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