21 February 2022

Understanding the different types of resolutions in Sectional Title Schemes

Submitted by Aidan van Vuuren

When it comes to sectional title schemes, not all decisions that need to be made require the same level of approval from the body corporate. For example, the decision to appoint a managing agent, and the decision to amend management rules would require different levels of consensus. This can be confusing for those who live in a sectional title scheme, so we’ve outlined the 5 types of resolutions in sectional title schemes, why they are necessary and what level of approval is essential for each.

Special Resolutions

A special resolution can either be passed by members (property owners) at a general meeting or agreed to in writing.

A written special resolution (round-robin) is passed by members holding at least 75%, calculated both in value (PQ) and number, of all votes.

For a special resolution voted on at a general meeting to be passed successfully, at least 75% calculated both in value (PQ) and the number of the votes of the members, (present or represented by proxy at the meeting) must agree with the decision by voting in favour of it.  If the special resolution is passed by members holding less than 50% of the total value (PQ) of members vote,  the body corporate cannot implement the decision for a period of 1 week, unless trustees deem immediate action absolutely necessary.   If there are 25% of the total votes of all members in value (PQ) who are not in favour of the special resolution, they can request in writing for another SGM to reconsider the resolution, provided this is done in writing within 7 days of the resolution being passed. Then, trustees will not be able to implement the resolution until the special resolution has been passed once again

Special resolutions can be used in a variety of situations, including

    • Extending a section
    • Changing the conduct rules
    • Cancelling notarial registered exclusive use areas
    • Extending insurance to cover more than what is prescribed
    • Authorising any remuneration to any trustees who are owners
    • Effecting “reasonably necessary” improvements on common property 
    • Borrowing money

Written Consent

In certain circumstances, all owners in the sectional title scheme are required to give their written consent.  The following decisions require written consent from all owners: 

    •  Buying land to extend the common property
    • To purchase land to extend common property within the scheme
    • To authorise the use of an exclusive use area, to be used for any purpose other than what is indicated on the sectional title plan

Ordinary Resolutions

An ordinary resolution is taken at a general meeting and requires the majority of the members present or represented by proxy to vote in favour of the resolution for it to pass. 

Ordinary resolutions span across a number of decisions that are usually on the agenda for an AGM.  They can include

    • Remuneration of trustees who are non-owners
    • Installation and maintenance of separate electricity, gas and water meters 
    • Appointing a managing agent

Unanimous Resolutions

There are two ways that a unanimous resolution can be passed. The first is at a body corporate meeting where a quorum of at least 80% (calculated both in value and in number) of the votes of all the members are present or represented and they all agree or vote in favour of the resolution. The second is when the resolution is agreed in writing without a meeting,  by 100% of the scheme members.

Unanimous resolutions include, but are not limited to, the following decisions:

    •  Amending management rules
    • Making improvements or alterations to common property that isn’t reasonably necessary 
    • Selling common property
    • Lending money from the body corporate’s account
    • Destroying the building comprised in a scheme
    • Leasing common property for more than 10 years

Trustee Resolutions

Trustee resolutions are to give effect to them performing and exercising the functions and powers of the body corporate. They are passed in trustee meetings where the majority of trustees vote in favour of the resolution, or in writing by a round-robin. Trustees manage the day-to-day running of the scheme, so they meet more frequently to pass resolutions on the following types of decisions:

    • Appointing a managing agent
    • Appointing replacement trustees if someone, for example, resigned
    • Cancelling or refusing to renew a managing agent’s contract 
    • Establish and maintain the levy/administration fund and reserve fund

Many of the resolutions mentioned in this article can result in a body corporate needing to find funds for a project that they hadn’t budgeted for. Here’s where Propell comes in, with our solution called Project Loans for body corporates who can’t let their budget get in the way of their plans. Project Loans is an unsecured revolving loan facility provided to sectional title schemes and homeowners associations. They can access funds immediately to complete projects like maintenance, upgrades, repairs and energy-saving solutions, or use the funds to settle municipal arrears or fund professional services such as legal fees and consulting fees. Finance for Body Corporates Here.

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