NSW: Q&A Unbalanced Strata Unit Entitlements Affecting Maintenance

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The following questions are from NSW lot owners enquiring about strata unit entitlements and how they may affect the maintenance of the common property.

Jump directly to the QUESTION you are after:

• QUESTION: We are in a duplex. The other owner gives power to their Real Estate Agent who repels any action by us the owner to paint the property or have their tenants abide by Common Property Rules. Can they do that?
• QUESTION: One family owns 61% of our scheme and use their strata unit entitlements to block the committee and let the scheme run down. Would this situation be classed as dysfunctional?
• QUESTION: In our new building, NCAT has issued an order for changing strata unit entitlements to a more equitable allocation. We assumed our strata company would send the order onto Council, however, they stated this is not their responsibility.
• QUESTION: What are the rules of strata voting at the AGM concerning strata unit entitlements?
• QUESTION: Our strata seems to have taken proxy voting and strata unit entitlements to a new level. It now counts storage units (which have a separate unit number) as voting entities.

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Question: We are in a duplex. The other owner gives power to their Real Estate Agent who repels any action by us the owner to paint the property or have their tenants abide by Common Property Rules. Can they do that?

We have resided in our duplex since 2004. We did not have a registered set of By-Laws attached to our property. We as owners have had cooperative owners in the past until now. The current owner gives power to their Real Estate Agent who repels any action by us the owner to paint the property or have their tenants abide by Common Property Rules. Can they do that?

Shouldn’t the Owner be directly accountable for their property and inform the Real Estate what has to be done? The real Estate Protect their Tenant and Income to the Owner. When informed about repairs she informed us she had a pension and couldn’t afford them we would like to paint our 17 year old Duplex.

Answer: The by-laws for the scheme apply to all lot owners and occupants.

It sounds like you are in a difficult situation. I am going to assume you are in NSW however the Act and QLD have similar provisions in their legislation.

The short answer is that the by-laws for the scheme (which is what I believe you have called the common property rules) apply to all lot owners and occupants. They should be complied with and there are mechanisms under the Strata Schemes Management Act 2015 to enforce them.

In NSW, you can apply for mediation of the issues and if this fails apply to NCAT for works orders or orders requiring compliance. If you have an Owners Corporation meeting and your lot has 51% of the unit entitlements for the scheme then you could also have the Owners Corporation pass motions to take this action. As you are a two-lot scheme you will need to ensure that you have at least 51% of the unit entitlements before requesting your strata manager organise a meeting.

If you have sufficient voting power you could also have the Owners Corporation pass a resolution to issue a notice to comply with the by-laws. You should seek advice about your particular situation before you apply to NCAT to make sure that:

1. you have evidence to support your claim and
2. the orders you are seeking are within the power of the NCAT to make and are worded appropriately.

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

This post appears in Strata News #415.

Question: One family owns 61% of our scheme and use their strata unit entitlements to block the committee and let the scheme run down. Would this situation be classed as dysfunctional?

Are voting blocks in NSW strata schemes unlawful or otherwise unacceptable?

We have one family who has bought up 61%. They use their strata unit entitlements to not let anyone else on the committee.

They run the scheme down both materially and by not adhering to by-laws and got us prosecuted for not implementing a new fire order.

Would NCAT find such a voting block dysfunctional?

Answer: If the 61% family prevents the Owners Corporation from complying with its statutory obligations, then this would be a strong argument for the compulsory appointment of a strata manager.

Yes, if the 61% family prevents the Owners Corporation from complying with its statutory obligations, then this would be a strong argument for the compulsory appointment of a strata manager. Obviously, you would bear the onus of proof and need to demonstrate the full extent of the dysfunction and have statutory declarations and other strong evidence to support your application.

Leanne Habib
Premium Strata
P: 02 9281 6440
E: [email protected]

This post appears in Strata News #198.

Question: In our new building, NCAT has issued an order for changing strata unit entitlements to a more equitable allocation. We assumed our strata company would send the order onto Council, however, they stated this is not their responsibility.

We are in a newly built apartment block which contains 5 apartments. The block was owner built with the builder retaining the penthouse. The remaining 4 apartments are of varying sizes.

Last December, after all of the owners agreed to approach Fair Trading, NCAT issued an order for changing strata unit entitlements to a more equitable allocation.

NCAT sent the paperwork to the Strata management company and we all assumed the strata company would send this onto Council so our water rates could be adjusted. In recent conversations with the Strata manager, she has indicated that this is not the company’s responsibility, even though the company, not the owners’, received the papers. Is this correct?

