QLD: Q&A What happens if owners vote no to the budget at the AGM?

This article is about what happens if Queensland owners vote no to the budget at the AGM.

Question: What happens if lot owners vote no to the administration fund budget at the AGM?

Answer: Bear in mind that it will cost the scheme to call an EGM to consider a new budget, and there will be delays in issuing levies until a new budget is agreed upon.

If a majority of owners vote no to the budget or any of the levy motions at the AGM, the main impact is that the body corporate does not have any authority to raise levies as per the motion.

This, in turn, can have a range of effects, starting with the restriction of cash flow to the body corporate and subsequent inability to pay bills and organise works. The scheme’s savings will cover it for a period but they can’t last indefinitely.

As a result, most schemes will try to rectify this by calling an EGM to present and confirm a budget or rerun the original to see if owners will vote for it a second time.

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The committee and body corporate must consider why owners are voting no and whether they can reach an alternative.

At the least, the no vote suggests a disconnect between the committee and owners regarding what they think is the best direction of the scheme. Try to understand why and whether there is a compromise position that can be reached. Sometimes the resolution is simply in better communication about the budget and its intent.

Otherwise, has the committee put forward a budget that owners don’t want or are owners being unrealistic about how much money is required for the scheme? From an owner’s perspective, it is important to remember that most items on a budget are not optional. Schemes are obliged to have insurance. You have to maintain the property in good condition. Contracts for caretakers will go up every year. It may not be a good enough reason if you are voting no just because you don’t like paying more.

On the other hand, the committee has to consider how the budget is structured. If the complex needs to put in extra money to meet its obligations, maybe the committee should hold an owner’s forum to explain why. Is it possible to reconsider the amounts by taking out some optional costs and making them individual items for owners to vote on? For example, if you wanted to do a major pool refurbishment and had added the costs to the budget, maybe this item should be listed separately with a special levy to approve it.

Whatever the circumstances, everyone must be realistic about finding a path forward. Bear in mind that it will cost the scheme to call an EGM to consider a new budget, and there will be delays in issuing levies until a new budget is agreed upon. This can cause a lot of stress, so owners must work together on practical solutions.

William Marquand
Tower Body Corporate
E: willmarquand@towerbodycorporate.com.au
P: 07 5609 4924

This post appears in Strata News #723.

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