Many of the rules that apply to the passing of special resolutions for sectional title schemes are not fully understood by the trustees of the schemes, and this can lead to problems says Michael Bauer, GM of IHFM property management company.

“Again and again,” says Bauer, “we have to point out that for a special resolution to be passed it is necessary that a quorum must be present at a special general meeting and the majority of not less than three-quarters of the owners reckoned by number and value must vote in favour of the proposed resolution.

“What is more, in most cases this has to be at a special general meeting for which the owners have received 30 days’ notice in which the gist of the forthcoming resolution is explained.”

Where the calling of a special resolution may not be possible or agreeable to owners, says Bauer, it is acceptable to get the resolution passed by means of a round robin letter. In these cases, again 75% of the owners (calculated by value and by number) have to have given signed approval of the resolution. Even here, however, the prescribed management rules state that owners or others standing in for them can call for a special meeting within 30 days of the meeting at which the resolution was debated.

All postal communications for the canvassing of opinion have to be either hand delivered or sent by prepaid registered post to the owners of the units.

If too few people attend the special meeting to obtain a quorum, the meeting has to be adjourned for one week and has to take place in the same place and at the same time on a later date. If once again at this subsequent meeting a quorum is not achieved, those present have the power to pass the special resolution.

Bauer says there are frequent misunderstandings about when special resolutions are required. Some trustees believe that a special resolution is needed for any change of the rules and conditions, but this is not so.

“Special resolutions are necessary when non-luxurious improvements are proposed, when changes in the contract rules are mooted, extensions of any section (the space in an individual unit) are proposed, an exclusive use area is to be cancelled or added, a servitude is to be created, the value of an owner’s vote or levy contribution is to be changed, additional insurance risks are taken on, the developer is to be sued for claims, the managing agent’s contract is to be terminated or if payment for services is to be made to trustees who are already owners.

“As always,” says Bauer, “the PMR rules on these matters are clear and comprehensive but, as professional managing agents, our ongoing obligation is to see that the trustees read and understand them. Trustees come from all sorts of different backgrounds and cannot be expected to be au fait with property law. They will require ongoing instruction and so long as trustees can be appointed without any training for their job this situation is likely to persist. Quite often, however, we find ourselves having to remind people of rules of which they have been informed rather than instructing them for the first time.”