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Topic
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Major capital works projects were approved at our recent AGM. Once the motions to proceed with these controversial projects were passed, nearly half of the room of owners emptied. The later motions in relation to payment options were passed by those owners remaining in the AGM (probably 30 of 150 owners). The special levies for these major capital works will be debt funded. The lender gave options for repayments over 5 years and 8 years. The OC put forward only one motion at the AGM, to repay the loan over 2 years (8 payments). This motion was passed. The quarterly strata fees are currently approx $1400 on average. The special levy will add a further $5000/ quarter over the next two years.
Are there any schemes available to assist owners who cannot afford the huge jump to $6400/quarter? Any options at all (aside from selling, trying to raise external finance).
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The first thing that occurs to me is that the meeting may have been inquorate when the decision on the loans was made so, unless there were proxies left behind to make up the numbers, the decision may be invalid and you might have grounds for calling an EGM to reconsider the loan repayment period (or challenging the decision at NCAT if the committee refuses).
Apart from that, the easiest thing to do may be to go to your bank and ask to extend the loan or remortgage to cover the added amount.
But a challenge to the decision may be worth the effort – you can’t be the only owner with that problem.
The opinions offered in these Forum posts and replies are not intended to be taken as legal advice. Readers with serious issues should consult experienced strata lawyers.
Hi Boxfree
It’s Paul here from Lannock Strata Finance.
My first question is the same as Jimmy’s – was there, technically, a quorum when the finance issue was discussed and voted upon? If not, it’s back to square one.
I think it’s quite common for corporations to think “ok, this is easy, we’ll borrow the money and pay it off over a couple of years”. Our experience is that people who can pay a loan off in a year or or two could almost as easily have a single special levy or a levy payable in a few installments.
Lannock will lend for as short a period as a few months, but in practice, most people borrow for 7 years with quite a few borrowing for 10 or more years.
As we are lenders to the corporation, our suggestion would be to talk with your other owners with a view to having the loan term changed at the next GM or to hold an EGM. in the meantime, you could ask the committee to consider drawings funds with an initial “interest only period” – this would halve the corporation’s cash outflows.
Whatever you do, don’t be in arrears as then you’ll be unfinancial and unable to vote in any meeting.
Please give us a shout if you’d like us to come and talk to the committee or to a general meeting.
Regards
Paul
paul@lannock.com.au or 1800 85 15 85
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