Quorum, and its ability to self-destruct your Apartment Building's Management Committee.
Unless you have a lot of experience with members organisations, unions, company shareholders meetings and so on, you may never have heard of Quorum.
But this little thing, is probably the #1 hazard to most apartment building and communal resort management committees. Quorum, or specifically a lack of Quorum is the equivalent of your Management Committees Kryptonite.
And you must protect yourself from it at all costs! Ok I am getting a bit overdramatic, but you get the point
What is Quorum?
Quorum is basically the minimum number of people that need to be at a meeting for that meeting to proceed.
Communal property (shared property such as apartment buildings, complexes and resorts) is governed by a specific law the Immovable Property Act (cap224), and one of the requirements of this law is that when holding a general meeting of the owners (which you must have every year), you must have Quorum.
The Law sets that Quorum for the Annual General Meeting of Owners (AGM) is 50% of those eligible to vote at that meeting should either be present in person or have someone there representing them on their behalf (a Proxy).
To explain “Eligible Owners”, these regulations also state that while everyone can attend the meeting only those who have paid their share of the communal expenses may vote at this meeting, these are the eligible to vote owners.
How do you calculate if 50% of the property owners are represented?
When calculating quorum, you disregard any unit that is in arrears with their communal fees almost as if their property does not exist.
E.G If you have 20 units in your building, but 5 do not pay their fees you act like your building only has the 15 paying units and need to check that half of those 15 are represented.
Unfortunately, it’s not that simple, but I am sure you already guessed that.
The thing that complicate this, is that quorum is not counted by units, or even by unit size. Quorum is calculated based on that units’ proportion of joint ownership (PJO) which itself is based on the unit’s Official Value.
So, if you have 10 units in your building, your quorum may not be 5 units, you may need 8 of the smaller lower valued apartments or 2 of the larger higher valued ones, whatever adds up to 50% of the PJO.
Unfortunately, I don’t have room to go into this calculation in this article and plan to publish a separate article or perhaps even a live training event on this at a future date. But if you own a copy of The Ultimate Committee Handbook, you will find much more detail about quorum, including how to calculate the PJO In Chapter Two: The AGM and Chapter Seven: General Committee Operations. If you don’t own a copy you can get one by clicking this link.
Why does Quorum matter?
Many buildings don’t follow the requirements for quorum, either because they don’t think they will achieve quorum so pretend the requirement does not exist so they can proceed with the meeting, or because they feel it’s too complicated to calculate and unnecessary.
It’s a common opinion that providing you make the effort to advertise the meeting, who turns up is who turns up and the meeting will proceed anyway.
The problem with this is the regulations specifically state that without Quorum no business can take place, so if you cannot prove (with a good set of AGM Minutes) that you met this requirement then the meeting and all decisions made at that meeting (including budgets, committee elections, custom regulations etc) could be ruled invalid.
This would be a major problem if you ever need to take a debtor to court, need to enforce a breach of the regulations by a unit owner, or an owner legally challenges a decision or the overall legitimacy of the committee.
What if you do not have Quorum at your Annual General Meeting?
Under the regulations, for a General Meeting if you don’t have quorum then you must wait for 30 minutes for late arrivals and if you still don’t have quorum you MUST postpone the meeting and reschedule it for 1 week later at the same time and location.
What if you still don’t have 50% of the owners at this second meeting?
This is where the law is very well written, the requirement for 50% quorum is only for the first attempted meeting.
If at this second meeting attempt you still do not have quorum, you simply need to wait 30 minutes to allow for late arrivals. After this waiting time, you can proceed with the meeting with whoever is present and eligible to vote and providing you organise the rest of the meeting within the regulatory requirements this meeting will be considered legal and all decisions binding.
What if you don’t have enough information to accurately calculate quorum.
Once a buildings title deeds are issued, getting the Proportion of Joint Ownership and Official Values of each unit is fairly simple. As an owner you can attend the land registry and submit a N50 application to get a document with all this information for every unit in your building.
But if you do not yet have title deeds then this document will not detail all this information.
If for any reason you doubt the accuracy of the information you have, or cannot get the information you have to assume you do not have quorum at the first meeting and reschedule. At the second meeting after the waiting period those present and entitled to vote will counts as quorum and you can proceed with the meeting.
What about an Extraordinary General Meeting (EGM)?
If you need to call an Extraordinary General Meeting during the year, whether it’s to elect a new member of the committee or vote on a specific decision item this is still considered a general meeting and many of the same regulatory requirements apply, including Quorum.
So, you will need to follow all the same quorum requirements as an AGM.
What if while reading this article you realise you did not have Quorum at your last meeting?
If you feel that you did not have quorum at your last meeting, you should plan to correct this as soon as possible.
If you have an AGM coming up, just make sure you follow the requirements at this meeting, and if you don’t it may be advisable to call an EGM.
You can frame this as you wish but you may want to say you have recently become aware of a requirement that needs to be met, and in an continuing effort to ensure that the building is operated in the best way possible you feel it’s necessary to call an extra meeting to meet this requirement.
A Final Important Note.
There are quite a few rules and requirements for how your General Meetings are organised that must be followed exactly.
The Annual General Meeting (AGM) of your apartment building, complex or resort is probably the most important event of the year, and in my opinion organising it correctly is the most important task of your management committee.
Unfortunately, despite its importance, it’s also where I see the most common mistakes made by committees. I must say that almost every committee I have every worked with have always worked in good faith, but the AGM is where despite good faith, any mistake can have serious consequences, for the unit owners and the committee members.
I cannot emphasise enough to make sure that before holding your next annual general meeting to go through the regulations and make sure every step is followed!
If you are unsure of any particular item look through the articles and videos on the Cyprus Communal Guide as I have most likely covered it.
If you would like a comprehensive resource to take you step by step through organising your annual general meeting, this is included in the Ultimate Committee Handbook (if you don’t already have a copy you can get one by clicking this link).
Alternatively, if you want complete peace of mind, you can look at outsourcing the organisation of this meeting to a professional third party. I do also offer an AGM 'Done For you' Service
Looking for more?
If you are a member of your management committee, (or are looking to set one up) you will know that while the communal property regulations are comprehensive, they are sometimes a little difficult to understand and even once understood its not always easy to apply these generic regulations to your individual building with its specific challenges.
To help with this problem my most recent book the Ultimate Committee handbook gives you detailed and step by step instructions on every aspect of being on your committee and running your building. It explains the communal property law in simple terms including real world examples and instructions on how to best apply these regulations.
To get more information on this book, and view a book preview you can click the below link.
Unlock the true potential of your apartment building or resort with The Ultimate Committee Handbook.
The Cyprus Communal Guide
Helping you unlock your buildings true potential.