Question: Our three building scheme has a percentage of holiday lets run by a hospitality company. The CEO of the company holds a large number of proxies and controls decisions. Lot owners feel there is a conflict of interest. What can we do?
Our complex consists of three buildings with a percentage of owner occupiers and holiday let properties.
A hospitality company with a management agreement based at the reception of our main building runs the holiday letting properties.
The CEO of this company is not a lot owner. They get elected every year to the council of owners and use proxies from holiday let owners to run the show from decision making to financials.
Every time the remaining lot owners try to vote for something, the CEO votes with the proxies, and we get absolutely nothing done that is in the interest of our complex. Every decision goes in favour of the hospitality business.
Can a person that isn’t a lot owner hold proxies and vote on behalf of owners?
Can the CEO be on the council of owners when he does not own a lot?
Are there any suggestions to stop the conflict of interest and corruption?
Answer: If you feel the individual is using proxies to steamroll decision making, try negotiating a resolution.
A lot owner can appoint the accommodation manager as their proxy. It is often part of the agreement between the lot owner and the accommodation manager that the proxy be given. I would, however, encourage owners to consider providing voting instruction on the appointment of proxy or renegotiate their proxy rights.
A non-proprietor cannot be elected to the council of owners. If a corporation is elected to the council, the corporation can appoint an individual who is not a lot proprietor to represent the corporation on the council.
If you feel the individual is using the proxies held to steamroll decision making and does so in a manner that is not in the best interests of the strata company, I would first encourage you to raise your concerns accordingly and try to negotiate a resolution. If this fails, it would be appropriate to seek an order via the State Administration Tribunal to invalidate the decision – an order that the motion was not passed.
This post appears in Strata News #655.
Luke Downie WA Strata Consultant E: luked0876@gmail.com P: 0456 589 639