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Out-of-date by-laws mean pet bans will stay

Dog and cat owners in apartments and townhouses need to sit and stay.  It could take decades for the proposed changes to the standard by-laws to make any difference to majority of strata residents’ chances of having a pet in their homes.

Even when they come in, probably late next year, NSW Fair Trading’s mooted by-laws making permission for pets the default rather than the exception will not be retrospective and they’ll be far from compulsory.

The by-laws currently in place in your existing building will stay exactly the same, regardless of any changes in the standard by-laws.  They will only apply to strata schemes created after the law is changed.

It’s up to you and your neighbours to change your current by-laws but that requires an overwhelming majority of owners, voting on the basis of their unit entitlements at a general meeting, to agree. (For a comprehensive guide to how to change by-laws in different states please scroll down the page to “State By State”)

This ‘ratchet effect’ where, for instance, a small number of owners of larger apartments resist change, can lock existing buildings into by-laws that were devised decades ago.

That’s one of the reason’s Fair Trading’s policy wonks are apparently looking at ways of making it easier to change by-laws. Their stated hope is to make strata schemes more self-regulating, with by-laws that reflect the lifestyles of their current residents, rather than being stuck with out-of date, one-size-fits-all rules that suit only a minority.

One suggestion, say insiders, is to reduce the threshold of votes required from 75 percent to two-thirds or even 60 percent, making it easier for owners to update their by-laws  … but not too easy.

Right now, even if 70 percent or more of owners were in favour of pets, for instance, just a quarter of those who turned up and voted at a general meeting – or, significantly, owned a quarter of the real estate of all those voting – could block changes to anti-pet by-laws.

Even worse, a highly motivated minority can slip by-law changes past frequently disengaged and apathetic owners – a low turnout at a general meeting is the norm rather than the exception –  then block any return to the status quo when their neighbours wake up to what’s happened.

But that’s NSW.  The methods for changing by-laws vary dramatically from state to state with no two legislatures operating under the same rules.

STATE BY STATE

In Victoria, if you don’t have a specific rule in place and there is one in the Model Rules, then the default by-law applies. The default rule (by-law) on pets basically says if you have a pet and it’s a nuisance and you’re told to get rid of it then you have to do so.  Note the assumption that you could have a pet.

So what do Victorians do if they don’t have a pet by-law and they don’t like the Model Rule?

Like NSW, in Victoria by-law (or ‘rule’) changes require a special resolution vote which means 75 percent of votes at a general meeting have to be in favour.  However, if more than 50 percent of votes but less that 75 percent are in favour and not more than 25 percent are against, the motion is passed as an Interim Special Resolution.

What that means is that the secretary of the Owners Corp has to tell owners this has happened within 14 days, inviting objections to it.  If 25 percent of owners object within 29 days of the initial meeting, it fails.  If they don’t, the rule change goes through.

Victoria also has a postal ballot system in strata which can pass Special Resolutions and change rules on the same basis but without having to hold a physical meeting.  You’ll find more detail on that HERE.

In Queensland you need two-thirds of votes cast at a general meeting to be in favour of the change, provided those who vote against represent no more than 25 percent of the lots.

Confused?  Of course you are. This is how it might work – you have a block of, say, 100 units and they all turn up or send votes to a general meeting (yes, this IS hugely hypothetical).  A by-law change is proposed and 67 owners are in favour.  So far, so good.  But the other 33 percent all vote against, representing more than 25 percent of owners so the motion fails.

If, however, only half the owners turned up or sent votes to the meeting (a much more likely scenario) and 34 of them voted for the change (68 percent) and the other 16 voted against, the motion would pass because only 16 percent of the total owners (rather than voters) had said no.

Add in complications like limits on proxy votes, lot entitlements and voting by email and you have a system that, like NSW’s can be easily manipulated by an active and organized minority, especially one resistant to change.

In the ACT by-laws can be changed by a special resolution which means that less than one-third of people present (including proxy votes and absentee votes) have voted against the resolution, and more votes have been cast in favour of the motion than against it.

Note that subtle difference – it’s not fewer than one third of people actually voting, it’s one third of people at the meeting either in person or represented by proxy or by postal vote.

Things are a lot simpler in South Australia.  Again, you require a special resolution to change a by-law but it has to be supported by two-thirds of all owners, not just those voting at a general meeting.

And just when you think every possible variation of the management of by-laws has been devised, we move to West Australia where by-laws are divided into Schedule 1 and Schedule 2. The first lot appear to be about basic rights and responsibilities – everything from how to elect your committee to being allowed to decorate your own home – and they require a vote “without dissent” to pass them. A vote without dissent in WA means that nobody who turns up at the meeting or sends a proxy vote, has voted against the motion.

Schedule 2 By-laws in WA cover things like parking, children playing on common property and drying laundry and can be changed by special resolution. A special resolution in WA is passed when votes in favour represent ownership of  no less than 50 percent of the lots or unit entitlements AND the votes against represent no more than 25 percent of ownership.

To take that fictional 100-lot block again if only half the owners vote and even one says “nay” then the motion fails because it didn’t reach the 50 percent threshold. But if 75 owners vote and 24 say no and the other 51 say yes, then it’s passed (but only just). Best of luck to our WA readers when you get a couple of massive blocks mostly owned by overseas investors – try getting your required 50 percent of informed and engaged owners then.

In WA the Schedule 1 and 2 by-laws apply to all strata schemes but with exisiting by-laws that are additions to or changes of these by-laws also being accepted.

In Tasmania, by-laws can be created or changed by a simple majority at a general meeting.  Tassie is also one of those states where, if a by-law (or ‘article”) doesn’t exist in a specific strata scheme, then the one in the standard scheduled by-laws applies.

In the Northern Territory you can change ‘articles’ by special resolution, which requires that two-thirds of owners voting are in favour but no more than 25 percent of unit entitlements are held by those voting against.

It’s worth noting that in most if not all jusridictions, an owner can call for a poll vote, where the votes are tallied on the basis of unit entitlements (ownership share), which supersedes a simple show of hands.

You will find links to all the various rules and regulations about changing by-laws across Australia HERE.

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