This article discusses strata majority vote related owners legality and what minority owners can do in a small scheme.
Question: I have purchased in a four lot strata scheme. The owners of two other lots are related and band together for a majority vote. Is this legal? What can I do?
I have purchased a unit in a four lot strata scheme. An individual owns the largest unit in the block, and his son-in-law owns another unit. Together, they own 51% of the block, granting them the majority of voting power at 51%. At the AGM, the son-in-law gives his proxy to the father-in-law. Is this legal? I will never have the opportunity to participate in the decision making processes while they hold the decisive vote. This situation feels particularly inequitable since I was unaware of their relationship before I purchased in the block.Answer: Speak to the other owners and try and work with them.
Unfortunately, there would have been no way to ascertain the relationship between the owners prior to purchasing. A pre-purchase inspection would have unlikely to have shown anything. Perhaps a review of the minutes over the course of a number of years may have shown a trend of one lot owner always providing their proxy to another owner. It is a similar situation where there is no relationship, and one owner provides their proxy to another owner.
Yes, it is legal, as there is no prohibition of providing a proxy to a family member.
In any general meeting, votes are calculated in one of three ways.
- Ordinary resolution – requiring majority (either per lot or unit entitlement);
Provided all owners attend and vote, you cannot outvote the majority and cannot prevent an ordinary resolution from being passed
- Special resolution – not more than 25% of the unit entitlement voting against a motion;
Depending on your unit entitlement and the number of owners who attend and vote, you may be able to prevent a special resolution from being passed.
- Unanimous resolution – no votes against.
You can prevent a unanimous resolution being passed.
If the owners corporation is not complying with its legislative requirements or the majority is making decisions that it should not be making, there are options through mediation in the Office of Fair Trading and/or NCAT proceedings.
In the first instance, I would speak to the other owners and try and work with them. You never know. They may be reasonable and like-minded.
This post appears in Strata News #658.
Matthew Jenkins Bannermans Lawyers E: enquiries@bannermans.com.au P: 02 9929 0226