Sectional title trustees

Sectional title trustees often ignorant of rules

Many of the rules that apply to the passing of a special resolution for a sectional title scheme are often not fully understood by the trustees of the scheme, says Michael Bauer, GM of IHFM, the property management company - and this, he says, can lead to problems.

“Again and again,” says Bauer, “we have to point out that for a special resolution to be passed it is necessary that a quorum needs to be present at a special general meeting and that the majority of not less than three-quarters of the owners reckoned by number and value must vote in favour of the proposed resolution.

“What is more, in most cases this has to be at a special general meeting for which the owners have received 30 days’ notice in which the gist of the forthcoming resolution is explained.”

Where the calling of a special resolution may not be possible or agreeable to owners, says Bauer, it is acceptable to get the resolution passed by means of a round robin letter. In these cases, again 75% of the owners (calculated by value and by number) have to have given signed approval of the resolution. Even here, however, the Prescribed Management Rules state that owners or others standing in for them can call for a special meeting within 30 days of the meeting at which the resolution was debated.

All postal communications for the canvassing of opinion have to be either hand delivered or sent by prepaid registered post to the owners of the units.

The question then, of course, arises, what happens if too few people attend the special meeting to obtain a quorum?

In these cases, the meeting has to be adjourned for one week and has to take place in the same place and at the same time. If once again at this subsequent meeting a quorum is not achieved, those present have the power to pass the special resolution.

So - for what matters are special resolutions required? Again, says Bauer, there are frequent misunderstandings on this matter, certain trustees apparently believing that a special resolution is needed for any change of the rules and conditions - but this is not so.

“Special resolutions,” he says, “are necessary where non-luxurious improvements are proposed, where changes in the contract rules are mooted, extensions of any section (i.e. the space within an individual’s unit) are proposed, an exclusive use area is to be cancelled or added, a servitude is to be created, the value of an owner’s vote or his levy contribution is to be changed, additional insurance risks are taken on, the developer is to be sued for claims, the managing agent’s contract is to be terminated or if payment for services is to be made to trustees who are already owners.

“As always,” says Bauer, “the PMR rules pertaining to these matters are clear and comprehensive but, as professional managing agents, our ongoing obligation is to see that the trustees read and understand them. These people, coming from all sorts of different backgrounds, cannot be expected to be fully au fait with property law and will require ongoing education and so long as trustees can be appointed without any training for their job this situation is likely to persist. Quite often, however, we find ourselves having to remind people of rules of which they have been informed rather than instructing them for the first time.”

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