#26193
Sir Humphrey
Strataguru

    This is about the allocation of ‘unit entitlements’ (ACT-speak. Other places might use a different term). If a development had only identical units then each would get the exact same number of unit entitlements. However, if some are larger and some smaller, or some likely to cost the OC more than others for insurance or maintenance or have more occupants using the common facilities, then the number of ‘unit entitlements’ will vary. So, it would not be unusual for a large penthouse to have three times the unit entitlements of a much smaller unit. 

    In the ACT, and I think elsewhere, in the normal run of things, each unit’s owner would have one vote in a general meeting whether the unit is large or small. However, any unit owner has the right to demand a ‘poll vote’ for any particular motion. When that happens the votes are weighted according to unit entitlements. Then the penthouse owner’s vote would count three times as much as the vote of the owner of the smallest unit. 

    With larger or smaller unit entitlements comes larger or smaller levies. Each owner contributes to the owners corporations costs in proportion to their entitlements. So, while the penthouse owner can exercise a right to have a greater say in decisions, they also have to pay more due to having a greater share in the property overall. Indeed it is a bit like shares in a company. It is as if the penthouse owner bought a greater share of the overall development at the start than the owner of the smallest unit. 

    Some units paying more is justified to some extent because their more expensive unit is responsible for a greater proportion of the OC’s insurance bill. Where the OC provides unmetered services, it is reasonable to assume the larger units are likely in the long term to use more than the smaller units. On the other hand, some OC costs are the same per unit, regardless of the size of the unit, so perhaps unit entitlements should not be strictly proportional to size or market value of the unit.

    In the set of townhouses where I live, the largest unit is quite a lot more than twice the size of the smallest unit but it has only about twice the unit entitlements. Even some identical units have slightly different unit entitlements. I think this reflects that some costs are fixed per unit while only part of the OC costs are proportional to unit size or value (notably insurance) and some identical units may have been thought to have ‘better’ locations than others on the site. 

    People can and do debate at length about the best and most proper or fair way to allocate unit entitlements. I don’t think there is a way that is 100% perfect but generally I do agree that the penthouse should pay somewhat more and should get a proportionately bigger share of the vote if a poll is demanded. 

    Generally it is the developer who decides the schedule of unit entitlements. If they are manifestly unfair the allocation can be challenged and the state or territory Tribunal can order a reassessment of the schedule. Also an OC can vote and decide to reallocate according to a new valuation of the units but it takes a high level of agreement, not just a simple majority vote. Also, a reallocation might be required by state regulation if a unit has a sufficiently major alteration requiring approval by planning authorities that the authorities will only approve with a reallocation of entitlements. 

    One quirk in all this could be that the penthouse might have been created out of three units after the strata plan was registered, so the penthouse owner did actually buy three units, not one. Perhaps after the plan was registered putting in two doors to join the three units was regarded as a minor variation to the construction plan?  If the change of plan was before the plan and unit entitlements were registered, then the large penthouse might still have been allocated three times the entitlements of a small unit of one third the floor area.  So, if the situation is the first of these, it might really be correct that the penthouse owner gets to vote three times even when a poll is not demanded and everyone is doing the usual simple one unit-one vote voting. 

    I hope that all makes sense!