What limits are there on a strata committee?
Posted 07 November 2024
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The owners corporation can choose to prohibit or restrain the types of matters the strata committee can decide. The owners corporation can also overrule any decisions the strata committee makes.
Most strata schemes give their strata committee the power to make decisions for things like:
- spending for the day-to-day running of the scheme (e.g. hiring repairers, arranging insurance);
- approving minor renovation works; and
- issuing a notice to comply with a by-law.
However, a strata committee does not have the authority to make decisions on a “restricted matter”, including:
- A decision that is required by or under any Act to be made by the owners corporation by unanimous resolution or special resolution or in general meeting.
- A decision on any matter or type of matter that the owners corporation has determined in general meeting is to be decided only by the owners corporation in general meeting.
- Improve or enhance common property (must be approved by special resolution at a general meeting of the owners corporation).
- Set levy contributions (must be approved by ordinary resolution of the owners corporation);
- Spend more than 10% above the budgeted amount for any item (unless approved prior by ordinary resolution of the owners corporation).
- Obtain legal services for which any payment may be required (see exceptions on the next page).
- Approve by-laws (must be approved by special resolution).
- Terminate the strata manager or building manager (must be approved by ordinary resolution).
In addition to the above, a decision of a strata committee has no force or effect if, before the decision is made, notice is given to the secretary of the owners corporation by one or more owners, the sum of whose unit entitlements exceeds one-third of the aggregate unit entitlement, that the making of the decision is opposed by those owners (clause 9 of Schedule 2 under Strata Schemes Management Act 2015 (SSMA).
Exceptions for obtaining legal advice
Despite the limitation that applies to legal services, a strata committee can obtain legal advice and take legal action without obtaining approval at a general meeting where:
- urgent action is necessary to protect the interests of the owners corporation and the cost of legal services does not exceed $15,000; or
- no urgent action is necessary however the cost of the legal services does not exceed $3,000; or
- it is necessary to obtain legal advice before commencing legal action; or
- to take legal action to recover unpaid levy contributions, interest on unpaid contributions or related expenses.
Examples of urgent action may include:
- Dealing with proceedings commenced against the owners corporation, particularly filing a defence, which must be undertaken within a short time frame in order to avoid serious adverse consequences.
- Dealing with claims made against the owners corporation by a contractor under the Building and Construction Industry Security of Payment Act 1999, failing which judgments may be obtained adverse to the owners corporation.
- Dealing with statutory requirements, including fire safety and other council orders, often requiring a response within 14 days.
This is an extract from our Strata Committee Manual.
To access more information, please fill in the below form to download our Strata Committee Manual for free.
