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Home » Bylaws » Bylaws NSW » NSW: Strata Resolutions – What is Required?

NSW: Strata Resolutions – What is Required?

Published December 4, 2020 By David Bannerman, Bannermans Lawyers 6 Comments Last Updated March 31, 2022

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This article about strata resolutions has been supplied by Bannermans Lawyers.

Strata owners corporations will, over time, need to make decisions about a wide range of matters. Some decisions can be made by the strata committee or by the strata managing agent under delegated authority, but the most important decisions will need to be made by a resolution of the owners corporation at a general meeting. To ensure the legality of such resolutions, it is important to be aware of the different kinds of resolutions contemplated by the legislation, when they are required and how to make them.

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The following issues need to be considered:

  • Have quorum requirements been satisfied? No resolution will be validly made if quorum requirements are not satisfied.
  • What kind of resolution is required? An ordinary resolution may be sufficient, but in some circumstances, the legislation may require a special resolution or a unanimous resolution. Also, a resolution amending or revoking an earlier resolution usually must be of the same type, i.e. a special resolution is required to amend or revoke a special resolution and a unanimous resolution is required to amend or revoke a unanimous resolution unless the unanimous resolution involves common property, in which case it may be amended or revoked by special resolution.
  • Has the resolution been validly made? Each type of resolution must satisfy specific requirements. The resolution must be framed as a resolution of the specified type and the required level of support must be achieved. Simply achieving the required level of support is insufficient, e.g. a resolution not framed as a unanimous resolution is not a valid resolution simply because it receives unanimous support.
  • Are there any additional statutory requirements? For example, certain resolutions will not be effective without the written consent of specified persons or without additional action, such as registration.

In theory, only a simple majority is required, but there are some factors that make it more
complicated:

The following issues need to be considered:

  • Initially, a vote will be determined by a show of hands according to numbers of lots owned. However, a person present and entitled to vote can demand a poll, in which case the vote will be determined according to unit entitlements.
  • An owner’s vote will not be counted if the owner is not financial.
  • The vote of an original owner will be discounted by two thirds if the unit entitlement of the original owner’s units are at least half the aggregate unit entitlement for the scheme.
  • A developer or lessor of a leasehold strata scheme cannot vote in relation to matters concerning building defects or their rectification.

Special resolutions are required in a wide range of circumstances, e.g. where a decision involves:

  • Transfer or lease of common property or grant of an easement over common property.
  • Acquisition of additional common property.
  • Alterations/additions to common property.
  • A determination that it is not appropriate to maintain part of the common property.
  • Amendment/revocation of by-laws

A special resolution requires that no more than 25% of the votes cast, by unit entitlement, are against the resolution, i.e. a 75% majority of those present and entitled to vote. This is subject to the same complicating factors as apply to ordinary resolutions.

Pending legislative changes in relation to sustainability infrastructure will change this. Where a special resolution is required, it will be sufficient, in the case of a “sustainability infrastructure resolution”, if it is opposed by less than 50% of owners entitled to vote, i.e. reducing the bar from 75% support to 50% support.

Unanimous resolutions are required in a more restricted range of circumstances, including where a decision involves:

  • A two lot scheme deciding not to establish a capital works fund.
  • A two lot scheme deciding not to insure the building, where the buildings in each lot are physically detached
  • Distribution of surplus funds in the administrative fund or capital works fund.
  • Amending or revoking an earlier unanimous resolution, not being a resolution dealing with common property.
  • Winding up the strata scheme

A unanimous resolution requires that no vote is cast against the resolution, i.e. a 100% percent majority of those present and entitled to vote. This is subject to the same complicating factors as apply to ordinary resolutions, except that an owner does not need to be financial to vote on a unanimous resolution.

Conclusion

It would be a worthwhile exercise for strata schemes and their strata managing agents to consider these issues and develop procedures to deal with them.

We have considerable experience with these issues and could help you pre-empt difficulties in this area.

Bannermans Lawyers
T: 02 9929 0226
Suite 702, 2 Elizabeth Plaza
North Sydney NSW 2060

This post appears in the December 2020 edition of The NSW Strata Magazine.

Have a question about strata resolutions or something to add to the article? Leave a comment below.

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Read next:

  • NSW Dispute Resolution: 6 Tips For Conflict Management
  • NSW: Quorum Requirements for the AGM

The information contained in this article is general information only and not legal advice. The currency, accuracy and completeness of this article (and its contents) should be checked by obtaining independent legal advice before you take any action or otherwise rely upon its contents in any way.

Visit Strata By-Laws and Legislation OR NSW Strata Legislation.

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About David Bannerman, Bannermans Lawyers

David Bannerman, Principal, established the firm in 2007 as a sole practitioner under the business name Bannermans Lawyers. The firm provides high quality specialist legal services to the strata, development, construction and insurance industries and with its expertise and industry experience has become Sydney’s leading strata law firm, employing over 30 staff, including 19 highly skilled lawyers.

Bannermans acts primarily for owners corporations and strata managers, but also has many builder, developer and insurer clients. While the firm’s focus is on the greater Sydney area, the team is increasingly providing services throughout regional NSW.

David's LinkedIn Profile.

Comments

  1. Dede says

    May 10, 2022 at 8:07 pm

    Should a motion to terminate your existing strata managing agent be a special resolution, unanimous or ordinary motion?
    Thank you

    Reply
    • Nikki Jovicic says

      May 11, 2022 at 7:38 am

      Hi Dede

      This Q&A should assist: Question: We are lot owners in a small 8 lot commercial strata building. What is the procedure for changing strata managers? What happens if this procedure is not followed?

      You may also wish to read the other Q&As within this article for further information about terminating your strata manager.

      Reply
    • Matthew Jenkins says

      May 11, 2022 at 3:51 pm

      A motion to terminate your existing strata manager requires an ordinary resolution at a general meeting in accordance with section 50(3) of the Strata Schemes Management Act 2015. You should first ensure that you are able to terminate the agreement in accordance with the agreement.

      Reply
  2. David Bannerman says

    September 29, 2021 at 12:49 pm

    Hi Adalazie, this sounds like an identical query that we have recently received and there is a potential conflict. Please contact our office on (02)9929 0226 to discuss.

    Reply
  3. Adalazie says

    September 29, 2021 at 6:12 am

    Two matters were discussed at our AGM yesterday that were not specified on the agenda. . The first was under ‘Maintenance’ and a number of items were raised orally (including by me.).

    The other matter required a special resolution. It was introduced orally in our Zoom meeting by a new owner, under a heading our new Strata Manager placed on the agenda called ‘Matters Arising.’

    The matter was to change a security light on an external wall to a sensor light.

    I am concerned (though I eventually voted for it) that significant matters that require special resolutions can be raised orally under a general heading at a meeting.

    Don’t matters for special resolutions need to say what they are and give particulars?

    Many thanks in advance for your reply.

    Reply
    • Liza Admin says

      April 13, 2022 at 12:10 pm

      Hi Adalazie

      The following response has been provided by Leanne Habib, Premium Strata:

      No motion, whether ordinary or special, can be resolved unless it appears on the notice/agenda of the general meeting.

      Reply

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