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I understand the new Strata Schemes management Act might come into effect around July this year (2016).
Assuming an existing EC has a member (office bearer) who would not qualify for membership after the new bill becomes legislation (say July) – and an AGM is due a month or two before the legislation is in place. So this person will not be eligible for membership after July.
Is there likely to be any ‘honeymoon’ period for the new legislation implementation? If not, can this person stand for membership at the AGM given they would be ineligible a month or two after? If they are voted onto the EC at the AGM what is the mechanism for standing down in July given they won’t want to go (resignation or dismissal)? How should the position be filled?
Thanks
JC
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JC – apart from the new term of “strata committee”, the only significant change to membership that’s relevant to your post is that building managers and property managers cannot be appointed unless they’re also owners.
So in the circumstances you describe where such a person is a member of the executive committee as a non-owner on the date that the new Act commences, then as I understand it that person could remain a member until the next Annual General Meeting unless, as is currently the case, a special resolution vote by the Owners Corporation at an earlier General Meeting removes them and declares their position vacant.
I agree with Whale. The relevant section of the Act (see below) says these people are not eligible to be “appointed or elected”. However, if they become ineligible, they are obliged to tell the Owners Corporation in writing as soon as that occurs. EDITED- See Item 5 Below – JT
When the Act comes into force, strata managers and rental agents who are not owners are required to inform the committee which should then inform the owners.
32 Persons who are not eligible to be appointed or elected to strata committee
(1) The following persons are not eligible for appointment or election to a strata committee or to act as members of a strata committee unless they are also the owners of lots in the strata scheme:
(a) the building manager for the strata scheme,
(b) a person who acts as an agent for the leasing of a lot or lots in the strata scheme to tenants,
(c) a person who is connected with the original owner of the strata scheme or the building manager for the scheme, unless the person discloses that connection at the meeting at which the election is held and before the election is held or before the person is appointed to act as a member,
(d) any other person prescribed by the regulations for the purposes of this section.
(2) An owner of a lot in a strata scheme who was an unfinancial owner at the date notice was given of the meeting at which the election of a strata committee is to be held and who did not pay the amounts owing by the owner before the meeting is not eligible for appointment or election to the strata committee.
(3) A person who becomes ineligible for appointment or election to a strata committee after being appointed or elected to the strata committee must disclose that fact to the secretary or chairperson of the owners corporation as soon as possible after becoming aware of that fact.
(4) A disclosure by a person under this section, other than a disclosure that is made at a meeting of an owners corporation or strata committee, is to be made by written notice given to the secretary or chairperson.
The opinions offered in these Forum posts and replies are not intended to be taken as legal advice. Readers with serious issues should consult experienced strata lawyers.
You are absolutely right. The key phrase (which my weary eyes skimmed over) is that they are not eligible to “act as members of a strata committee”.
Well, that settles that. Common sense says that they should resign and the law says that they should be replaced by someone appointed to the EC by its remaining members.
With that in mind, it should be pointed out at the AGM prior to the law coming in that there is no point in electing these people as they will be required to vacate as as soon as the law comes in.
Apologies for the oversight.
The opinions offered in these Forum posts and replies are not intended to be taken as legal advice. Readers with serious issues should consult experienced strata lawyers.
You could both be correct, but my “understanding” (ref. post #2) of what will apply when the new Act commences was based on past experience with drafting the technical aspects of new Legislation in NSW where, save the influence of so-called “interested parties”, new provisions don’t usually require actions by affected parties such as Owners Corporations then formed to immediately re-shuffle their deck chairs and to change operational procedures in order to achieve compliance from day one.
That is why I interpreted “act as members……” as being a reference to Sch.3 of the current Act where at Cl.3 a person may with the consent of the E/C “act” as a member in place of another who cannot personally attend a Meeting.
So I assumed that upon commencement of the new Act the status-quo could apply to matters such as the composition of already elected / appointed E/Cs and to the form of current Strata Management Agency Agreements until the next planned General Meeting (AGM), unless of course individual Owners Corporations such as that for JC’s Plan wanted to then convene a General Meeting (EGM) in order to achieve earlier compliance.
Then again, I too could have misinterpreted and maybe none of us will know how the new Act will be applied until it is (Law), but let’s all hope that very little will be open to interpretation by the N.C.A.T.
Well, what Whale says makes a lot of sense too. I have asked the powers that be to interpret for us. Watch this space …
The opinions offered in these Forum posts and replies are not intended to be taken as legal advice. Readers with serious issues should consult experienced strata lawyers.
Hello
On a related matter, what is the definition of owner in this context? I am thinking of the situation where an agent becomes the company nominee thus being able to “side-step” the intent of the law(as I read it). As company nominee and agent for the same said properties there appears to be a substantial conflict of interest(and currently power) to ensure decisions are taken in self-interest.
