NSW: When are you an unfinancial lot owner? What effect does this have?

This article about levies, unfinancial lot owners and what this means has been supplied by Allison Benson, Kerin Benson Lawyers.

One of the most common questions we receive is when is a lot owner an unfinancial owner for a meeting?

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The reason for the question is clause 23(8) in Schedule 1 of the Strata Schemes Management Act 2015 which states:

“(8) Voting rights cannot be exercised if contributions not paid A vote at a general meeting (other than a vote on a motion requiring a unanimous resolution) by an owner of a lot or a person with a priority vote in respect of the lot does not count if the owner of the lot was an unfinancial owner at the date notice of the meeting was given and did not pay the amounts owing before the meeting.”

The Act’s definitions section provides that an “unfinancial owner” means “an owner of a lot in a strata scheme who has not paid all contributions levied on the owner that are due and payable, and any other amounts recoverable from the owner, in relation to the lot”.

The effect is that if you have not paid all the levies / contributions and any other amounts (which would include interest) recoverable from you as at the date of the meeting notice by the actual meeting you are unfinancial and cannot vote.

What does the owner have to pay? And when by?

Take for example a meeting notice dated 14 February 2018 for the meeting to be held on the 7 March 2018 where levies were due on the 1 March 2018.

The lot owner only has to have paid everything owed as at 14 February 2018 before the 7 March 2018 meeting. They do not have to pay the 1 March 2018 levies before the meeting.

If I am unfinancial what rights do I have regarding meetings?

The consequences of being unfinancial at a meeting are that you cannot vote at a general meeting of the owners corporation.

Does this apply to strata committee meetings?

In respect of strata committee meetings Schedule 2, clause 9(4) applies. It states:

“(4) Voting rights cannot be exercised if contributions not paid A member of the strata committee is not entitled to vote on any motion put or proposed to be put to the strata committee if the member was, or was nominated as a member by a member who was, an unfinancial owner of a lot in the strata scheme at the date notice of the meeting was given and the amounts owed by the unfinancial owner were not paid before the meeting.”

As such, if either you or the person that nominated you was unfinancial as at the date the notice of meeting was given and the amounts owed were not paid before strata committee meeting then you cannot vote.

When unfinancial you can, however:

1. request a motion be placed on the agenda of a later meeting if you are unfinancial (but you cannot vote at that meeting if you are still unfinancial);
2. nominate someone for the strata committee.

Read next:

• NSW: Q&A How long can member hold positions in executive committee?
• NSW: Q&A Strata levy increases – how much and how often?

Allison Benson
Kerin Benson Lawyers
P: 02 4032 7990
E: [email protected]

This post appears in Strata News #183.

This article has been republished with permission from the author and first appeared on the Thoughts from a strata lawyer website.

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