Strata committee dos and don’ts of decision-making

Understanding body corporate and owners corporation committee roles, responsibilities and restrictions

The strata committee plays an important role in the administration and management of the common property. They serve as a representative on behalf of owners to help make decisions, oversee daily administrative tasks, maintain the property and fulfil the legal responsibilities of the body corporate or owners corporation.

However, there are certain restrictions to the committee’s decisions to help balance the distribution of power and protect the interests of all owners. Understanding and respecting these limits is essential to maintain transparency, legal compliance, and the overall harmony of the community. By adhering to the legal framework and best practices, strata committees can effectively manage their responsibilities in line with the interests of all owners.

Here is a guide to help you understand what roles and responsibilities committee members should perform and what decisions they are not authorised to make:

The role of the owners corporation or body corporate committee

During each annual general meeting (AGM), committee members are elected to serve a one-year term. They are typically responsible for running the owners corporation or body corporate property for the benefit of the owners by:

Looking after administrative tasks and the day-to-day tasks of the strata property.

Making decisions on behalf of the owners corporation or body corporate

Implementing legislative and compliance requirements.

The roles of chairperson, secretary and treasurer are considered office-bearing positions. They each come with unique duties and responsibilities. Separate individuals or one person can fill these roles. To manage effectively, the committee should meet regularly to make decisions and document them in meeting minutes for future reference.

Learn more about committee member roles
Duty of care – a legal requirement

The committee member’s roles usually include a fiduciary and legal obligation to undertake these duties with ‘due care and diligence’. Here are some main aspects that owners corporations, and body corporate committee members are liable for:

Each member must perform their duties for the benefit of the scheme and all owners, with due care and diligence.

Keep equity and equality at the forefront of decision-making.

No single member can make decisions on behalf of the committee. However, individual office bearer roles may perform specific tasks without a committee meeting, such as the secretary maintaining the strata roll (list of all owners).

Committee members should understand the governance processes in their scheme's by-laws, building rules, and other related legislation.

Remember this when voting or making decisions within your committee. Separate the collective interests of owners corporation or body corporate from the committee member's interests as an individual lot owner, as they may not always align.

What are the responsibilities of a body corporate or owners corporation committee

The list of things a strata committee should do will depend on whether it is self-managed or a strata manager is engaged.

If a strata property is self-managed, the committee would need to carry out all tasks of the owners corporation or body corporate, such as issuing levy notices, arranging insurance quotes, preparing financial statements and keeping records.

However, these days, the emergence of outsourced services and growing compliance requirements have encouraged many owners to enlist the help of property management providers. If a strata manager is engaged, the committee’s functions become less task-related, and more management is needed to fulfil legal obligations. They can instead leverage the expertise of the strata manager and work hand in hand to achieve the property’s maintenance, administration, and legislative duties.

Repairs, maintenance and upgrades

One of the most important things a strata committee should do is to appropriately maintain the common property following any terms and requirements agreed upon by the owners corporation or body corporate.

This can involve:

  • Communicating with the strata manager about works that need to be undertaken.
  • Ensuring all tradespeople working on common property are licensed and insured
  • Ensuring major works have been accounted for financially and scheduled in the appropriate timeframe before a safety issue occurs.

A strata committee should also review the capital works or maintenance plan and schedule the required works, ensuring enough budget is allocated for the works to occur. This may involve:

  • Engaging the appropriate consultants to review the condition of the building and its assets, creating a scope of works
  • Meeting with tradespeople
  • Obtaining quotations, applying for necessary permits or development applications
  • Informing residents of works
  • Making sure work is being carried out following work, health and safety standards.

 

While the strata committee does their bit to manage common property, it is also the responsibility of all owners to support them by reporting damage and safety concerns.

Manage by-laws or building rules

A strata committee’s role in administering by-laws or building rules can be put into two categories — breaches and approvals.

