Approving multiple budgets at an AGM

[lantus]

The MUD act gives good guidance as to budget approval overall but what about where a development has a say 4 tyes of unit each with very different budgets. If one type of unit has a majority then it can approve the budget every time even if the other unit types are not happy as they are all lumped in as a minority.

Would, or has anyone seperated the budgets out and voted then in seperately by the members of each unit type? (ignoring the obvious logistics nightmare/headache.)

 

[shesells]

Do you mean four different budgets or four different methods of fee calculation all paying into the main budget.

In our development we have townhouses, own door duplexes, own door apartments and shared entrance apartments. Unfortunately the way our leases and deeds are constructed, fees are calculated in the same way though we each receive different levels of service.

In newer clusters, fees are calculated based on services received so the calculations are different for each unit type. There is still one central budget and a majority of owners at an AGM can approve the development budget irrespective of what type of unit they own. The directors are charged with coming up with a budget that is fair to all unit type owners, ideally there should be an owner from each unit type on the board of directors to help this to happen.

 

[lantus]

Well there is one budget but each unit type has a different method of service fee calculation.

As I understand it at an AGM there is a single vote to approve all the service fee levels.

However, what if there is 300 of one unit type and 10 of the other 3? How can it be fair that for such a huge service fee variation the units in the minority have no real say. Even if they all attended they could be easily outvoted. The MUD act ensured one member one vote but maybe it could be revised to accomodate the different types of development where specific units with more complicated (or simpler) needs can have a degree of autonomy which is what the act was meant to deliver.

You are right that having directors from each unit type helps. They are still just along for the ride though if one unit type is dominant.

 

[shesells]

If there are 4 different kinds of fee calculation I can't see how any unit type can get a better deal, the fee calculations should make it fairer for all unit types e.g in my development, all unit types pay a share of common area cleaning costs but only shared entrance units benefit from it. In yours, only units that benefit would bear the cost.

It means that a 2 bedroom unit in a shared entrance block would be paying considerably more than an own door 2 bedroom unit, but surely that's fair?

 

[Luternau]

It's the lease that will determine budget apportionment-not the MUD Act. MUD cannot change the lease. As long as the budget apportionment per unit type is fair for all unit types, what you say could and should never arise.
However, your OMC could seek to change the apportionment, but it would be an expensive legal exercise and the change would have to go to a vote of the members. If the majority are adversely affected by the changes, they have the right to block it.

 

[lantus]

It's the lease that will determine budget apportionment-not the MUD Act. MUD cannot change the lease. As long as the budget apportionment per unit type is fair for all unit types, what you say could and should never arise.
However, your OMC could seek to change the apportionment, but it would be an expensive legal exercise and the change would have to go to a vote of the members. If the majority are adversely affected by the changes, they have the right to block it.

Correct, but the MUD act specifies the voting arrangements. If you have the following unit types: -

A - €100 (300units)
B - €1500 (10 units)
C - €4000 (5 units)

Then unit A will hold all the voting power. If there are issues with the budgets for B or C thos unit owers will have no option to reject or modify this budget even. The idea that the lease is a perfect instrument is incorrect. If it is then why have voting approval at an AGM at all? If all leases are perfect there would be no need to vote and MUD act would contain no such provisions.

What I am saying is that it would seem to make sense to have a single budget but then approve say each of the three unit types above by the relevant members IF the directors of that company or members desired such flexibility. It gives those units a degree of autonomy.

The alternative (something we currently do) is to hold informal pre budget meetings so members can review their specific budget and the factors that affect it. That way there are no surprises.