Question: An owners corporation is considering funding much needed repairs using an unsecured loan from a number of tenants. Are those same tenants able to vote on approving the loan at a committee meeting?
If an owners corporation is considering funding much needed repairs using unsecured loans ($300k) from a number of tenants at 5% interest over 7 years, are those same tenants able to vote on approving the loans at a committee meeting (they are all on the committee)? Or, due to a conflict of interest, should they be prohibited from voting?
Answer: Only one tenant representative is allowed on the strata committee and that tenant does not have voting rights.
This is not a lawful arrangement because there is only ever one tenant representative on the strata committee and that tenant does not have voting rights. Please see below. Further, any loan must be approved by resolution at a duly convened general meeting of the owners corporation not at a strata committee meeting. See Section 33 of the Act.
33 Tenant representatives
- This section applies to a strata scheme if there are tenants (being tenants notified in a tenancy notice given in accordance with this Act) for at least half of the number of lots in the scheme.
- The tenants of lots in a strata scheme (being tenants notified in a tenancy notice given in accordance with this Act) may nominate one tenant representative for the strata committee.
- The tenant representative on a strata committee, in that capacity:
- is not entitled to vote on decisions of the committee or to put a motion or nominate a person for office, and
- is not entitled to act as an officer of the owners corporation for committee purposes, and
- cannot be counted in determining whether there is a quorum of the committee
This post appears in the April 2021 edition of The NSW Strata Magazine.
Leanne Habib Premium Strata E: info@premiumstrata.com.au P: 02 9281 6440