Different types of Resolutions in Sectional Title Schemes

by Liesl Ungerer 

Different Types of Resolutions

Different decisions in sectional titles schemes require different levels of consent, i.e different types of resolutions and consent.  There are five types of resolutions/consent that should be applied in different circumstances:

1. Unanimous Resolutions
2. Special Resolutions
3. Written Consent of all members
4. Ordinary Resolutions
5. Trustee Resolutions

A quick guide as to when each of the above resolutions would apply is available in the paragraphs following this one.

Unanimous Resolutions for Bodies Corporate

A unanimous resolution can be passed in one of two ways – either at a general meeting (30 days’ notice, quorum of 80% and all represented have to agree) of the body corporate or in writing by ‘round robin’ procedure (ie. without a meeting, with 100% of members signing their consent).

The following decisions require a body corporate to obtain a unanimous resolution from its members:

• Amend Management Rules
• Improvements to common property which are not “reasonably necessary”
• Lease common property for longer than 10 years
• Sell common property
• Lease land that is not common property
• Create exclusive use that can be registered with a notarial deed
• Extend a Section 25 right
• Loan money from the trust account

Special Resolutions

A special resolution is a resolution passed by at least 75%, calculated both in number (the number of members present in person or by proxy) and value (the sum of the participation quota), of the members of the body corporate who are present or represented at a general meeting; or agreed to in writing by members of a body corporate holding at least 75% of all the votes calculated both in value and number. The following decisions require a special resolution of the body corporate:

• for the body corporate to purchase or otherwise acquire, take transfer of, mortgage, sell, give transfer of, hire or let units;
• for the body corporate to borrow moneys required by it, in the performance of its functions or the exercise of its powers;
• for the body corporate to enter into leases of parts of the common property to owners or occupiers for periods of less than ten years;
• the extension of a section;
• rules altering the vote values or levy liability (which also required the consent of adversely affected owners);
• substituting, adding to, amending or repealing the conduct rules;
• the creation or amendment of exclusive use rights in terms of the conduct rules in terms of section 10;
• the cancellation of a notarial deed of cancellation of an exclusive use right in terms of section 27(5) of the STA;
• suing the developer;
• insurance against more risks than fire and those prescribed;
• reasonably necessary improvements to the common property or their removal;
• holding general meetings outside of the scheme’s municipal district;
• a decision by members that the managing agent’s contract be revoked;
• authorising the remuneration of trustees who are owners; and
• the creation of a servitude burdening or benefiting the land.

Should a special resolution be passed at an AGM or SGM by 75%, calculated in number and value (PQ), of a quorum representing less than 50% of the total value (PQ) of all members in the scheme, the body corporate must not take any action to implement the special resolution for a period of one week following the meeting where the special resolution was passed, unless the trustees resolve that there are reasonable grounds to believe that immediate action is necessary to ensure safety or prevent significant loss or damage to the scheme. Members holding at least 25% of the total votes, calculated according to value (PQ), of all members in the scheme, may within 7 days from the passing of the special resolution, by written and signed request delivered to the body corporate, require that the body corporate hold a SGM to reconsider the special resolution. At which time, the trustees must not implement the special resolution, unless it is again passed by special resolution, or a quorum is not present within 30 minutes of the time set for the second SGM.

Written Consent

Written Consent quite simply requires all members of the body corporate to give their consent in writing. Written consent of all owners is required in the following circumstances:

• to exercise or alienate a future development right
• to sell a right of extension of the scheme to a third party
• to authorise a section or exclusive use area to be used for a purpose other than shown on the sectional plan.

If a unanimous resolution negatively affects any owner’s proprietary rights (the term ‘proprietary rights’ is not defined in the Act), that owner must provide their written consent before the unanimous resolution is passed. But if the body corporate cannot achieve a unanimous resolution it can go to Court and ask for assistance.

Ordinary Resolutions

An ordinary resolution can only be taken at a general meeting, and requires the majority of represented members to agree. This means that 51% of the quorum present at a properly constituted meeting must vote in favour of the resolution to be passed.

A member is not entitled to vote on ordinary resolutions if they fail or refuse to pay the body corporate any amount due after a court or adjudicator has given a judgment or order for payment of that amount; or if they persist in the breach of any of the conduct rules of the body corporate after a court or an adjudicator has ordered that they refrain from breaching the conduct rules. This disqualification does not apply to special or unanimous resolutions.

The following decisions (which are not standard items on an AGM agenda) require an ordinary resolution of members:

• Installation of separate meters (water, electricity etc)
• Remuneration of trustees who are non-owners
• Appointment of a managing agent (this decision can also be taken by the trustees)

Trustee Resolutions:

Trustees, are tasked with the day-to-day management of the scheme. This means that they need to meet regularly to discuss governance issues and take resolutions.  There are three ways for trustees to make decisions:

• at a meeting of trustees by majority vote, or
• in writing by round robin 
• a resolution by electronic participation

Depending on the circumstances of your scheme it makes sense to use technology to the body corporate and trustees’ advantage.