For strata, owners corporations, and body corporate properties, following best-practice governance procedures is essential, especially when it comes to decision-making.
Owners and committees are the legal entities responsible for managing administrative duties, maintaining common property and resolving disputes so that the property operates smoothly and fairly. However, making decisions can get complicated, especially when multiple owners are involved. Furthermore, legal frameworks across Australian states and territories dictate decisions, the ethical standards expected of committee members, and the spending limits that apply to the owners corporation or body corporate.
The owners corporation or body corporate is the collective group of all owners in the strata scheme, and it is the decision-making body for matters that affect the entire property. However, this is often a collaborative process involving owners, committees, and strata managers.
Owners corporations, and body corporates usually oversee numerous aspects of property management. A committee or strata manager can assign many routine tasks to make this more manageable. This is typically done to streamline operations and improve efficiency. While the committee handles the day-to-day delegated decisions, owners play a key role in general meetings. However, this is subject to strict legal boundaries on matters impacting the whole owners corporation or body corporate.
All owners can delegate their collective owners corporation or body corporate responsibilities to the committee or strata manager, participate in general meetings, raise significant matters for consideration, and vote on major decisions that cannot be delegated.
Elected by owners, committees help manage day-to-day operations within the scope defined by legislation and act in the best interests of all owners and within delegated authority. They can make decisions on behalf of the owners corporation or body corporate for issues that do not require a general meeting.
Strata managers execute decisions made by the committee or owners corporation. Their authority is limited to the functions delegated to them, and must comply with applicable laws and codes of conduct.
Decision-making in strata schemes involves several mechanisms, and the process may differ depending on the complexity of the issue and the state-specific legislation. Below, we look at the most common decision-making methods in an owners corporation or body corporate.
The AGM is held at least once a year and covers essential governance, financial, and administrative matters for the strata scheme. Items of discussion typically include:
An EGM is called outside the regular AGM schedule to vote on time-sensitive or high-impact matters that require owner approval. Items of discussion typically include:
This type of meeting is called amongst committee members to make decisions on behalf of the owners corporation for day-to-day administrative matters and issues that do not require a general meeting. Items of discussion typically include:
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Decisions made at meetings are generally made through resolutions. This system helps provide a fair and equitable opportunity for committee members or owners to cast votes and have a say in the management of the common property and affairs of the owners corporation or body corporate. The different types of resolutions include:
Common decisions are made by a simple majority vote, where over 50% of owners favour a motion to pass it. This can include matters around:
Some decisions require at least 75% of the votes in favour of the motion being passed. This can include matters such as:
When voting on fundamental decisions, at least 100% of votes must be in favour of a motion being passed, including:
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Sometimes, certain issues, such as emergency repairs or safety issues, require immediate action. While the owners corporation, body corporate, or committee generally makes decisions according to the established processes, urgent matters often must be dealt with swiftly.
Committees often have the authority to make emergency decisions without requiring a general meeting. This typically applies to urgent repairs necessary to maintain the safety and functionality of the property.
However, to maintain transparency and accountability, the committee must report any action taken to the owners at the next general meeting.
An EGM can be called when urgent decisions are needed but do not fall under the committee’s delegated powers. Common issues can include:
Maintaining transparency, fairness, and accountability in decision-making is essential for committees. This is achieved by following a code of conduct for voting members, which sets out the expected standards of behaviour and the procedures for making decisions.
Whilst some states may not prescribe a formal ‘code of conduct’, committee members still have legal obligations to act in good faith for the benefit of the owners corporation or body corporate and with due care and diligence.
These standards are usually outlined under relevant state and territory laws, which provide clear legal guidelines for how committee members should act following their duties. This typically includes:
Committee members must act in the best interest of the owners corporation or body corporate rather than in their own interests. They must prioritise the community’s well-being and the long-term sustainability of the property.
Committee members must exercise reasonable care and diligence in carrying out their duties. This includes making informed decisions, understanding the financial status of the scheme, and seeking professional advice where necessary.
