Section 103 of the Strata Schemes Management Act 2015 (NSW) explains that before obtaining paid legal services, a resolution approving the use of this service must be passed at a general meeting of the owners corporation (OC).
However, there are some exceptions where legal services can be obtained without OC approval, but only with approval of the Strata Committee. This is the case when:
- Urgent action is needed to protect the interests of the OC AND the cost of the legal service does not exceed $15,000*;
- Urgent action is NOT needed AND the cost of the legal service does not exceed $3,000*;
- Obtaining legal advice before commencing legal action; and
- Taking legal action to recover unpaid contributions, interest on unpaid contributions or related expenses
To simplify this:
- OC approval is NEEDED when the legal service costs over $15,000, regardless of whether it is urgent or not.
- OC approval is NOT NEEDED when the legal service is urgent and not over $15,000.
- OC approval is NOT NEEDED when the legal service is not urgent and not over $3,000.
Therefore, if you are on the strata committee and you believe that legal advice is needed, call a general meeting to seek approval for the use of legal services, unless the exceptions suit the situation, in which case you need a majority decision of the Strata Committee only.
*This amount is prescribed by Regulation 26 of the Strata Schemes Management Regulation 2016.