Common property alterations can have a significant impact on residents and investors. And if construction costs spiral out of control, the associated levies could put lot owners under severe financial strain.
With so much at stake, it makes sense that significant, large-scale alterations require strong consensus among owners. But for urgent, pre-planned, or minor projects, is a stringent formal voting process really required?
In this post, we’re looking at which common property alterations require a special resolution in Victoria, and which don’t.
When Common Property Alterations Require A Special Resolution
In Victoria, common property alterations may require a special resolution when they significantly impact function or aesthetics, are excessively costly and/or require permits.
When Alterations Have A Significant Impact
Under Section52 of the Owners Corporations Act 2006 (VIC), a special resolution is a legal requirement when there is any significant alteration to the functionality or appearance of common property, except when a statutory exemption applies.
The term ‘significant alteration’ is not clearly defined in the Act, meaning each case will turn on its own facts. In general, we can consider significant alterations to affect the property’s value or the enjoyment of residents, and to be important, noticeable, or of practical or financial consequence.
In practice, significant alterations could include a range of structural and design changes, such as facade alterations (including cladding), exterior repainting, lobby renovations, driveway rerouting, or new landscaping works. If contested, a court would decide on a case-by-case basis whether property alterations were ‘significant.’
When Upgrading, Renovating, Or Improving Common Property
Upgrading, which the Act defines as ‘building works for upgrading, renovating, or improving property,’ requires a special resolution when:
- The estimated cost exceeds more than double the total annual OC fees; or
- A building permit is required.
When Common Property Alterations Don’t Require A Special Resolution In Victoria
There are situations in which an OC can make significant alterations without passing a special resolution.
Alterations Listed In A Maintenance Plan
An OC may be able to authorise significant alterations detailed in an approved maintenance plan without a special resolution.
A maintenance plan is a document detailing expected expenses for common property over a 10-year period.
Tier 1 and Tier 2 OCs are legally required to have one, and the plan is non-compulsory but generally recommended for Tier 3 and Tier 4 OCs. Under the Act, a maintenance plan must be accompanied by a maintenance fund. An OC Committee must report on the implementation of the plan at each Annual General Meeting (AGM).
Immediate Concerns For Safety or Property
Significant alterations without a special resolution may be permitted when there are reasonable grounds to believe the work is urgent and necessary to protect health and safety or to avoid significant loss or damage to property.
In practice, that might include repairing a balcony railing deemed unsafe by a structural engineer, or dismantling a malfunctioning driveway gate.
Disability Access
An OC may also be able to alter common property without a special resolution to provide tenants and visitors with disabilities better access to the site.
Understanding Special Resolutions
Passing a special resolution is no easy feat.
Under the Act, a special resolution requires support from 75% or more of the total lot entitlements or total votes of all lot owners.
As the special resolution must be reached by all owners (rather than an OC Committee), the voting must occur at an Annual General Meeting (AGM), a Special General Meeting (SGM), or a ballot.
A special resolution is binding if at least 75% of the membership (based on lot entitlement) vote in favour.
Passing A Special Resolution
An OC manager can take certain steps to pass a special resolution more smoothly.
- Writing the full motion in clear, unambiguous text on the agenda before the meeting. Unexpectedly moving a special resolution ‘from the floor’ isn’t allowed.
- Providing written notice of the AGM, SGM, or ballot to every lot owner at least 14 days in advance.
- Ensuring compliance with the legal meeting quorum for in-person voting (at least 50% of lot entitlements or total members).
Interim Special Resolutions
If the vote gets 50-75% in favour and less than 25% against, it will pass as an Interim Special Resolution (ISR).
The secretary must notify all lot owners of the ISR within 14 days. The ISR will become a special resolution after 29 days unless lot owners holding more than 25% of lot entitlements petition against it.
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Backed by a specialised in-house team of Chartered Accountants and SCA-Certified Strata Community Managers, we provide effective, customised OC services in Melbourne and beyond. Whether you need help passing a special resolution or want a comprehensive OC management solution, contact us today.
