Question: Can we have House Rules that can cover both split budgets or single budgets for our scheme?
We’ve received the Executive Committee minutes that had the below statement:
“It was resolved that the House Rules governing the complex are to be registered by the incoming committee after the AGM. It was noted that a Rule would need to be added to the Rules at the 2022 AGM if a spilt budget was to be considered at the 2022 AGM. It was discussed that a spilt budget could not be proposed at the 2021 AGM due to the timeframe of the AGM and the legal preparation for this to take place”.
Our complex consists of 5 class B buildings. Some lots use lifts and some do not. Is the above statement legal and accurate? Why can’t we have House Rules that can cover both split budgets or single budgets?
Answer: We’ve provided some guidance on registering or rules, split budgets and fairness of voting
The phrasing of the question and information provided leaves too much to be assumed to enable a detailed response. The best option for the owner is to seek advice from the Strata Manager and they should be able to provide advice specific to the situation.
For ease of reference, broad answers have been provided below to the individual questions.
Registering of Rules
The first thing to note is that any Owners Corporation Rules must be approved by Special Resolution of the Owners Corporation (at a General Meeting) prior to them being registered. The EC can undertake the physical process of registering the rules, however they must first be approved by the Owners Corporation.
Split Budget
Legislative Reform stipulates that a budget can only be split by way of special resolution, subject to registration of an Alternate Rule. A regular budget (1 x administrative fund and 1 x sinking fund) requires an ordinary resolution.
In order to move away from a standard administrative & sinking fund, into the territory of a split budget, an Alternate Rule must be adopted, setting out criteria and formula by which the budget are calculated. It is important to note that a split budget cannot be approved without the Alternate Rule, and the Alternate Rule cannot be retrospectively applied (you cannot split the budget and then develop the rule for registration). Under the new legislation a budget can be split by way of special resolution as opposed to an unopposed resolution as was required prior to November 2020.
Fairness of Voting
Any owner may apply to ACAT for a review of a resolution if they feel it is unfair. If the owner chooses to take this option, they would need to clearly articulate what they are hoping to achieve and the methodology proposed to achieve the desired outcome. Ie; if you would like a budget split to differing portions for the units and townhouses, you would need to set out reasons as well as provide the formula by which calculations have been made.
Nina Cannell
Signature Strata
E: nina@signaturestrata.com.au
P: 02 6185 0347
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