Compulsory obligation to sell one’s home – new laws apply from 30 November 2016 collective sale or redevelopment of strata schemes

19/12/2017

From 30 November 2016 there has been a change in the strata law with the introduction of the Strata Schemes Development Act 2015.  This act refers to the obligations and processes that apply in relation to strata renewal process, by way of collective sale or redevelopment of the strata.

The process of the collective sale or redevelopment commences with an offer to the Owners Corporation or a proposal to each of the lot owners.  This is the commencement of the process.  If lot owners of more than 25% of the lots reject the offer that proposal does not proceed.

Previously prior to the Strata Schemes Development Act 2015, if you were the owner of a lot within a Strata Scheme you could not be forced to sell.

The new Act does not apply to for example a Strata Scheme with then 4 lots or a retirement village.

The process is very procedural and there are more than 30 steps to be taken before the sale process is completed with the transfer of the property to the purchaser, payment of money and the cancellation of the certificate of title.  Each of the steps should be considered.

One of the critical processes is the requirement of the approval of the plan by the Land & Environment Court.  The Court is required to be satisfied as to various matters including:

1.        The relationship between the owners of the lots and the purchaser and developer has not prevented the plan being prepared in good faith.

2.        That all the procedural steps have been taken.

3.        In relation to a collective sale that the proposed division of the proceeds of sale apportioned to each lots is not less than the “compensation value” of the lot and the terms of settlement under the plan are in all the circumstances “just and equitable”.

4.        In the case of the dissenting owner the terms of settlement under the plan are “just and equitable” in all the circumstances.

This article does not attempt to set out the 30 odd steps which are said to be procedural by most of the Lawyers acting on behalf of the Developers or making commentary.

The opinion of many that it is mostly procedural ignores the expressed obligation that the result must be “just and equitable” in particular to the dissenting owners.

This year we have advised numerous lot owners who have been approached and received offers as to their rights, obligations and possible issues that arise.  Some of the Owners have signed a Put and Call Option, some have agreed under pressure and some have not agreed.

One of the greatest concerns is a dissenting owner putting his or her submission to the Court at the stage that the Owners Corporation and proposed purchaser seek approval of the Court to a collective sale or redevelopment.

As far as we are aware the first application for approval is to be heard in the Land & Environment Court in February 2018.  This relates to a Strata Plan with a small number of lots in which all owners are said to be consenting owners.

A further important facet to be considered is the matter of costs, what will it cost you the lot owner, if you wish to seek legal advice in relation to the proposed collective sale or redevelopment and who covers those costs.  The question of costs is an important aspect to be considered when making a decision in relation to a collective sale or redevelopment whether you are a dissenting lot owner and/or a lot owner wanting to obtain the best possible “monetary compensation” for your lot.

If you have any queries or concerns regarding a proposed collective sale or redevelopment of your strata complex and how it will affect you, please do not hesitate to contact Richard Watson, our experienced Strata Solicitor or his assistant Shereen Da Gloria to discuss your questions and concerns.

This is only a preliminary view and is not to be taken as legal advice without first contacting Watson & Watson Solicitors on 02 9221 6011.