Unfinancial Owners Can’t Vote… Sometimes!
By Jennifer Paddock
You’ve probably heard that if an owner of a unit in a sectional title scheme is in arrears with his levies he is not entitled to vote. But, like all things sectional title, it’s not as simple as that…
I like the terminology used in Australia – they refer to an owner in arrears as being “unfinancial”.
What does it mean to be “unfinancial”?
It means that an owner has outstanding contributions payable to the body corporate in respect of his unit – ie. he is in arrears.
How does being unfinancial affect an owner’s voting and other rights?
- An unfinancial owner is not allowed to vote for ordinary resolutions at general meetings. An owner is always allowed to vote for special and unanimous resolutions, regardless of his financial status.
- Because the establishment of a quorum is based on the number of persons in attendance that are entitled to vote, an unfinancial owner is not counted for the purposes of establishing a quorum at a meeting where ordinary resolutions are on the agenda.
- Any mortgagee (of the unit whose owner is unfinancial) is entitled to vote as the unfinancial owner’s proxy.
- An unfinancial owner is not eligible to be nominated or elected as a trustee.
- If an owner-trustee falls into arrears, and effectively becomes unfinancial, for more than 60 days and fails to bring his arrears up to date within 7 days of being notified in writing to do so, he automatically ceases to hold office as a trustee.
If you’re looking for the relevant prescribed management rules related to the above, have a look at:
- PMR 64 – No vote in certain circumstances
- PMR 57 – Quorum
- PMR 7 – Trustee nominations
- PMR 13 – Trustee disqualifications
I hope this has been helpful.
If you have any questions or comments – write to me in the comments section below!
Image source: jonmarxism.blogspot.com
Thinking Inside the Box 
Hi – Is this rule still applicable with the new changes?
Dear Lesley,
Thank you for your comment. We are more than happy to help, however we do not give free opinions / advice. Please email us on consulting@paddocks.co.za with regards to your matter, and we can provide you with a no-obligation quote, so that we can assist you.
Kind regards,
Paddocks
Our acting chairman was in arrears with his levy account for more than 60 days. I am not sure whether notice was given to him by the MA but this was unbeknown to me at the time he agreed to act as chairman as I am new to the complex.
We recently had a vote to elect a new MA as notice was given to the current MA by former trustees. I pointed out that votes cast by trustees in arrears for 60 + days would not be counted and this disqualified votes of chairman and another trustee who voted to keep the current MA on for another term.
A week later I find that the acting chairman has renewed contract with current MA who was voted out by count of valid votes from trustees who were not in arrears at the time votes were cast and advises that his arrears have been paid up and he is using his casting and deliberative vote to keep the current MA on for another term.
Do I have any recourse?
Hi there,
Thank you for your comment. Please email us on consulting@paddocks.co.za with regards to your matter, and we can provide you with a no-obligation quote, so that we can assist you.
Kind regards,
Paddocks
is an “unfinancial” owner (who is not a trustee) allowed to attend trustee meetings ?
Hi there, thanks for your question. We answer one question a day on our Facebook page for free. Please Like our Page on FB and re-post your question on our wall. One of our consultants should answer you within a few days. Thank you!
Good day – I would like to find out whether an “unfinancial” owner is eligible to vote in favour of the removal of a chaiperson at a SGM held after the 14 day notice period.
Hi Stacen, we answer one question a day on our Paddocks Facebook Page. Please find our page on FB, like it and then post your question on the wall. Thanks so much 🙂
Good Day,
Please advise if one can still be nominated as trustee if ones normal levies are up to date, but a portion of ones special levy is still outstanding.
Thanks
I fully agree with the logic of the points made and believe that all management rules should be enforced – after all – it is the basis upon which people purchase property in a sectional title scheme. The value of the unit is so critically dependent on how well the scheme is managed. It is the collective responsibility (as well as legal obligation) of every owner to contribute his or her share of the operating expenses. This much is obvious. The other aspect is that when one is living in a collective environment, the agreed standards of behaviour must be adhered to since this also has an impact on the intangible value of the property. In addition, it is also the behaviour if individuals which has a far wider impact and can affect the value of adjoining properties and consequently have a profound negative affect the value of a neighbourhood.