Breaches:

Complaints about by-law or building rule breaches should initially be directed to the strata committee, who can decide whether to issue a breach notice to request for compliance or explore another course of action.

Approvals:

The strata committee is also responsible for reviewing applications for pet and renovation and alternation approvals.

Although the strata committee has no authority to pass new or modify existing by-laws or building rules, they can propose new or suggest amendments to an existing one. This proposal can then be included as a motion for discussion at a general meeting of the owners corporation or body corporate.

Manage funds and finances

The owners corporation or corporate body is responsible for ensuring their strata property meets its financial obligations. This is where the treasurer’s role comes into play. It is their role to help the strata property’s financial obligations be executed correctly, ensure adequate funds are available to cover expenditure and make financial records accessible to owners. They should review each invoice and check its accuracy before approving the payment. Furthermore, the committee has a spending limit. Before they proceed with any expenditures, it is important to check whether that money is formally included and available in the budget. The committee can call a general meeting to change the budget or raise a special levy if there aren’t enough funds. If a professional strata manager has been engaged, they will develop a budget forecast for the owners corporation or body corporate for consideration for the upcoming year. This budget determines the levies. The strata committee should receive a draft budget for review before it goes out to all owners in the meeting agenda. They should then review the proposed amount and ensure it is sufficient to cover operational and capital expenses. While a strata manager generally performs duties such as preparing budgets and financial statements and notifying owners about contributions, the owners corporation or body corporate is still responsible for the manager’s actions.

Keep records

If a strata, owners corporation, or body corporate property has delegated responsibilities to a professional strata manager, the strata manager should store records on their electronic document management system.
However, the strata committee should still ensure record keeping is accurate. This includes ensuring agendas and minutes are correct and that the information required to be kept by legislation is passed onto the strata manager.

Information includes:

  • Invoices.
  • Receipts and expenditure.
  • Correspondence received or sent to the owners corporation.
  • Meeting minutes.
  • Notices of meetings.
  • Proxies.
  • Defect or engineer’s reports.
  • Any notices or orders given to the owners corporation.
  • Insurance information.

Manage meetings

Meeting management is a vital part of a strata committee’s role. This includes organising, conducting, recording and adjourning meetings as necessary. The strata committee secretary should inform owners of upcoming meetings in advance by putting up notices on the notice board, handing in the notices in person or delivering notices via email or post (with the assistance of the strata manager). The secretary is also responsible for preparing meeting minutes, collating the action items, sharing reports and maintaining records.

Securing insurance

While the strata manager will arrange quotations from brokers for the required insurance for common property, the strata committee is responsible for nominating the sum insured, ensuring it provides adequate coverage and deciding if additional insurances are required.

Communicate with owners and residents

Good communication makes a massive difference to strata community living — there’s nothing like an open discussion to help turn things around. A strata committee should encourages conversations in meetings and promote balanced discussions to reach a consensus.

When there are disagreements, they are responsible for mediating matters and building rapport so that owners are heard and treated fairly. The committee is responsible for ensuring all owners are aware of and abiding by the by-laws or building rules.

Importantly, a strata committee should be the point of contact for other owners and building residents and should be able to answer strata-related questions regarding by-laws or building rules, finances, access information, and be ready to mediate discussions between neighbours.

Strata committee decision restrictions

Although the strata committee helps make decisions on behalf of the body corporate or owners corporation, there are limitations to this rule. Their decision-making powers are subject to specific limits to maintain transparency, accountability, and fairness. It is important to note that an individual member cannot make decisions on behalf of the whole committee without a discussion through a meeting or vote. Furthermore, when acting on behalf of all owners, there may be certain matters that the committee cannot decide upon without a resolution at a meeting. The specifics of committee limitations and reserved issues are governed by state legislation, the scheme’s by-laws or building rules, or the strata management agreement. Below are some main areas that are common body corporate and owners corporation committee rules that usually restrict decision-making powers:

Spending limits

The specifics of committee spending limits and reserved issues are governed by state legislation, and these can vary from state to state in Australia. Furthermore, the spending authority of the committee may also be outlined in the strata management agreement or the by-laws of the individual owners corporation or body corporate.

