What is a Special Resolution, when is a Special Resolution required, and how does a Special Resolution carry?
Most owners corporations make decisions via General Resolutions - this is, via a simple majority at an AGM, an SGM, a committee meeting or a ballot. General Resolutions are used to decide on budgets, contractors, most maintenance issues, and policies. A Special Resolution requires more owners to be in agreement, and is needed to address the following owners corporation issues:
A significant alteration or upgrade to common property (unless the works are required immediately to ensure safety or prevent significant loss or damage).
To provide a service to lot owners or the public, or to enter agreements for the provision of services to owners.
Lease or license all or part of the common property to a lot owner or other person.
Obtain a lease or license over any land, whether or not in the Plan of Subdvision (link).
Commence legal proceedings in a court other than VCAT or the Magistrate’s Court (note that to commence proceedings in either VCAT or The Magistrate’s Court only requires a General Resolution).
Raising extraordinary fees (a Special Levy) which are over twice the total amount of the annual fees approved in the Budget at the AGM.
Borrowing any amount money that exceeds the total annual fees approved in the Budget at the AGM.
Make, amend, or revoke rules of the Owners Corporation.
There are legal differences for how a General Resolution, and a how a Special Resolution, are put to owners, and legal differences in how the votes are tallied.
Difference number 1
General Resolutions are calculated as one lot per lot (in the case of a committee resolution), and either as one vote per lot or via lot entitlement at an AGM, SGM, or ballot. Special Resolutions MUST be calculated via lot entitlement.
Difference number 2
Owners who are in arrears are not permitted to vote in a General Resolution, but they are permitted to vote in a Special Resolution.
Difference number 3
General Resolutions can be moved ‘from the floor’ at a meeting and don’t need to be part of a meeting notice, if there is ‘General Business’ listed as an agenda item. The text of a Special Resolution must be in the meeting notice which is sent out at least 14 days prior to the meting, and cannot be amended at the meeting, or moved ‘from the floor’.
Difference number 4
The requirements to pass either a ‘binding’ or ‘interim’ Special Resolution are different to those for a General Resolution.
Remember, General Resolutions can be either immediately ‘binding’, or they can be ‘interim’. There’s more information on this below.
How to Pass a Binding Resolution
A General Resolution may be conducted via a vote for all owners (at an AGM, SGM or via ballot), or vote for just committee members (at either a committee meeting, or via a committee ballot);
If the vote is taken at an AGM or an SGM, the General Resolution is binding if both a) the vote carries by simple majority, and b) quorum is present at the meeting.
If the vote is taken by a ballot of all owners, the General Resolution is binding as long as both a) at least 50% of the membership (based on lot entitlement) submit their ballots, and b) a simple majority of responses received vote in favour.
A Special Resolution must be conducted via a vote for all owners (at an AGM, SGM or via ballot), and NOT by a committee.
If the vote is taken at an AGM or an SGM, the Special Resolution is binding if at least 75% of the membership (based on lot entitlement) vote in favour.
If the vote is taken by a ballot of all owners, the Special Resolution is binding if at least 75% of the membership (based on lot entitlement) vote in favour on their submitted ballots.
If a resolution is immediately binding, it can be acted on straight away.
How to Pass an Interim Resolution
An interim General Resolution may be passed at an AGM or an SGM, but interim General Resolutions do not occur via a general ballot or at a committee meeting.
At an AGM or a SGM, the General Resolution is interim if the vote carries by simple majority, but a quorum of owners (at least 50% of the membership, based on lot entitlement) is not present at the meeting.
An interim Special Resolution may be passed at an AGM, an SGM or via a ballot, but the committee does not have the ability to pass an interim Special Resolution.
If the vote is taken at an AGM, an SGM, or via ballot, the Special Resolution is interim if both a) at least 50% (based on lot entitlement of the ENTIRE membership) but less than 75% vote in favour, and b) less than 25% of the membership vote against.
Remember, Special Resolution percentages are based on the entire membership, not just as a percentage of votes cast.
If a resolution is ‘interim’, it means it cannot be acted on for 29 days.
In that 29 day period, if over 25% of the membership (based on lot entitlement) objects to the resolution, the interim resolution fails.
If, however, less than 25% of the ownership objects during the 29 day period, the interim General or Special Resolution becomes ‘binding’ on day 29.
Do you need assistance with a Special Resolution? Contact Melb OC for a free consultation.