This Q&A discusses the NSW legislation around Section 110 – the power to borrow money, in this case to cover remedial works. Leanne Habib, Premium Strata provides the following response.
Question: At our next EGM we will be voting on whether to take out a Strata Loan to cover remedial works. What procedure is required for acceptance of this Motion?
At our next EGM we will be voting on whether to take out a Strata Loan to cover remedial works. What percentage is required for acceptance of this Motion and does everyone have to participate in the loan, despite organising finance themselves.
Answer: A resolution approving the relevant loan has to be passed at a general meeting of the owners corporation.
Section 100 of the Strata Schemes Management Act, 2015 (NSW) is set out below and the power to borrow only requires an ordinary resolution/majority vote.
100 Power to borrow money
- An owners corporation may borrow money and secure the repayment of money and of any interest in any manner agreed between the owners corporation and the lender, otherwise than by charging the repayment on the common property.
- An owners corporation must not borrow money, or secure the payment of money and interest, unless a resolution approving the relevant loan has been passed at a general meeting of the owners corporation.
Because the borrower is the Owners Corporation and would need to issue levies to cover repayments, it isn’t possible that some owners could opt out as levies are due and payable by all owners part of the scheme.
Have a question about Section 100: power to borrow money or something to add to the article? Leave a comment below.
This post appears in Strata News #369.
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These articles are not intended to be personal advice and you should not rely on it as a substitute for any form of advice.
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