Answer: Once an order has been granted by NCAT, the owners corporation needs to lodge a form with Lands Registry Services.

Once an order has been granted by NCAT, the owners corporation needs to lodge a form with Lands Registry Services. Once lands have made the amendment and update certificate of title and strata plan will reflect the amended UE.

• Order for reallocation
• Procedure for changes to UE
• Forms for reallocation post order from NCAT

I would imagine you not in Sydney and this is in a regional area where councils supply water to the scheme and it’s not individually metered (whereby the cost is accorded to owners via their unit entitlement).

The owners corporation needs to ensure that the relevant forms have been lodged with lands and once an updated CT/plan has been received, then ensure these are issued to council (with a request for bills to be adjusted based on the date of amendment).

The owners corporation can instruct their strata managing agent to do that, provided it’s a delegation available in their agreement with the owners.

Leanne Habib
Premium Strata
P: 02 9281 6440
E: [email protected]

This post appears in Strata News #197.

Question: What are the rules of strata voting at the AGM concerning strata unit entitlements?

My concern is around the rules of strata voting at the AGM concerning strata unit entitlements.

I live in an old strata heritage block of 6 units with 3 garages built in the 1930’s. It would be interesting to hear if other owners of older units built in the 30, 40, and 50’s have similar problems.

The 3 garages are separate lots on title with the units. I believe that when the units were initially sold, the new owners had first option to buy the garage lots. I also believe the present owners can sell their garage lots to others owners within the unit complex.

I think giving strata owners of garages an extra vote at meetings should be cancelled out.

On reading the Strata Schemes Management ACT 2015 – Sect 4 I found it very interesting:

No mention of Garages being a “lot” — What is mentioned is Utility Lot — meaning a Utility lot is designed to be a primarily used for storage or accommodation of boats, MOTOR VEHICLES or goods, and not for human occupation as a residence, office, shop or like.

The 3 owners of the 3 garages use their extra voting power to block maintenance for the units. I strongly object to allowing Utility lots being given an extra vote at meetings. I am hoping that the new Strata Laws will address this by giving everyone just one vote at all meetings.

Answer: The one lot / one vote rules continue to apply under the new legislation.

The one lot / one vote (special resolutions and demand for poll excepted) rules continue to apply under the new legislation.

Ultimately, if owners are abusing their voting rights to prevent the Owners Corporation from complying with its statutory duties, the disgruntled owners could make an application for a compulsory appointment to ensure repairs and maintenance were properly undertaken.

Leanne Habib
Premium Strata
P: 02 9281 6440
E: [email protected]

This post appears in Strata News #97.

Question: Our strata seems to have taken proxy voting and strata unit entitlements to a new level. It now counts storage units (which have a separate unit number) as voting entities.

Our strata seems to have taken proxy voting to a new level. It now counts storage units (which have a separate unit number) as voting entities.

Our building has six lock-up storage units which were bought by unit owners. Five of them are registered as having 19 unit entitlement each, the sixth (the largest) has 40. The unit entitlements for the apartments range from 1727 (smallest) to 3746 for the largest.

Can these storage spaces have legal votes at a meeting equal to the vote of an apartment owner? If not, what section or regulation covers this?

Answer: We suggest you request a poll vote as the lower unit entitlements allocated to the storage lots may equal less than one vote per unit.

Our reply is based on the details provided.

We note that the storage lots are on separate titles, with a unit entitlement allocated to each storage lot. As such each owner has a voting entitlement for each lot they own, so if they own a unit and a storage cage, as they are two separate titles with two unit entitlement allocations they have two votes each if voted by a simple show of hands.

Most decisions can be made by a simple majority vote but sometimes a special resolution or unanimous resolution is needed. Even when only a simple majority vote is needed a poll can be called.

When a poll is demanded by an owner at a meeting, votes will have a different value and are worked out by counting the unit entitlements, as opposed to calculating a vote by show of hands wherein one lot equals one vote.

We suggest you request a poll vote as the lower strata unit entitlements allocated to the storage lots may equal less than one vote per unit.

In summary, the storage lots will have an equal vote to the apartment owners if voted by show of hands, if voted by poll, the votes will have a different value and will be calculated on the unit entitlement subject to each registered lot.

Leanne Habib
Premium Strata
P: 02 9281 6440
E: [email protected]

This article is not intended to be personal advice and you should not rely on it as a substitute for any form of advice.

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