Strata Law – New rules – Redevelopment Strata Properties – Rights of Dissenting Lot Owners

21/02/2017

Watson & Watson have been advising in relation to Strata Laws and associated difficulties for many years.

There have been very extensive changes to the Strata Laws as from 30 November 2016.

Prior to the changes all Lot Owners were required to be in agreement if a Strata Building was to be sold as a whole.  The changed law now allows under the Strata Schemes Development Act, 2015 that if there is at least 75% of the lots in a Strata Scheme, the Owners Corporation can force the dissenting Lot Owners to join in a sale of the strata building if there is compliance with the Rules and Regulations.

The NSW government has recently introduced changes to the legislation governing redeveloping a strata title schemes. The new rules allow people to submit proposals to an Owners Corporation for the collective sale or redevelopment of a strata scheme. These proposals are called strata renewal plans.

The change to the law is to allow strata renewal plans to take place where there is the support of the owners of at least 75% of the lots. This changed the previous position which was that the termination of a strata scheme required the agreement of all of the owners of the lots.

This means for example that where there are eight apartments in a strata scheme and the owners want to redevelop the building or sell it, then this proposal must have the support of the owners of 75% of the lots, that is of six of the eight lots.

One question that arises is how a person who does not agree to this proposal might respond.

Under the law, a lot owner who does not want to sell or redevelop the building can lodge an objection to the proposal.

The person applying for the strata renewal plan ought to then apply to the Land and Environment Court for an order giving effect to the strata renewal plan.

The court can only make an order giving effect to the plan if satisfied of various things. Those things include the following:

1. The relationship between the lot owners and the purchaser or developer has not prevented the renewal plan being prepared in good faith
2. The steps taken in preparing the renewal plan were carried out in accordance with the rules
3. All notices required to be served have been served
4. If the plan is for collective sale, the proposed distribution of the proceeds of sale apportioned to each lot is not less than a fair value for each lot,
5. If the plan is for redevelopment, the amount to be paid to a dissenting owner Is not less than a fair value and
6. If the plan is for redevelopment, the terms of settlement are just and equitable.

If the dissenting lot owner or objector feels that the terms of any renewal plan are unfair or incorrect procedures have not been followed, there is scope to challenge the strata renewal plan. An example of this would be whether the value offered a compensation for a lot seems to be greatly less than what one would expect for that lot.

The change to the law has just commenced and it will be interesting to see how the courts deal with objections to strata renewal plans by dissenting lot owners.

If all Lot Owners agree to the terms of the sale of all Lots, one does need to proceed by way of a Court order approving the sale but may proceed in a sale by all the Lot Owners.  Such sale(s) needs to be with great care as to responsibility and consequences if disputes arise in the sale process.

If you are faced with question as to whether an Owners Corporation will be able to sell the strata building and achieve a successful strata renewal plan please contact Richard Watson of Watson & Watson in relation to those matters.

There are also in excess of 150 other amendments to the Strata Laws which will affect strata living and the rights of various Owners and the responsibilities of Owners Corporation Executive Committees in relation to the operation and maintenance of the strata property.

The experienced Strata Lawyers at Watson & Watson can assist you in relation to this very important issue that now arises having regard to the amendments to the Strata Laws.  If you have any enquiries in relation to the new Strata Laws please do not hesitate to contact Richard Watson or his assistant Shereen Da Gloria to discuss your concerns.