Body Corporate Committee Deadlock

[bernly]

Would like advice please regarding a block of 8 flats where 6 are owned by the same person who, when financial, has majority vote. The complex needs major maintenance incl pool that leaks and is currently empty but for green slime from rain water catchment and guttering that drastically needs replacing (this repair was ok'd at last AGM 12 mths ago.)

The owner with majority vote has indicated he has 'no money' and blocks any attempt to address these issues, including setting a date for AGM which is due now. Are there any legal means to ensure maintenance of the property? If the single owners paid for urgent maintenance, is there a way of guaranteeing repayment from other owner via a "lien"?

Obviously, it is in the best interests of all parties to have their assets in good condition in order to maximize rental return but the Body Corporate manager is exasperated, apologetic and seemingly unable to force the issue. In the meantime, the complex continues to deteriorate and it is just a matter of time before good tenants leave.

Cheers

 

[Empty Pockets]

Which state?

 

[bernly]

This property is in Queensland. But it is an interesting scenario regardless of which state. I wonder if the issue of voting power being in the hands of one person only, and to this extent - that is 8 votes to 2, has been discussed previously. It seems odd that the BC managers are powerless to ensure the complex be kept maintained. And what about the "no money" aspect. Hard to argue with that!

 

[DaveM]

Call an AGM when the majority owner is not financial so they cannot vote. One owner, majority or not, cannot block an AGM being held.

If there are two of you, you have a quorum and so can vote on motions.

Raise funds through a strata finance company, yes it will involve interest but 6/8th of that interest will come from the majority owner

Approve motion to raise funds through strata finance

Get work done

Approve motion to action debt collection against non financial majority owner. Commence bankruptcy proceedings to reclaim monies owed.

 

[bernly]

Thanks, Dave.

This isn't my property but I care about the person in this predicament and will pass on the suggestions that you have made. My friend has even considered paying for the majority of the pool repair (quoted at approx $24,000) herself with the expectation of being repaid when the majority owner is able to but I think this is a bad idea should bankruptcy be declared at some stage.

Can't understand people not looking after their assets. Coming from a dairying area in SA, an analogy that springs to mind is that of a dairy farmer with a herd of cows that he stops feeding well = less milk production = less income = even less money for feed and property maintenance = even less income although running costs still remain = mortgagee sale of cows and property for rock bottom prices = stuffed! Far better to sell some of the herd to look after the rest....

 

[Aaron_C]

If that majority lot-owner is bleeding money in his own retail business etc you can be pretty sure that looking after the apartments is the last thing on his mind. For lots of people 6 apartments or whatever is just cheap change.

 

[Tony3008]

IANAL but from a quick scan of the Victoria Owners Corporation Act (presumably other states have similar provisions):

5. Owners corporation must act in good faith. An owners corporation in carrying out its functions and powers— (a) must act honestly and in good faith; and (b) must exercise due care and diligence.

46. Owners corporation to repair and maintain common property. An owners corporation must repair and maintain— (a) the common property; and (b) the chattels, fixtures, fittings and services related to the common property or its enjoyment.

163. Who may apply to VCAT in relation to a dispute? (1) Any of the following persons may apply to VCAT to resolve an owners corporation dispute— (a) a manager or former manager; (b) a lot owner or former lot owner ...

165. What orders can VCAT make? (1) In determining an owners corporation dispute, VCAT may make any order it considers fair including one or more of the following— (a) an order requiring a party to do or refrain from doing something; (b) an order requiring a party to comply with
this Act or the regulations or the rules of the owners corporation; ...

So this all suggests to me that in Victoria you or the manager would be able to go to VCAT, state that the work is necessary and apply for an order requiring it to be done. You/they might also, if not already in place, need an order allowing interest to be levied on overdue OC levies. The OC may need to borrow to finance the work if the offending owner won't pay, but ultimately the charges + interest will need to be paid before he can sell. Again IANAL

 

[Macca]

If the property is in QLD then you need to research QLD laws on BCs.

I think a bit of a Google would soon find the right info on a Govt website. Print this out and give it to your friend, they can then follow procedure and hopefully sort it out.

 

[bernly]

Thanks, Tony, Macca and Dave

As a result of your helpful advice I've done a bit of googling and sent off web addresses to my friend who is really appreciative and hopeful of a satisfactory solution to this situation.

Will encourage her to join Somersoft. I spend so much time away from home these days that I'd forgotten what a powerful source of info Somersoft is because of the generosity of its members and their willingness to share experiences and information.

Cheers

 

[chilliblue]

Go to flat-chat.com.au and post in their forum or contact Teys Lawyers who specialise in these matters.

 

[bernly]

Thanks, chilliblue

Have passed on your info and also bookmarked the flat-chat website for my own use. I'm on several body corporate committees and can see that it might be very useful in the future. Really appreciate your help. Thanks again.