Question: If an owner has interest owing on arrears, but during the meeting, a motion is passed to waive those interest fees, at what point are they permitted to vote or be nominated for the strata committee? Are they considered unfinancial until the end of the meeting?
Answer: An owner who is unfinancial at the commencement of the meeting would remain so for the duration.
Yes, for the purpose of a meeting where a motion to waive interest and elect the strata committee is considered, an owner who is unfinancial at the commencement of the meeting would remain so for the duration of such.
In NSW, an owner is considered unfinancial if they have failed to pay all contributions levied that are due and payable and any other amounts recoverable from the owner in relation to the lot. This includes interest applied for unpaid contributions.
The Strata Schemes Management Act 2015 specifically addresses the limitations of an unfinancial owner at a general meeting, stating: ‘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‘ (Schedule 1, Part 4 (8)).
Similarly, when considering the election of a strata committee, the Act stipulates: ‘An owner of a lot in a strata scheme who was an unfinancial owner at the date notice was given of the meeting at which the election of a strata committee is to be held and who did not pay the amounts owing by the owner before the meeting is not eligible for appointment or election to the strata committee‘ (Section 32 (2)).
Therefore, because the legislation explicitly states that an unfinancial owner must pay all due amounts before the meeting, the voting rights would not be partially granted to the owner for the remainder of the meeting and subsequently, eligibility for election to the strata committee could not be conferred, even if the owners corporation passed a resolution to waive the interest at the meeting.
After the meeting concludes and the minutes are issued, the strata manager would facilitate the removal of any interest in accordance with the resolutions passed and as permitted under Section 85 (3) of the Act.
In my experience, in these circumstances, it would be advisable for the unfinancial owner to pay the interest owing before the meeting. The payment should be made in advance of the meeting date to ensure that the funds are received in the owners corporation’s trust account. Then, if the resolution to waive interest is agreed upon at the meeting, a credit would be applied to the owner’s ledger account thereafter.
By making payment of the interest before the meeting, the owner ensures they have full voting rights, are eligible for election to the strata committee, and will contribute to the smooth conduct of the meeting.
This post appears in the July 2024 edition of The NSW Strata Magazine.
Ben Ruddell
Tender Advisory
E: ben@tenderadvisory.com.au
P: 0423743714
Is a lot owner considered unfinancial if they are on an approved payment plan? Specifically, are they allowed to vote and serve on the strata committee whilst they still have unpaid levies that are being paid progressively via a payment plan?
Hi Tim
We have just received this reply back from Leanne Habib, Premium Strata:
Voting rights and committee eligibility while on a payment plan
A lot owner is still considered unfinancial while they are on an approved payment plan, until all outstanding levies and current contributions are paid in full.
Being on a payment plan does not change the owner’s status as unfinancial under the Strata Schemes Management Act 2015 (NSW). It simply formalises how the outstanding levies will be repaid.
In practical terms, this has two key implications.
First, an unfinancial owner is not entitled to vote on motions at general meetings. Voting rights are generally restricted to financial owners, unless specific exceptions apply under the legislation.
Second, an unfinancial owner may remain on the strata committee, whilst they remain unfinancial, if they were elected while financial. However, they cannot be re-elected at the next Annual General Meeting (AGM) unless they are financial at the time of nomination and election.
Why this issue matters
Payment plans are an important tool to support owners who may be experiencing financial difficulty. However, they do not remove the underlying debt or change governance requirements.
Confusion often arises when owners assume that entering into a payment plan restores their full rights. In reality, the legislation draws a clear distinction between financial status and participation in decision-making.
Maintaining this distinction helps ensure fairness across the scheme and protects the integrity of voting and committee elections.
What your next practical steps should be
If your scheme is dealing with arrears and payment plans, there are several steps the committee can take to manage this appropriately.
• First, confirm the financial status of owners before any meeting. The strata manager or treasurer should provide a list of financial and unfinancial owners prior to issuing voting papers or conducting votes or elections.
• Second, communicate clearly with affected owners. Owners on payment plans should understand how their status impacts voting rights and future committee eligibility.
• Third, manage committee composition proactively. If a current committee member becomes unfinancial, note that they may remain in the role until the next AGM, but will need to be financial to stand again and to vote at committee meetings in the interim.
• Fourth, ensure payment plans are properly documented. Approved plans should be in writing, realistic, and monitored regularly to ensure compliance.
A structured and transparent approach to arrears and voting rights ensures that payment plans support owners in difficulty, while maintaining fair and compliant decision-making across the Owners Corporation.
Leanne Habib
Premium Strata
W: premiumstrata.com.au
E: info@premiumstrata.com.au
T: 02 9281 6440
This information is not intended to be personal advice and you should not rely on it as a substitute for any form of advice.
Does a lot owner remain unfinancial and therefore unable to vote if they have interest on arrears owing, but during the meeting a motion is passed to waive those interest fees? At what point are they permitted to vote or be nominated for the strata committee?
Thank you for your comment. We have responded to your question in the article above.
what happens if the Strata Committee member is un-financial but the person who nominated them is financial, can they still vote?