Unit Titles – Voting When You Haven’t Paid Your Levies

April 9, 2021

in Unit Titles

We act for many Body Corporates and also owners of units in Unit Title developments.

We are frequently asked by both our Body Corporate and unit owner clients questions around eligibility for voting.

The Unit Titles legislation prescribes a number of criteria that must be satisfied for an owner to vote in relation to Body Corporate matters at meetings or by way of postal votes.

One criteria is that to be able to vote an owner must have paid all levies then due for payment.  If the owner has unpaid levies, the legislation is clear they may not vote on any Body Corporate resolution.

What has not been so clear is where an owner has a mortgage over their Unit and has unpaid levies can the bank (mortgagee) vote on a resolution in place of the owner.

Most bank mortgage documentation provides in the fine print that the bank has the power to vote on Body Corporate matters essentially as if it was the owner where it holds a mortgage over the Unit.

However, does the rule prohibiting voting where there is unpaid levies also apply to the bank?

The High Court has recently held that the prohibition on voting where there is unpaid levies applies not only to the owner of the Unit but also to a mortgagee of that Unit.  In the case in question an owner was unable to vote however the bank stepped in and voted in place of the owner however the High Court determined that those votes were invalid and could not be counted.

The High Court’s position is that the rule against voting where there are unpaid levies is predominant and applied to the bank.

If you require any advice or further information on the matters dealt with in this publication please contact the lawyer at Farry Law who normally advises you, or alternatively contact:

Paul Farry
pfarry@farry.co.nz
09 353 6671

The information contained in this publication is intended as a guide only.  It does not constitute legal advice and should not be relied upon as such.  Professional advice should be sought before applying any of the information to particular circumstances.  While every reasonable care has been taken in the preparation of this publication, Farry Law Limited does not accept liability for any errors it may contain. 

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