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Not just who pays but whether they will pay! If you try to get people to pay for the required work via a levy or taking a loan there is a good chance people will vote to do nothing and spend nothing. If you have a sinking fund plan in place and the levy is planned and on a schedule etc. people get used to it and don’t complain (at least not as much). If the plan includes a contingency component and something unexpected needs doing, or you even propose an improvement to the common property, there is a chance it will be approved because the money has already left people’s pockets.
There are savings to be made from attending to work in a timely manner as well.
At one time it was a standing joke that what would attract a good attendance at one of our AGMs was a naive motion from a newby with a bright idea to change the colour scheme to whatever was currently trendy.
…In the ACT by-laws can be changed by a special resolution which means that less than one-third of people present (including proxy votes and absentee votes) have voted against the resolution, and more votes have been cast in favour of the motion than against it. Note that subtle difference – it’s not fewer than one third of people actually voting, it’s one third of people at the meeting either in person or represented by proxy or by postal vote. …
Yes. An important point. Some of our owners were outraged when we started putting ‘abstain’ as an option along with ‘yes’ and ‘no’ on our proxy forms. [We do not have a prescribed proxy/absentee voting form we have to use. Instead the EC must approve a form before a general meeting.] Our EC thought it entirely reasonable that an owner might wish to direct their proxy to abstain on some motions while voting yes or no on others. This innovations helps for special resolutions. As you point out the tougher part of test in the ACT is that, of the people taking part, in person or by proxy, fewer than one third can be opposed. An abstain is not opposition and boosts the total numbers taking part which means those opposed could fall below one third of the total.
That is easier than the NSW requirement of >75% in favour but still a tough enough test for things that should have more than just a bare majority.
The key tax ruling for owners corps is:
https://law.ato.gov.au/atolaw/view.htm?docid=ITR/IT2505/NAT/ATO/00001
It describes when income is mutual or non-mutual, and when non-mutual income is taxed at the corporate rate in the hands of the OC and when the tax liability is divided up among unit owner in proportion to unit entitlements. It is not obvious to me when bank interest would have to be divided up.
If the answer at the AGM is that there was no interest reported because none was earned then the question should be asked why the OC’s funds were not in an interest-earning account. The larger part of our OC’s funds are in two term deposit accounts with maturity dates about 6 months apart earning reasonable interest and one working account earning less but with enough for fluidity to pay the bills.
I agree that the OC should not hold excessive cash reserves but I would not go so far as to prefer special levies over a sinking fund plan that anticipates expenses and spreads the cost equitably over an extended period. It is not equitable that only the people who happen to be owners in the year of a big expense cover the cost of maintaining something that has been enjoyed by past owners for possibly decades.
A bit in reserve makes things much easier for the EC when the unexpected happens. It can be explicitly a ‘contingency’ component to a sinking fund plan in addition to the named, known items. Owners are much more likely to agree to a necessary expense if it can be covered from savings rather than a new levy.
At the AGM financial statements should be presented. They should state income from all source (levies will be the biggest by far) and all expenses for the past year. One source of income should be some amount of interest on money held in the OC’s bank account. Something is wrong if this is not stated in the AGM papers.
Usually, there would be some amount proposed to be levied for the sinking fund (usually an amount anticipated for each year of a sinking fund plan) and some other amount proposed to be levied to meet the budgeted expenses of the admin fund. Usual resolutions at the AGM would be to approve the budget and approve the amount to be levied.
What you end up paying will be the admin fund levy plus the sinking fund levy. There is no predetermined split between these because OCs differ in their regular, annual expenses (admin) and their anticipated but infrequent major items (sinking fund).
…He has contacted the managing agents several times and they have (eventually )said they will reimburse him less the insurance excess. Is this correct?…
With the caveat that my knowledge is ACT not NSW. Our standard practice had been that unit owners had to pay the excess. However, the Unit Titles Act states that insurance must cover various things but every insurer has an excess so it is not practically possible to get insurance that covers the required matters 100%. This has been interpreted to mean that the OC has to pay the excess and we are now budgeting to cover a number of claims excesses each year. If NSW has a similarly absolute statement about the items to be covered, then it seems likely to me that the OC would have to pay the excess for the same reason.
