NSW Q&A Section 100: The Power to Borrow Money

This Q&A discusses the NSW legislation around Section 110 – the power to borrow money, in this case, to cover remedial works.

Table of Contents:

• QUESTION: Our strata has borrowed $2.5 Million. I am responsible for repayments of $11,000 per year for 6 years. If I sell my strata property, am I then responsible to repay the entire amount I owe for the 6 years? Or does the new owner take on the responsibility of the repayments?
• 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?

Question: Our strata has borrowed $2.5 Million. I am responsible for repayments of $11,000 per year for 6 years. If I sell my strata property, am I then responsible to repay the entire amount I owe for the 6 years? Or does the new owner take on the responsibility of the repayments?

Answer: A strata loan is taken out but the strata corporation, not individual owners, so if an owner sells the debt stays with that lot and the incoming owner takes on the responsibility of those levies.

Debbie Barker
StrataLoans
E: [email protected]
P: 1300 785 045

This post appears in Strata News #472.

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

1. 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.
2. 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.

Leanne Habib
Premium Strata
E: [email protected]
P: 02 9281 6440

This post appears in Strata News #369.

Have a question about Section 100: power to borrow money or something to add to the article? Leave a comment below.

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Read next:

• QLD: Q&A Using a Strata Loan to Pay for Painting of the Complex
• Strata Owners: Why refinancing your home loan may be a good idea … and why it could prove difficult
• Strata Finance: The guide for Owners Corporations

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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