Is a Body Corporate entitled to adopt a ‘no pet’ rule, banning pets entirely?
Is a Body Corporate entitled to allow some pets, for example cats, but not others, such as dogs?
What about emotional support animals and therapy pets?
What can a Body Corporate do if it wants an owner or occupier to remove a pet?
PADDOCKS CLUB MEMBER QUESTIONS:
For a body corporate we manage, there are a few items which require a better understanding. These are:
Question 1
Can an owner who is in arrears vote at the AGM?
Answer 1
PMR 20(2)(a) only disqualifies a member (owner) from voting for ordinary resolutions if that owner refuses to pay the body corporate any amount due AFTER a court or adjudicator has given judgment or order for payment of that amount. This provision therefore only disqualifies an owner from voting for ordinary resolutions if there is an outstanding court order or CSOS order against the owner to pay the amount and the owner still refuses to pay. An owner who has fallen into arrears but does not have a formal order to pay the arrears is still entitled to vote for all resolutions.
Question 1
If the body corporate has a Special General Meeting to vote on major projects, can the owners in arrears vote on these items as well?
Answer 2
As per the answer to 1.
Question 3
If a unit owner is in arrears and the trustee of this unit is actually the tenant, can this trustee still be involved in making decisions?
Answer 3
If a tenant is a trustee and the owner of the unit in which the tenant lives is in arrears, this does not have any impact on that trustee’s ability to vote as a trustee. However, at body corporate meetings, only owners have voting rights. Non-owner trustees can attend and speak at general meetings but are not entitled to propose any motion or vote.
Question 4
The trustees also want to increase the interest rate for the unit owners in arrears from 12.25% per annum to 24% per annum. Can the trustees make this decision and pass this interest resolution without holding a SGM/AGM? Is this interest rate exorbitant?
Answer 4
Yes, PMR 21(3)(c) allows the body corporate, on the authority of a written trustee resolution, to charge interest on overdue amounts. It limits the amount of interest it can charge and links this limit to the rate recoverable under the National Credit Act, compounded monthly in arrear. The maximum rate of interest is currently 2% per month, i.e. 24% per annum so the trustees proposed increase is the maximum amount of interest that can be charged. The trustees can take a written resolution increasing the interest rate from 12.25% per annum to 24% per annum without holding a SGM/AGM.
Question 5
Also, one of the trustees is an insurance broker and the trustees would like to have this particular trustee take over the insurance for the building since he is onsite and there would be no financial gain to have this contract in place. What are the requirements in this regard to have the trustee be involved as the insurance broker? Would the trustee have to resign as a trustee and then only focus on being the insurance broker?
Answer 5
Please see the post below where this issue was discussed.
IS THERE A CONFLICT OF INTEREST IF A TRUSTEE IS ALSO THE SCHEME'S INSURANCE BROKER?
Question:
A body corporate we manage wants to change insurance brokers – however, the insurance broker they want to move to is actually one of the trustees for the scheme. The one trustee is involved with the insurance company and offered comparative pricing for the interest of the scheme.
All the trustees are in favour of this change over, however, one trustee states that this is a conflict of interest and should not be permitted. This one trustee who disagrees also owns the majority of the units at the complex.
Please advise?
Graham's Answer:
My suggestions, when trustees have an interest in any BC contract, as both the broker and the person who is ‘involved’ with an insurer will have in this case, are:
the other trustees must make sure that they compare the quotes from the brokers and insurers connected to these trustees with a number of genuinely independent quotes, and
all owners should be told about the potential conflict and given an opportunity to make suggestions.
A member of Paddocks Club who has more experience with sectional title insurance than anyone else I know is Mike Addison (from Addsure). I hope he will read this and comment on the best way to get competing independent quotes.
Mike Addison's Answer:
It is indeed a difficult one as there are both advantages and disadvantages. I have personally found myself in this position and I have in the past told trustees where I have invested, that I will either be a trustee or the broker but not both. I find this far better, particularly, in a residential scheme. It would thus depend on his or her value to the scheme as either broker or trustee. In the scheme I reside in at the moment, I am the broker and thus decline to be a trustee. (Although I did step up for one year when we were needing to deal with certain financial matters). In a residential scheme, a difficult claim can go pear shaped, and it is best under those circumstances to have clear different roles, i.e. trustees for the insured, and a broker consulting or providing intermediary services to the trustees. Roles are better defined.
In a commercial situation, say office park, it's less of an issue, less personal and good if your broker’s office is in your park for example, as commercial issues are easily dealt with. Again, it depends on the value that the person brings as a broker vs as a trustee. We find that trustees who are brokers, generally prefer not to be the broker but rather use their broker skills and act as trustee with the Insurance portfolio. They then engage mostly with the third-party broker, them having the suitable knowledge, asking the right questions and so on. I have many client trustees who are brokers themselves but prefer our brokerage to be the appointed advisors. They then discuss matters in more detail, and take an interest in the advice, policy etc. and, check us, and it works very well because they understand matters.
So, I would say, it has many advantages to have a resident owner as broker but it can be unhealthy and blurred where the broker is a trustee as well. Our scheme consists of 226 units, and it is really nice for owners, as I can go and pop in to see any minor issue, leak etc at a moment’s notice. I then see the owners in clear capacity as broker, not with two caps on.
