Question: We own 2 of 6 lots in our community titles scheme and plan to vote against termination. Due to the 75% rule, does that give us a veto?
I am in a block with 6 units and own 2 of the 6. 75% of 6 is 4.5, so does that mean the 75% rule can never be met because the maximum votes in favour can only be 4 of the 6? Is this how it would work?
Answer: The 75% threshold counts owners rather than lots, so owning 2 of 6 lots does not give a single owner an effective veto over scheme termination.
We’ll get to your arithmetic shortly. Firstly, some clarity is needed. Your query relates to what is called ‘scheme termination’ in Qld. In other words, ending the body corporate and your ownership share in it.
There is a misconception about the operation of the so-called 75% rule, only recently implemented in legislation. A scheme does not automatically get terminated if 75% or more of the owners agree. What it means is that if 75% of owners agree to termination and there are ‘economic reasons’ that apply, the body corporate may be able to proceed with the ‘economic reasons’ process for termination. That process is involved, complex and would likely take several years to pan out. It also includes significant appeal rights throughout the process. It remains possible for a scheme to terminate simply by a resolution without dissent, which is the method that’s always been in place.
So, to your specific instance: yes, you’re right. 75% of 6 lots is 4.5, and you can’t have a 0.5 in strata voting. That said, looking at the Commissioner’s Office fact sheet for economic reasons, and the relevant legislation, the wording used is ‘owner’, not ‘voter’. You say you own 2 lots. Assuming there isn’t another owner of multiple lots, then that leaves 5 ‘owners’. 75% of 5 owners equals 4. That then suggests that if you, plus 3 other owners, agree, you may meet the requirement to proceed with the economic reasons option.
We stress, though, that this legislation is relatively new, and that we aren’t aware of many (any) outcomes from it. So our comments are made with that in mind. It is essential to seek qualified legal advice where there is any thought or suggestion of going down this path. Remember also that pursuing the 75% option does not then immediately absolve the body corporate from its responsibility to maintain common property. That obligation remains.
A final comment on your remark that the threshold ‘can never be met’. That might be true now, although it isn’t fixed: never forget that the option remains open to all owners to lobby for the outcomes they want, whether they be for, or against, termination. In other words, any owner can potentially be persuaded to meet the threshold if the messaging is convincing enough.
This is general information only and (obviously) not legal advice.
This post appears in Strata News #794.
Chris Irons
Strata Solve
E: chris@stratasolve.com.au
P: 0419 805 898
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