Kangaroo said…Added to which, governments have not encouraged manufacturers to develop any aesthetic solutions for implementing solar systems generally, nor have they devoted one minute of thought to installation of sustainability equipment in the strata schemes they encourage for increased population density.
Installation of sustainability equipment in new developments is certainly an issue. The trouble is that it tends to cost more to build but then costs less to own and run. The developer would rather build cheaper and not worry about the on-going cost.
At least some developers of up-market developments are including sustainable design as a selling point. I had a conversation with one developer who expressed frustration that having designed so that air-conditioning would be unnecessary, the units would not sell till air-conditioners were added.
In the specific case of an evacuated tube solar hot water system, these look like an innocuous black rectangle on the roof from any distance, no tank, nothing shiny.
Not answering the question exactly… I doubt that the value of the unit is likely to be a very good guide. Some OCs will have lots of common property requiring expensive maintenance, others will have little common property or it might be set up to be low maintenance. Insurance is linked to value but also to risk which could vary. Management services might be relatively cheap with an active executive committee but more expensive with almost everything handed over to a managing agent. Some will need to be building up a large sinking fund to cover expensive maintenance responsibilities well into the future, others will have a comfortable reserve and no looming expenses.
@sealion said:
I can’t find anything on ethics under the Property Stock & Business Agents Act. You would think if someone had to be licensed, there would be a code of conduct somewhere. What do you think?
I guess any OC proposing to engage a strata manager could give them a copy of the ACT code of conduct and ask them to commit to complying with that as a condition of their engagement regardless of which state they are in.
…The proposed system is an evacuated tube system – you’re right, it will sit flat, but it will be clearly visible from the common area, which is the issue. …
Well, that is pathetic. An evacuated tube system is about as innocuous as you can get. Sure, not having any kind of solar equipment is neater but what century are we in?
The refusal is so unreasonable that I think you should be able to successfully challenge it.
I don’t know if Co-op differs from strata but generally: If the land is common property permission for exclusive use can only be granted according to the legislation (generally a special or unopposed resolution of a general meeting). The special privilege can only be revoked by the correct form of resolution also (generally a special resolution). It could then be granted to someone else. Certainly in the ACT it is not possible to sell the special privilege to someone else and thereby force the owners corporation as a whole to agree to the change of treatment of common property. That was part of a mistake our OC made 30 years ago (before my time
) and blew up in our faces about 2 years ago. In the ACT under the Unit Titles (Management) Act 2011 Rules (bylaws/Articles) are of no effect to the extent that they prevent the installation of sustainability equipment.
Have you suggested an evacuated tube solar hot water system? These are dark and lie flat on the roof without a prominent tank and would work with a tank where your existing one is now. This style would look better than the tank on the roof sort.
I would expect this would have to be covered by an owners corporation resolution to grant permission for the use of the common property subject to conditions.
We have a situation like this. The OC retains ownership of carports built over previously open, unallocated parking spaces. Unit owners were granted special privileges for exclusive use of the parking spaces for parking and limited storage with conditions that the unit owner is responsible to meet the OC’s costs for the initial construction and subsequent maintenance of the structure. The OC retains the right to carry out any of its functions on these bits of common property so long as it does not interfere unreasonably with the use of the spaces for parking vehicles. So, for example, even though the roofs were paid for by individual owners, we have a communally owned solar PV system on the roof in one area. In principle we could do other things such as collecting rain water for the common property garden or some other thing we have not yet thought of so long as it did not interfere with parking.
It does sound silly. Perhaps they had a problem previously with limited line space and people leaving stuff out for many days?
If there actually were some problem it seems the solution would be to install some more line space rather than being officious.