Would you elect a tenant to your committee?

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Years ago I heard about a building in Sydney that was totally dominated by a long-running chairman who was an autocrat and a bully.

Residents found his “my way or the highway” attitude intolerable but every year at the AGM he’d have more proxy votes in his back pocket than there were owners at the meeting so he was guaranteed to be re-elected every time.

This was, of course, before proxy farming was outlawed in NSW and a majority of disengaged residents and non-resident owners just put “the chairman” on their proxy forms.

In desperation, some owners looked at his levies payment record, thinking that if he hadn’t paid his levies maybe he couldn’t stand for election.

They discovered that he had never paid levies, because he wasn’t an owner – he was a tenant.

At some point in the dim and distant past his landlord had agreed to nominate him for election to the committee and he had just kept rolling it over year after year.

When the owners complained to the landlord about his behaviour, the nomination was withdrawn and he was bumped off the committee at the first opportunity by previously loyal supporters who were horrified to realise they’d been voting for a mere renter.

Now, there was nothing illegal about him being nominated and elected, with full voting rights.  And that unfortunate story apart, there is no fundamental reason why you as an investor shouldn’t nominate a long-term and trusted tenant for election to your committee.

In fact, it may be a very sound business decision. One of the biggest complaints investors have about strata is that they have no idea what’s being discussed at committee meetings or why decisions are being made.

The committee minutes need only reveal so much. To read that such and such a motion was debated and voted on, only tells you the result. 

Your “spy” on the committee can tell you that, for instance, a perfectly good proposal was rejected because the person who proposed it was disliked by the committee chair and his or her cronies. 

Or that essential repairs are being ignored because the office-bearers are on fixed incomes and don’t want levies to go up, ever. You won’t get that in the minutes.

Also, if your tenant has been in place for a few years, it’s presumably because they like living in that block.  They can move on any time they like.

They aren’t locked in by any need to avoid capital gains tax when they sell, or stamp duty when they buy somewhere else. Most importantly, they know how it works and how it could be better. 

As an investor, you are immune from how daily life is affected by the decisions that  your strata committee makes.  Your tenant, and everyone else’s, has to live with the consequences of the decisions, so if they are reasonable people and they want to contribute, why not give them a voice in the process?

In NSW schemes where tenants make up more than 50 per cent of residents, owners corporations must arrange an election process to choose a tenant representative for the strata committee.

That tenants’ rep has no vote and can be asked to leave the meeting when anything the chair deems to be sensitive is discussed.

However, if they are nominated by an owner, they can be elected with full voting rights, exactly the smae as every other member.

And maybe tenants who were representing their landlords as well as well as other tenants, who had a vote, and were allowed sit in on discussions about finances and facilities, would make some buildings considerably better places to live for everyone.

Just don’t nominate bullies or autocrats.

This column first appeared in the Australian Financial Review.

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  • This topic has 3 replies, 3 voices, and was last updated 3 months ago by .
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  • #62194
    Jimmy-T
    Keymaster

    Years ago I heard about a building in Sydney that was totally dominated by a long-running chairman who was an autocrat and a bully. Residents found hi
    [See the full post at: Would you elect a tenant to your committee?]

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  • #62226
    optusJo
    Flatchatter

    As an owner/investor of an apartment in a complex of 8 apartments, but only 2 owners living on site – I would welcome tenant representation.  It is only when the complex has gotten run-down that you realise that Body Corporate managers don’t go near the complex, agents tell you about your apartment and as an owner you don’t know your tenants or other owners.  If there was a representative tenant then perhaps they would know that ‘common property’ matters fall through the crack and they could put in ‘their 2 cents worth’ when it came to decision-making.

    I don’t think I would want them to have voting rights although their opinion would be really valuable in discussion like – are there enough clotheslines?  Is the cleaning done to a good standard?  How hard is it to get a full bin to the footpath?

