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Forum: When strata donations are illegal

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Suppose you have a committee or a chair who’s passionate about some issue related to apartments – something like Airbnb or pets or anything that’s likely to get the political juices flowing.

And they decide that your owners corporation should donate a sum of money to the fighting fund, for whatever the battle is. And maybe the majority of owners agree.

But you don’t support that point of view and since it is a polarising issue, you suspect that a lot of other owners are also none-too-happy about having contributed via their levies or fees.

What can you do? Even if the majority of owners has voted in favour, do they have the right to use your money to support something you don’t believe in?

That’s a question raised by Flatchatter The Hood who wants to know if it’s even legal for an owners corporation to contribute funds to anything without getting something tangible in return.

And the shocking news is – it probably isn’t. Section 73.4 of the NSW strata Act is very specific about what owners corp funds can be used for and unless funds were set aside in the previous AGM budget, they seem not to be allowed.

In Queensland, The Hood points out that a Tribunal has ruled ex gratia payments are forbidden: “Moneys are not to be disbursed from [its] funds except to meet the liabilities incurred by the body corporate in performing its duties and functions or exercising its powers and authorities under the Act …”

And he quotes a couple of NSW rulings, including this: “The payment of money by the Owners Corporation to a third party in circumstances where the Owners Corporation has not received any benefit in return cannot be regarded as being in the interests of all of the lot owners.”

Finally, Special Counsel Richard dApice (AM) has weighed in to agree that these payments are illegal and he has a very interesting take on who should pay the funds back to the owners corp.

But what if the majority of owners are passionate about an issue?  There is a way they can contribute that’s perfectly legal, and that’s all HERE.

Elsewhere on the Forum:

How do you deal with an owner who undermines the committee and disputes its decisions, often misrepresenting the facts if not telling downright lies to owners?  That’s HERE.

Does an owner have any rights when they are unfinancial? That’s HERE.

Solar power company wants to pay strata managers to promote their product with strata committees.  Is this a good idea? That’s HERE.

Is there such a thing as a glass safety audit and do we need to have one carried out?  That’s HERE.

Is there a law that says how long we have to leave Real Estate for rent and for sale signs on common property?  That’s HERE.

There are a lot more questions, answers, debates and discussions on the Flat Chat Forum.  Register, login in and subscribe to your topic of choice and you won’t miss a thing.

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