they pay up to 50% more levies than the base apartment they still only get the same voting rights, ie one vote per lot.

    I used to live in Victoria and owned an apartment in Docklands and can recall that some votes at an AGM were based lot entitlements.

    Can you please comment and provide further info if this exists in Qld?

    • Hi Peter

      It is the same here but happens as a simple majority by default. Any lot owner may call for a poll vote, or vote by contribution lot entitlements on any motion, though they should be taken automatically on special resolutions. The poll vote will overturn any vote by simple majority if the outcomes differ.

  9. Hi
    I am the owner of a unit in a complex of 4 in WA. The other 3 owners have at the last general meeting voted me to manage accounts, insurance, banking and all issues that may arise with the units. I have advised them that I live remote and I don’t feel I can take on the responsibility and have suggested if they don’t want to take on the job then we could get a professional management service to look after it. They are not in agreeance with this and I am not sure what to do. I am getting a lot of rude emails and it is getting nowhere. Can they force me to take on the management? Please can you give me some advice.

    • Hi Lester

      No they can’t force you.

      If you were here in QLD I would suggest you make an application to an Adjudicator to appoint someone to manage the scheme.

  10. David Billings says:

    Hi,
    My wife is the chair person, on a commitee of 11 unites, her first year, our body corp has set an extra ordinary general meeting, they called the meeting on the 14th November, to be held on the 14th December, only having received our agendas in the last week, we were shocked to see the first resolution, is a Resolution without dissent, for reduced timeframe for the meeting, which is of concern, as the body corp set the date, and one vote against will put the whole meeting out, but the body corp will still charge for the meeting, what can be done to get past this, and hold the meeting,

    • Hi David

      That’s a technical question I’m afraid I don’t know the answer to. I didn’t think a resolution without dissent was required to waive the notice period but don’t have time to research it right now.

      As your meeting is proceeding today I doubt there is anything you can do in the short term. If the motion doesn’t pass you can make an application to an Adjudicator to pass the motion on the grounds the opposition was unreasonable. And of course it is also possible the motion will pass. Even if the motion doesn’t pass I would ask the manager to continue the meeting to see how motions would have been made so that if an application is made the matters may be decided.

  11. Hi have a question my mother has lived in the same complex for over 30 years and she’s over 70 the strata management and strata council have decided to do capital works on the whole building that are going to costs $500.000 dollars mum is a pensioner and already has to pay a Levy of 12k due to het unit entitlement being bigger now we have a strata meeting tomorrow night to talk about getting a loan and due to mums entitlement it looks like her repayments are 4K a quarter over the 8 year loan she’s looking at over 140k in repayments really for a pensioner and the strata management answer is oh well if she can’t afford it is to sell up really who is going to buy any of the apartments my understanding was that something as big as this it had to be 100% voted by all owners they had a 4/5 year plan to do all the works but some owners are insisting on doing all the work at once what are our rights.
    Regards rob

    • Hi Rob

      What a difficult situation. Unfortunately your strata manager is correct. When you share ownership of a building with others then you’re vulnerable to having decisions made you don’t agree with.

      Your mother can certainly vote NO on those motions she does not agree with. Unfortunately the other owners may vote yes and majority rules. Resolution without dissent is required in a handful of situations only: making exclusive use grants or otherwise selling common property. It sounds like they’re repairing not selling so only an ordinary or special resolution is required, depending on the works entered into and their cost.

      If the other owners vote YES there isn’t a lot you can do. You may challenge the legality of the meeting and the motion(s) passed, if you feel it breaches legislation, bearing in mind “I can’t afford to pay” is not a reason to challenge. But if there is some irregularity in the notice or form of the wording then you may challenge in that regards. I would suggest seeking legal advice if you plan that route.

      Even if you validly dispute the passing of the motions it is more than likely only going to put off the inevitable.

  12. I have a question. Myself and neighbouring lot have proposed a bylaw to give us exclusive use of the roof space (half each) for conversion to an attic room. A strata solicitor has answered any legal queries and now in the process of an independent valuation. When its time to vote are we (the benefiting units) still entitled to vote on the by-law or is this seen as a conflict of interest. We are a small block everyone is in favour of the proposal except one person. If we are unable to vote can she stop it by herself.

    • Hi Chris

      Allocation of exclusive use, which is a form of sale of common property, must be by resolution without dissent. So yes, absolutely you and your neighbour are eligible to vote. Even those who would otherwise be disqualified (ie have a body corporate debt) will be eligible to vote, the issue is deemed so important.

      That also means that the dissenting person can vote NO and the motion will fail.

      That doesn’t necessarily have to be the final say though. You can make an application to the Adjudicator to have the motion passed anyway, citing as a reason that to vote no was unreasonable. Of course you will need to demonstrate that it was unreasonable. If the Adjudicator agrees the motion may be deemed passed.

  13. Investor says:

    In our block there are 53 units and one person owns 17 units. At either a General Meeting or Special meeting, is he entitled to 17 votes. I have been told he only should have 17/53 = 3 votes. Is this correct and if so which particular legislation provides for this. (I have looked but cannot find anything)

    • Hi Investor

      No its not correct.

      If there are 53 units and one person has 17 units then they have 17 votes. The balance owners have the rest.

Speak Your Mind

*