Forced sales: is it really one person one vote?

In trying to explain a complicated system HERE, I may have skated over a couple of details in laying out the voting procedures in the proposed “collective sales” legislation.

So, for the uninitiated, let me just explain that there are basically two kinds of votes in a general meeting in NSW strata.

There’s a simple majority vote, whereby the decision is made on a show of hands (plus proxies), and there is a poll vote, which is calculated by adding up the unit entitlements of the owners voting in person or by proxy.

Unit entitlements are the figure used to calculate your levies and are very roughly related to the value of the apartment. In other words, owners in a bigger apartment in a better position will pay higher levies but will also have more voting power in a poll vote.

Any owner can call for a poll vote on any issue at a general meeting and all “special resolution” votes have to be conducted by a poll vote.  More on that later.

The new element for the “collective sales” scenario is a “notice of approval” – a document in which you agree that you want your apartment block to be sold or redeveloped under the terms of a plan proposed by your collective sales committee.

This committee is formed after a general meeting has agreed, by a simple majority, to explore the possibility of renewal or redevelopment.

When the committee reports back, the Owners Corporation has to agree to proceed via a special resolution (a poll vote in which no more than 25 percent of those voting in person or by proxy, using unit entitlements, vote against the motion).  So at this stage, the bigger units have the most say.

Then everybody has 60 days to consider the proposal, after which the committee can start collecting notices of approval.  Thus, at this critical stage, it’s one owner, one vote.

Then, once there are 75 percent of owners have agreed, there is another general meeting and, once again, a special resolution vote is required to move forward on the plan, so, once again, unit entitlements come into play.

It’s a neat way of switching the power between one-owner-one-vote to the people who have the larger investment having the biggest say, without either method being able to move forward without the other’s approval.

We reckon all that’s missing is a recognition that resident owners deserve more compensation and, maybe, that 75 percent is too low a threshold.