     

    #62228
    Jimmy-T
    Keymaster
    Chat-starter

    Due to having six out of eight of the units in your block occupied by tenants, under Section 7 of the NSW strata Regulations and section 33 of the strata Act, your secretary MUST convene a meeting every year at which tenants can nominate a representative to the strata committee.

    Tenants are eligible for election as tenants’ rep if their lease has been registered with the scheme.  Not registering tenants is a breach of Section 258 of the NSW strata Act and is subject to a maximum fine of $550.

    As you will see from section 33 of the Act, they have no voting power and can be excluded from certain discussions.

    FROM THE REGULATIONS

     7. Tenant representatives: section 33 of Act
    (1) A person who is entitled to convene an annual general meeting of an owners corporation that has tenants for at least half of the number of lots in the scheme must convene a meeting of eligible tenants for the purpose of the nomination of a person for the position of tenant representative on the strata committee.
    (2) The person must give notice of the meeting to each eligible tenant at least 14 days before the annual general meeting and the tenants meeting may be held at any time before the annual general meeting, but not earlier than 7 days after notice of the meeting is given.
    (3) Notice may be given in one of the following ways:
    (a) by causing a copy of the notice to be prominently displayed on any notice board required to be maintained by or under the by-laws on some part of the common property,
    (b) by written notice given to each eligible tenant.
    (4) The convenor of the meeting, or a tenant nominated by the eligible tenants present at the meeting, is to chair the tenants meeting.
    (5) An eligible tenant may nominate for, or nominate another eligible tenant for, nomination as the tenant representative at the meeting.
    (6) The tenant representative to be nominated by the eligible tenants for a strata scheme is to be determined by majority vote of tenants present at the meeting.
    (7) The quorum for the meeting is one person.
    (8) The term of a tenant representative commences at the end of the annual general meeting at which the nomination is received.
    (9) A person is an eligible tenant for the purposes of this Part if the tenant is a tenant notified in a tenancy notice given in accordance with the Act.

    FROM THE ACT

    33   Tenant representatives

    (1)  This section applies to a strata scheme if there are tenants (being tenants notified in a tenancy notice given in accordance with this Act) for at least half of the number of lots in the scheme.

    (2)  The tenants of lots in a strata scheme (being tenants notified in a tenancy notice given in accordance with this Act) may nominate one tenant representative for the strata committee.

    (3)  The tenant representative on a strata committee, in that capacity—

    (a)  is not entitled to vote on decisions of the committee or to put a motion or nominate a person for office, and

    (b)  is not entitled to act as an officer of the owners corporation for committee purposes, and

    (c)  cannot be counted in determining whether there is a quorum of the committee.

    (4)  The strata committee, at any meeting or for the purpose of all meetings, may determine that a tenant representative is not entitled to be present when the following matters are being discussed or determined—

    (a)  financial statements and auditor’s reports,

    (b)  levying of contributions,

    (c)  recovery of unpaid contributions,

    (d)  a strata renewal proposal under Part 10 of the Strata Schemes Development Act 2015 or any related matter,

    (e)  any other financial matter specified by the regulations.

    (5)  The regulations may provide for the procedures for nomination of a tenant representative, including the term for which a tenant representative is appointed, the notification of an appointment and the end of an appointment.

    #62253
    kaindub
    Flatchatter

    I was an owner in a strata property many years ago. I also rented out my property

    At the time I was the chairman and treasurer.

    A tenant got the proxy of his landlord and got sufficient support to roll me and to lead the strata committee.

    I have to say that this tenant did an excellent job in leading the strata (we were self managed then).
    I was bummed at the time, but on reflection I had gone stale and the committee needed a new direction.

    Its sometimes more beneficial to have someone who will take an interest in the property, rather than whether they are an owner.

    BTW I am chairman of two strata where I am not an owner.  I consider thst because of my experience and the time I have available, I make a significant contribution to these strata.

     

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