Currently that power is being abused when decisions or actions by the EC are not favourable, and the EC is moved against at EGM’s seeking more favourable EC members installed. These include a fellow agent who manages some of the company said properties, as well as fellow travellers who just happen to be managed by the former agent and would also benefit from more favourable decisions.
Sunny
I don’t think the agent becoming a company nominee makes any difference to them being excluded from election to the strata committee. It would be different if the agent was a part-owner of the company that owned the property, but they would still have to have their name on the strata roll to be counted as an owner in order to side-step the restrictions:
The Strata Schemes Management Act 2015 defines an owner thus:
Owner of a lot in a strata scheme means:
(a) except as provided by paragraph (b) or (c), each person for the time being recorded in the Register as entitled to an estate in fee simple in the lot (in the case of a freehold strata scheme) or as entitled to a leasehold estate in the lot (in the case of a leasehold strata scheme), or
(b) except as provided by paragraph (c), each person whose name is entered on the strata roll in accordance with section 178 as being entitled to an estate in fee simple in the lot (in the case of a freehold strata scheme) or as entitled to a leasehold estate in the lot (in the case of a leasehold strata scheme), or
(c) each person who is taken by section 43 (1) of the Strata Schemes Development Act 2015 to be the owner of the lot.
For the sake of clarity, Section 43 of the Strata Schemes Development Act says this:
43 Powers of lessor if no current lease
(1) For the purposes of this Act, a lessor of a leasehold strata scheme who is entitled to immediate possession of a lot in the scheme because of the determination of a lease is taken to be the owner of the lot. (2) Subsection (1) does not confer or impose on the lessor a right or obligation created by a lease, sublease, mortgage, charge or covenant charge to which a former owner was subject.
The opinions offered in these Forum posts and replies are not intended to be taken as legal advice. Readers with serious issues should consult experienced strata lawyers.
Thanks Jimmy. That is welcome news.
Can you quickly clarify whether a company nominee vote is regarded as a proxy vote, which will have limitations) or is simply just an extension of an owners vote, which has no limitations eg the above situation is occurring because the agent is the company nominee for about 20% of the properties in the scheme, giving themselves a huge head start over others, particularly owner occupiers and independents, with the apathetic a long last.
If this is the case the changes to proxy farming actually makes it more difficult to keep the wolves out of the hen house. Previously the owner elected to give proxies to the various agents who managed their properties, but this changed to company nominee when this agent made his first, and successful, attempt to change the status quo and remove the strata manager, who did nothing more than not approve everything asked for, and got too close to the sun(overcrowding and illegal constructions in these properties).
Their latest attempt(for exactly the same reasons) was able to be defended by obtaining more than 25% opposing the motion, but this position will be under threat again(“we’ll be back to get you next time”) and possibly easier given the proxy farming restrictions(which I have supported in the past).
They sought to replace the EC with two real estate agents who manage properties in the building, a former real estate agent and owner and two investor owners he manages apartments for, all with apartments which have been identified as overcrowded and/or illegal constructions.
A company nominee is not a proxy vote, it is an owner’s vote. Look at in legal terms – the reason you have a company nominee/representative is because a company can’t turn up to a meeting in person, because they are not a person. Therefore you always have to have someone who is appointed as the company representative to exercise those powers, if you want to exercise those powers.
So does that mean a rental agent who gets a small company to nominate him or her as their representative can by-pass the new laws? Many apartment owning companies are basically Mum and Dad operations that create companies to own apartments for tax purposes.
Not much of an improvement if that’s the case.
The opinions offered in these Forum posts and replies are not intended to be taken as legal advice. Readers with serious issues should consult experienced strata lawyers.
I would say yes.
A corporate representative is a completely different thing to a proxy.
I feel gloomy.
This proxy change will be a unintended step backwards in the battle against the unscrupulous and morally corrupt who have no care for the welfare or safety of the occupants of their lots, or anyone else in the building.
At least agents cannot be on the EC; they would only “perjure” themselves anyway!
It is not the company that wants to exercise the power, as they have little or nothing to gain. It is the agent who wants to exercise the companies power for his and his mates benefit. eg got a problem? Go to the agent and use the 20 % direct authority he has to get your way.
The owner does not necessarily see the benefit of massive overcrowding, that money goes to whoever is running the operation. Any operational cost impacts are socialised between all owners. Direct costs are sort to be borne by the OC, hence seeking to take over the EC.
Returning to JC’s post #1, I just found the following in the Savings Provisions of the NSW Strata Schemes Management Bill (2015):
Existing Executive Committees.(1) A person who, immediately before the commencement of this clause, was a member of the executive committee of an owners corporation is, on that commencement, taken to have been appointed to be a member of the strata committee of the owners corporation for the balance of the person’s term as a member of the executive committee.(2) A person who, immediately before the commencement of this clause, was an officer of an executive committee is, on that commencement, taken to have been appointed as an officer of the same kind of the owners corporation for the balance of the person’s term as an officer.
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