When are you an unfinancial lot owner? What effect does this have?

pexels-photo-260759.jpeg

One of the most common questions we receive is when is a lot owner an unfinancial owner for a meeting?

The reason for the question is clause 23(8) in Schedule 1 of the Strata Schemes Management Act 2015 which states:

“(8) Voting rights cannot be exercised if contributions not paid A vote at a general meeting (other than a vote on a motion requiring a unanimous resolution) by an owner of a lot or a person with a priority vote in respect of the lot does not count if the owner of the lot was an unfinancial owner at the date notice of the meeting was given and did not pay the amounts owing before the meeting.”

The Act’s definitions section provides that an “unfinancial owner” means “an owner of a lot in a strata scheme who has not paid all contributions levied on the owner that are due and payable, and any other amounts recoverable from the owner, in relation to the lot”.

The effect is that if you have not paid all the contributions and any other amounts (which would include interest) recoverable from you as at the date of the meeting notice by the actual meeting you are unfinancial and cannot vote.

What does the owner have to pay? And when by?

Take for example a meeting notice dated 14 February 2018 for the meeting to be held on the 7 March 2018 where levy was due on the 1 March 2018.

The lot owner only has to have paid everything owed as at 14 February 2018 before the 7 March 2018 meeting. They do not have to pay the 1 March 2018 levy before the meeting.

If I am unfinancial what rights do I have  regarding meetings?

The consequences of being unfinancial at a meeting are that you cannot vote at a general meeting of the owners corporation.

Does this apply to strata committee meetings?

In respect of strata committee meetings Schedule 2, clause 9(4) applies. It states:

“(4) Voting rights cannot be exercised if contributions not paid A member of the strata committee is not entitled to vote on any motion put or proposed to be put to the strata committee if the member was, or was nominated as a member by a member who was, an unfinancial owner of a lot in the strata scheme at the date notice of the meeting was given and the amounts owed by the unfinancial owner were not paid before the meeting.”

As such, if either you or the person that nominated you was unfinancial as at the date the notice of meeting was given and the amounts owed were not paid before strata committee meeting then you cannot vote.

When unfinancial you can however:

  1. request a motion be placed on the agenda of a later meeting if you are unfinancial (but you cannot vote at that meeting if you are still unfinancial);
  2. nominate someone for the strata committee.

5 responses to “When are you an unfinancial lot owner? What effect does this have?

  1. Pingback: NSW: When are you an unfinancial lot owner? What effect does this have?·

  2. Hi Allison love your explanation very clear

    Normally on an aged arrears report the first 30 days are deemed current there after they are outstanding – in short you get 30 days to pay

    So lets use your example above if the levy was raised on the 1 March 2018 and the meeting notice on the 2nd March for meeting held 20th March then you would be in arrears if not paid

    Am I correct to believe that the term arrears as it relates to strata is any money not paid

    where in the normal business world the term arrears can often mean a debt not paid over 30 days

    • Hi Colin,

      The relevant sections are below for you. Essentially, you send a notice of contribution to a lot owner at least 30 days before the contribution is due and payable. Say a notice is sent (& received) on 1 December with the contribution due on 31 December. The debt is due and payable from 31 December and the Owners Corporation cannot take steps to enforce the debt for one month however if a meeting notice was sent on 1 January for a meeting on 14 January then you would have to have paid all contributions and interest outstanding up to 1 January (including the 31 December amount) to be eligible to vote.

      As for the arrears, for voting purposes it can obviously be unpaid contributions but it can also be interest and reasonable costs on recovering those amounts and it can also be any amount owing under the by-laws.

      Section 83(3) states:
      “(3) Any contribution levied by an owners corporation becomes due and payable to the owners corporation on the date set out in the notice of the contribution. The date must be at least 30 days after the notice is given.”

      Section 86(2A) states:
      “(2A) An owners corporation may, without obtaining an order under this section, recover as a debt in a court of competent jurisdiction, a contribution not paid at the end of 1 month after it becomes due and payable, together with any interest payable on that unpaid contribution and the reasonable expenses of the owners corporation incurred in recovering those amounts.”

      Allison

  3. Just to expand on the term “unfinancial owner were not paid before the meeting”

    Can an owner pay in cash or by cheque handed to the Secretary or Strata Manager before the meeting commences or must the funds be deposited and cleared in the strata trust account

    I assume that this hinges on when a debt is paid, — When the money is receipted or when it is banked

    If so where does it state this as I am told that with the old act you could front up before the meeting and pay but this is no longer possible under the 2015 Act

    • Hi Colin, That is a great question. There is nothing in the Act or the Regulations that says that a cheque/money order/credit card payment or even cash cannot be accepted. The Act only provided that outstanding amounts (as at the date of the meeting notice) must be paid before the meeting.

      Arguably, if a lot owner turned up with the amount owing in cash and it was accepted by the strata manager then they have paid up. The issue with paying in cash is safety related and to prevent any fraud or accusations of fraud. Many meetings happen on site and in the evenings when strata managers (a) cannot bank it (b) have to take it home and (c) may be reliant on public transport. What happens if they are mugged? I believe it is entirely reasonable for strata management firms to clearly state no cash payments are accepted for safety reasons in which case I would highlight it in the meeting notice.

      The issue with cards/money orders/ cheques etc is easier. The payments should be in cleared funds prior to the meeting. Why? If the funds are not cleared and a vote is taken but a lot owner’s cheque later bounces the outcome of the vote can be affected.

      Clause 23(8) of schedule 1 of the Strata Schemes Management Act 2015 states:
      “(8) Voting rights cannot be exercised if contributions not paid A vote at a general meeting (other than a vote on a motion requiring a unanimous resolution) by an owner of a lot or a person with a priority vote in respect of the lot does not count if the owner of the lot was an unfinancial owner at the date notice of the meeting was given and did not pay the amounts owing before the meeting.”

      I hope this assists.

      Allison

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s