The extent of the committee’s spending limits can also be set by the owners corporation or body corporate.

Predetermined limits:

These limits help set boundaries for when committees authorise maintenance and other day-to-day expenses without requiring a resolution.

Major spending approval:

 Larger expenditures exceeding the committee’s spending limit usually require approval from the body corporate or owners corporation at a general meeting.

Budget adherence

Committees are generally required to operate within the budget approved by the body corporate or owners corporation.

Changes to common property

Any major renovations or changes to the common property that alter the appearance or structural integrity of the building may often require broader consensus from the body corporate or owners corporation. Therefore, approval through a general meeting resolution could be needed before any common property work can progress.

Major alterations

Significant changes or improvements to common property, such as structural modifications or extensive repairs, usually require a special resolution passed at a general meeting.

Minor works

Some minor works might be within the committee’s authority, but it’s essential to check specific state regulations and by-laws.

Altering levies

Adjusting levies, which are fees paid by owners to cover the costs of maintaining and managing the strata scheme, is another area with defined limits. Setting or changing these amounts usually requires a resolution at an owners corporation or body corporate meeting.

Changing levy contributions

Changes to unit entitlements could impact levy payment amounts and, therefore, generally require a special or unanimous resolution or application through the state’s relevant government body.

Special levies

Introducing special levies for unforeseen expenses usually needs approval by the owners corporation or body corporate.

Adding and changing by-laws or building rules

The committee does not have the power to pass new or alter existing by-laws or building rules. Instead, they may propose a new or amendment to an existing one and include it as a motion at a general meeting for all owners to consider.
Creating or amending by-laws

 The power to make, amend, or repeal by-laws generally rests with the owners corporation or body corporate and requires a special resolution at a general meeting.

Compliance with state legislation

Any changes to by-laws must comply with relevant state legislation to ensure they are enforceable.

Conflict of interest matters

Strata legislation usually requires committees to act in the best interest of the strata scheme without personal bias. Therefore, members should carefully review their state’s legislation requirements and avoid certain decisions that may benefit members or pose a conflict of interest.

Declaration of interests

Committee members must declare any conflicts of interest, such as financial benefit or relationships, that could influence their decision-making.

Abstaining from decisions

Abstaining from decisions: Members with a conflict of interest should abstain from voting on related matters to maintain integrity, fairness, and trust.

State-based decision and spending limits for strata committees

While committee decisions are made on behalf of the scheme, there are some limitations to the committee’s decisions. For example, a strata committee cannot decide on matters requiring a unanimous or special resolution, such as dissolving a strata property, amending by-laws or building rules, setting or changing levies, and changing property owners’ rights, privileges or obligations.

This section offers a general guide to restrictions on committee decision-making in your state. However, to understand these restrictions comprehensively, please review your by-laws and the most recent legislation or consult with your strata manager.

A strata committee does not have the power to decide on any of the below, as all owners are entitled to vote on these matters at a general meeting of the owners corporation. Some common examples include:

  • Approval to improve or enhance common property which requires a special resolution.
  • Setting the levy contributions requires an ordinary resolution.
  • Approving by-laws that require a special resolution.
  • Terminating the strata manager requires an ordinary resolution.
  • Altering the unit entitlements for the lots in a strata property requires approval by special resolution.
  • Terminating a strata management contract which requires an ordinary resolution.
  • Entering into a lease or license over common property that requires a special resolution.
  • No individual strata committee member can make decisions on behalf of the owners corporation.
  • The owners of more than one-third of the scheme’s total unit entitlement can notify the secretary of their objection to a matter being voted on by the committee in writing.

