Appointment of an administrator where the OC is dysfunctional

Where the OC is dysfunctional, it is possible to have an administrator appointed by the Tribunal to manage the affairs of the OC. Appointment of an administrator is not to be sought lightly though as it can have a negative effect on property value.

In Lubransky v Owners Corporation No 1 PS519798G [2014] VCAT 1301 an administrator was appointed. The majority of the lot owners wanted to bring an action against the builder of their apartments for alleged defects. To do so requires a special resolution passed by 75% of the vote. The majority lot owners did not have 75% voting power. The builder owned the remaining lots and obviously would not vote to commence an action against herself.

The Tribunal concluded that it was appropriate to appoint an administrator because there was an impasse which made the OC dysfunctional.

The Tribunal also appointed an administrator to the OC in Gleeson v Adams [2014] VCAT 1135 where there was a dispute between three lot owners who each owned a single lot and the remaining lot owner who owned 3 lots. Each had equal voting rights which resulted in a deadlock. In fact, this OC has had an administrator appointed for almost the entire period since 1991.

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