Resolutions in sectional title schemes - 2
Category Property Management
Resolutions in sectional title schemes - Part 2
Previously we published a list of all the resolutions that can be taken in a sectional title scheme. The list identified the type of resolution required for specific purposes and set out the level of consensus necessary to take each resolution. However, there can be specific conditions that apply in addition to the level of consensus required to take a special resolution for a particular purpose.
Special resolutions in sectional title schemes are required to authorise significant decisions by the body corporate. Most people know that taking a special resolution requires a higher level of consensus among the owners than ordinary resolutions. What they don't know is that there are several conditions that must be met in taking the resolution, which if not taken, might result in the decision being invalid.
Ordinary resolutions are passed by a simple majority (counted in vote value) of the votes cast at a general meeting but the required percentage to pass a special resolution is 75%. Note that the percentage is not of the votes cast, as in taking an ordinary resolution, but of all the votes represented at the meeting. So, if one were to illustrate this point as mathematical fractions they would be:
Ordinary resolution = Simple majority divided by votes cast
Special resolution = At least 75% divided by votes represented at the meeting
When taking a special resolution at a meeting, the votes are counted in two ways, in number as well as in vote value.
Special resolutions can be taken either at a meeting or by circulating a document containing the text of the resolution, commonly called a "round robin" resolution, for owner signatures. Only once 75% of all the owners, again counted in number as well as in vote value, have signed the resolution, is it passed. However, there are three circumstances under which the special resolution can only be taken at a meeting and not by round robin:
- If a special resolution is passed at a general meeting by members holding less than 50% of the total vote value, members together holding at least 25% of the vote value have a week to request another general meeting to reconsider the special resolution.
- The body corporate can terminate the managing agent's contract on two months' notice without liability or penalty but only by taking a special resolution at a meeting.
- The trustees can propose an improvement to common property that is reasonably necessary by sending a notice, with all the details, to the owners. If any member requests a meeting to discuss the proposed improvement to the common property, the improvement can only be approved by special resolution taken at a general meeting.
Meetings require notice and there are specific requirements for the notice of a meeting at which a special resolution is to be considered, namely:
- The notice must contain the agenda with the proposed wording of the special resolution.
- The notice must be delivered by pre-paid registered post to a physical or postal address in South Africa (it can alternatively be hand delivered to the member's section if that is practical).
- The notice period must be at least 30 days but if the trustees consider the matter urgent, they can give shorter notice, as little as 7 days, but they must take a trustee resolution, giving their reasons, to authorise the short notice.
However, the trustees may not give short notice of a meeting at which the special resolution to be considered, is to authorise an improvement to the common property that is reasonably necessary. They may also not give short notice of the special resolution to authorise the installation of pre-paid meters by the body corporate on the common property. That resolution requires 60 days' notice and occupiers as well as owners must be notified.
Finally, if either a member or the body corporate cannot obtain the special resolution, they can apply to the Community Schemes Ombud Service for relief.
Article reference: Paddocks Press: Volume 13, Issue 05
Posted In: Paddocks Press Newsletter | 30 May 2018
This article is published under the Creative Commons Attribution license.