 

Spending and approval limits:

  • The strata committee can only seek legal action or services for matters within the below limits. Otherwise, approval would be needed at a general meeting.
    – $3,000 for non-urgent matters.
    – $15,000 for urgent matters.
  • The limit for committee spending (how much money a committee can spend) can be set by an ordinary resolution of the owners corporation. There is no minimum or maximum limit that the owners corporation can set.
  • In a large scheme, the strata committee cannot spend more than 10% above the budgeted cost for any item, except in an emergency, without putting the matter to the owners corporation at a general meeting. Examples of emergencies include:
  • Burst or blocked water or sewage pipes
  • Damage caused by fire, storms or other natural disasters
  • Unexpected electrical or security system failure
  • Glass breakages that affect the security of the building or could result in damage to the inside of the building.

In Queensland, a body corporate committee have restrictions on decisions that must be made by ordinary, special, majority vote, or resolution without dissent. Below are some common examples:

  • Setting or changing a body corporate levies is decided by ordinary resolution at each AGM.
  • Changes to a contribution schedule lot entitlements and liabilities impacting the rights, privileges or obligations of lot owners require a unanimous resolution.
  • A committee decision cannot overturn a decision made at a general meeting.
  • Paying money to committee members unless it is less than $50 incurred by a committee member attending a committee meeting or not more than $300 reimbursed to a committee member within 12 months.

Spending limits and approval limits:

  • An ordinary resolution can limit committee spending (how much money a committee can spend). There is no minimum or maximum limit that the body corporate can set. However, if no amount is established, the limit is calculated by multiplying the number of lots in the scheme by $200.
  • The limit for major spending for a project is $10,000 or $1,100 x by the number of lots in the scheme, depending on which is the lesser. The body corporate can amend this amount at a general meeting.
  • The committee can approve improvements to common property no greater than $300 x the number of lots, as long as it is within the committee spending limit
  • The committee can approve a request from an owner for an improvement to common property (generally attached to their lot) if:
  • The total cost is less than $3,000.
  • The improvement does not detract from the appearance of a lot.
  • The body corporate is satisfied that the use and enjoyment of the improvement is not likely to breach the owner’s duties (e.g., by causing a nuisance to others in the scheme).

A committee cannot start legal proceedings unless:

Committees can make decisions within the limits set by the owners corporation and only on matters that require an ordinary resolution (i.e. they do not need a general meeting) or on issues that a special or unanimous resolution must decide. Some common examples include:

  • Significant improvements or alterations to common property require a special resolution to approve the works and levy fees on lot owners.
  • A special resolution is necessary to make, amend, or revoke the rules of the owners corporation.
  • Disposal of all or part of the common property necessitates a unanimous resolution.
  • A unanimous resolution is required to decide whether each lot owner must arrange their insurance.
  • The leasing or licensing of the whole or part of the common property to a lot owner or any other person requires a special resolution.
  • A special resolution must authorise legal proceedings by an owners corporation.
  • Extraordinary payments from maintenance funds other than following the approved maintenance plan demand a special resolution.
  • Committees cannot overturn a decision of the owners corporation.

 

Spending limits

Under section 11 of the Owners Corporations Act 2006, the owners corporation can delegate powers (outside of restricted matters) by special resolution to the committee at an annual general meeting.

This would mean that specific spending limits and requirements can be placed to dictate how the committee can spend the owners corporation funds.

In the Northern Territory, decisions made by the committee are supposed to represent the body corporate as a whole. However, exceptions exist regarding restricted matters requiring further processes and resolutions. Below are some examples of some situations that committees decision limits:

  • Granting exclusive by-laws or special privileges within common property calls for unanimous resolution.
  • Amending by-laws within a scheme statement necessitating a special resolution.
  • Modifying articles under the Unit Titles Act requires a special resolution.
  • Changing the proportions for expenditure contributions needs a unanimous resolution.
  • Opting out of body corporate insurance, which demands unanimous resolution.
  • Changes to the subdivision plan that require a unanimous resolution.
  • Agreeing to each proposed unit entitlement, demanding a special resolution.
  • Authorising unit repair or maintenance contracts with an owner requires a special resolution.

