This article is about restrictions on a NSW strata committee.
The strata committee’s powers are limited both by the Strata Schemes Management Act 2015, by the owners corporation itself and can potentially be limited by a group of lot owners.
Let’s break this down into what the Act prohibits, what type of restrictions can be placed on the strata committee by the owners corporation itself and what restrictions can be placed on the strata committee by a group of lot owners.
Powers (and restrictions) under the Strata Schemes Management Act 2015
Section 36 of the Act provides that the decision of a strata committee is a decision of the owners corporation unless there is a disagreement between the two, in which case the owners corporation’s decision prevails. As such, the strata committee does not have the power to make a decision that directly contradicts a previous decision of the owners corporation.
A further restriction imposed by section 36 is that the strata committee cannot make any decision that must be made by the owners corporation at general meeting or that requires a special or unanimous resolution. This means that the strata committee cannot determine contributions, appoint a strata manager or a building manager as these decisions must be passed at a general meeting nor can the strata committee decide to add to or alter the common property as this requires a special resolution to be passed at the general meeting.
The ultimate restriction is that if a group of lot owners feels strongly enough and have the numbers for a qualified request (that is 25% of the total unit entitlements for the scheme) then they can require a meeting to be held with a motion on the agenda to vacate one or more of the strata committee’s positions. This motion must be passed by a special resolution.
Restrictions imposed by the owners corporation
The owners corporation can limit the strata committee’s decision making power and this is a required motion on the agenda of each annual general meeting. While not all owners corporations limit their strata committee it can be a powerful tool as the strata committee cannot make a decision on any matter or type of matter that the owners corporation has resolved must only be determined at a general meeting.
In this category where a strata committee has been given a monetary limit e.g. $1,000, they can only make decisions up to that limit e.g. they can engage a contractor to do work up to $1,000. The owners corporation at general meeting may also resolve that any decisions in relation to a specific matter or type of matters be referred to a general meeting. For instance, this could be a decision about whether or not to accept a settlement offer in a building defect or damages claim.
Restrictions imposed by lot owners
The third category of restriction falls within schedule 2 of the Act. Essentially, after receiving a notice of a strata committee meeting, lot owners may write to the secretary of the scheme to requiring a motion to be determined by the owners corporation rather than by the strata committee. This requires lot owners with unit entitlements exceeding one-third of the total unit entitlement of the scheme to write to the secretary objecting to the strata committee making a particular decision. Depending on the size of our scheme and how organised lot owners are this can be very effective. It is designed to be used when a group of lot owners believe the decision is of such importance that all lot owners should be able to vote on it.
This is general information and should not be considered to be legal advice. I recommend you obtain legal advice specific to your individual situation.
This post appears in Strata News #516.
Have a question about about restrictions on a NSW strata committee or something to add to the article? Leave a comment below.
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This article has been republished with permission from the author and first appeared on the Thoughts from a Strata Lawyer website.
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Are you not sure about some of the strata terms used in this article? Take a look at our NSW Strata Glossary to help with your understanding.