Question: Our scheme hasn’t had an AGM in eight years and has no council of owners or funds. In order to get back on track, where do we start?
I’m an owner in a strata of five attached townhouses in Perth. I have lived here since the 199os when it was a new development. We have not had an AGM for more than eight years, have no minutes, no council of owners and no administrative or reserve fund. The only regular payment the five owners make is the yearly building insurance fee.
The common driveway paving has been a public liability hazard for years as pavers are sticking up around stormwater drains due to large tree roots. The building’s gutters need replacing, the exterior fibro walls need repainting, and no pest control has ever been done. Another owner and I are intending to sell. I have finally persuaded the other owners that we need to have urgent formal meetings and employ a professional strata manager.
To get everything back on track, where do we start?
Answer: Start with an AGM, since that’s what restarts the scheme’s governance and compliance obligations.
A strata company exists automatically the moment a strata plan is registered, even if it has not held meetings or kept records for many years. In your case, the strata company has effectively been dormant for eight years, but the legal obligations under the Strata Titles Act 1985 (WA) (the Act) have continued throughout that time. This includes requirements to:
- hold annual general meetings
- keep proper records
- maintain common property
- establish and maintain administrative and reserve funds
- insure the scheme
- elect a council of owners
Because none of this has occurred, the scheme now needs to “restart” its governance and compliance processes in a structured way. I would recommend the following steps:
1. Hold an AGM
Include both the standard AGM motions and the additional motions needed to “reactivate” the scheme:
- confirm the strata roll
- elect a council of owners
- appoint a professional strata manager
- adopt a budget
- establish an administrative fund and consider the need for a reserve fund
- approve urgent maintenance (driveway, gutters, painting, pest control)
- authorise special levies if required
- consider whether an exemption by-law is appropriate (see below)
2. If needed, hold an EGM or council meeting
An EGM or meeting of council may be useful after the AGM if:
- additional quotes come in
- further special levies are required (general meeting)
- owners need to approve staged works
- a by-law needs to be passed or amended (general meeting only)
Exemption by-laws for 5-lot schemes
Under the Act, schemes with 3-5 lots may adopt an exemption by-law to opt out of some of the statutory requirements. It may be worth consulting a strata lawyer about drafting an exemption by-law for your scheme.
Given your scheme’s backlog of maintenance and two upcoming property sales, an exemption by-law may not be in the owners’ best interests at this time, but worth considering for the future.
The first step to recovery is holding that all-important general meeting to get owners together and start taking steps towards resolving the maintenance and safety concerns. It will be vitally important to determine the boundaries of the lots from the strata plan to make sure that the strata company is only addressing common property matters.
This post appears in Strata News #804.
Luke Downie
WA Strata Consultant
E: luked0876@gmail.com
P: 0456 589 639
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