Raising these levies is a slow process
INSIDER'S VIEW: JENNIFER PADDOCK
THE process of raising general levies in sectional title schemes involves a step by step process. Before every annual general meeting (AGM) the trustees are obliged to prepare an itemised estimate of anticipated income and expenses (a budget) of the body corporate for the following financial year.
Copies of this budget must be sent to all people entitled to attend the AGM with the notice calling it. And that notice must be given at least 14 days before the date of the meeting if no special or unanimous resolutions are to be considered – or at least 30 days before the date if a special or unanimous resolution is to be considered.
This gives all those entitled to attend an opportunity to peruse the budget, as well as the other documentation sent with the notice, before the AGM.
At the AGM a quorum of owners must be present or represented.
The minimum quorum requirements will differ depending on the number of units in each scheme.
In schemes with 10 units or fewer, owners who hold at least 50 percent of the value of the votes must be present or represented.
In schemes with 11 to 49 units, owners who hold at least 35 percent of the voting values must be present or represented.
In schemes with 50 or more units, owners who hold at least 20 percent of the value of the votes must be present or represented.
During the AGM, the budget, as proposed or amended, must be approved by an ordinary resolution of owners: that is, an ordinary majority of 51 percent or more.
This vote will be taken on a show of hands, in which each owner has a vote for each section owned unless a poll is demanded by anybody entitled to vote at the meeting, in which case the votes will be counted in accordance with the value of the votes (determined by participation quotas allocated to each section or any special rule that varies these values).
The trustees must then meet within 14 days after the AGM to resolve to raise general levies in accordance with the approved budget. They must determine the amounts payable by each owner and instalments in which these will be paid.
This trustee resolution is the legal act that creates each owner’s liability in respect of payment of levy contributions to the body corporate. At this stage the trustees should resolve to charge an agreed rate of interest on levy arrears.
Once the levies are raised, the trustees must advise each owner in writing of the amount payable.
Jennifer Paddock is with Paddocks, a sectional title training firm.