Committee members must disclose any personal interests or financial relationships that may influence their decisions. If a committee member has a conflict of interest regarding a matter being discussed, they must abstain from voting on that issue.
Committee members should provide clear and open communication with owners about the decisions they make and any actions they take. This ensures that owners are well-informed and can hold the committee accountable.
Committee members must respect the confidentiality of any sensitive information, such as personal details of owners or confidential financial information, and should not disclose this information without authorisation.
Strata decision-making is not without limits. There are certain matters that owner corporations and body corporates are not permitted to make, even if the majority of owners agree.
These limitations often arise from relevant legislation and by-laws or building rules. When these rules are not followed, the result may be an unlawful decision that is either invalid, unenforceable, or exposes the owners corporation or body corporate to legal risk. Examples can include:
Owners corporations or a body corporate cannot make significant changes to the use or structure of common property without the approval of the majority of owners. In some cases, a special resolution may be required.
While committees can propose new by-laws, they cannot implement rules that contravene state or federal law. For example, by-laws or building rules that unfairly restrict pets or discriminate against certain groups would be invalid.
Committees cannot spend large sums of money without the approval of the owners corporation or body corporate, particularly if the expenditure exceeds the amount allocated in the budget, or is outside of the set scope.
Owners corporations or a body corporate may also have additional limitations and requirements regarding what can and cannot be decided at a committee level or general meeting. For example, by-laws or building rules may specify that certain decisions require a unanimous vote (e.g., altering the external appearance of the building).
Breaches can occur when a committee member votes on a matter in which they have a vested interest, such as through financial benefit or relationships, that could influence their decision-making.
Every lot owner is entitled to fair treatment and transparency. Depending on specific state laws, a significant breach occurs when their request is turned down without due consideration or proper reasoning. This denial not only violates procedural fairness but also strains the trust within the community.
Decisions that are legally mandated to be made by the owners corporation or body corporate should not be unilaterally decided by the strata manager. Any such action can be considered an improper delegation, jeopardising the democratic nature of the committee.
Effective decision-making governance in strata requires clear procedures, transparency, and active participation from committees and owners. Here are some strategies to enhance decision-making in strata schemes:
Committees must communicate effectively with owners, informing them about important decisions and developments. Regular newsletters, noticeboards, and email updates can help keep owners in the loop and foster a sense of community.
All decisions made by the strata committee should be properly documented in minutes of meetings, with clear explanations of why certain decisions were made. This ensures transparency and provides a reference point for future decisions.
Committees should seek input from owners when making significant decisions, such as changes to the building or by-laws. This could involve surveys or holding meetings where owners can voice their opinions and contribute to discussions.
The committee should seek professional advice for complex issues such as legal disputes, major repairs, or financial management. This may involve consulting with a strata manager, legal advisor, or financial expert to ensure that decisions are made in the owners' best interest.
Committees should regularly train to stay informed about the latest legal, financial, and management practices. This will help equip committee members with the necessary knowledge and skills to make informed decisions and handle their responsibilities effectively.
Establishing clear conflict resolution procedures can help prevent issues from escalating. This may involve setting up a formal grievance procedure, encouraging open communication, and fostering a culture of mutual respect among owners.
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Effective governance in strata decision-making is essential for maintaining a well-functioning and harmonious community. While committees are important in managing day-to-day operations, some matters involving finances or common property changes require broader owner involvement through general meetings.
Each state and territory in Australia has developed a legal framework that governs the decision-making processes of owner and body corporations. By following best practices for governance in this area, owners corporations and body corporates can foster positive living environments and safeguard the long-term value of their properties.
Since the first Australian strata scheme was established in 1948, we’ve come a long way in our knowledge and experience across various property types. Whether you are new to strata management or an active committee member, we have developed an extensive library of resources to assist you.
This article is edited by Lauren Shaw Regional General Manager and Licensee-in-Charge on May 2025.
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