 

Committee spending limits

In the Northern Territory, the body corporate sets the maximum amount that should be spent on common property repairs or improvements. The committee cannot exceed this expenditure limit without a special or unanimous resolution. However, below are the key statutory restrictions outlined in the Unit Title Act:

Improvements to common property cannot exceed the prescribed amount unless:

  • Agreed upon through a resolution without dissent at a general meeting.
  • Approved for common property’s health, safety or security through special resolution.
  • Required to comply with a notice or order from a public authority or local council.

If the proposed expenditure exceeds the limit, the committee should:

  • Present the proposal at an extraordinary general meeting.
  • Provide a minimum of two quotes for the proposed expenditures.

In Tasmania, the committee can only act on powers delegated to them by the body corporate and cannot decide matters requiring a unanimous resolution. Below are some examples of restricted matters:

  • Purchasing or selling common property.
  • Changing strata corporation’s unit entitlements.
  • Altering rights, privileges, or obligations of property owners.
  • Changing unit entitlements, merging body corporates, or terminating strata plans.

On the other hand, the committee can make some decisions with a simple majority unless the building or complex’s rules say otherwise. Examples include:

  • Making, changing or cancelling by-laws.
  • Introducing exclusive-use by-laws.

Spending limits:

Committee spending limits are not defined within the Strata Titles Act 1988 (Tasmania). Instead, it is common practice to agree on the expenditure amount at the annual general meeting.

How strata managers can help

Strata managing agents are trained professionals with knowledge and expertise to help committees maintain proper and timely compliance. The main functions that they can assist with can include areas such as:

Financial and accounting services

  • Maintain trust accounts.
  • Issue levies.
  • Monitoring or recovering of levy arrears.
  • Invoice payments from the trust account for the scheme.
  • Provision of reconciled accounts e.g. balance sheet, profit and loss account.
  • Tax return or BAS lodgment, and audits.
  • Prepare and draft admin and capital works budgets.

Secretarial services

  • Maintain books and records.
  • Issue section reports and other statutory notices.
  • Strata searches.
  • Issue agendas and minutes.
  • Communicate on behalf of the committee and owners corporation e.g. by-law notices or housekeeping notices.
  • Direct support for day-to-day enquiries e.g. by-laws or housekeeping.
  • Administrative aspects of officer bearer roles e.g. chairperson, secretary and treasurer.

Repairs and maintenance:

  • Contractor compliance.
  • Arrange contractors for maintenance issues.
  • Obtaining quotations on behalf of the committee.
  • Arrange compliance certifications
    g. fire, lifts, pools and anchor points.
  • Assist with contract execution.

Insurance:

  • Arrange quotes for renewal through an appointed broker.
  • Assist with disclosure requirements.
  • Valuations
  • Process claims.

Dispute resolution:

  • Prepare and issue of by law breach notices.
  • Notices to comply.
  • Formal mediation assistance.
  • Admin support for any NCAT or other court hearing.

Meeting management:

  • Issue agendas and minutes at general and committee meetings.
  • Acting as chairperson.
  • Expertise in meeting best practice and facilitation
  • Administration of voting processes

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Conclusion

In conclusion, strata committees are crucial in managing and maintaining communal living environments. However, it’s important to note that their powers are not limitless. While they can make decisions about the upkeep of common areas, manage finances, enforce by-laws, and handle administrative tasks, there are boundaries to their authority. They cannot make decisions that infringe on individual lot owners’ rights, make substantial changes to common property without consent, or bypass any procedures outlined in the strata legislation. Understanding these limits helps to achieve a balanced living environment where the rights of all stakeholders are respected.

 

Having set up the very first strata scheme in Australia 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. Download our FREE Community Living guide on committee management. Or, to find out more about the services we offer, click here for a free strata assessment.

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This article is edited by Lauren Shaw Regional General Manager and Licensee-in-Charge on August 2024.

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