Collective Sale and Renewal
On 1st July 1961 the NSW Conveyancing (Strata Titles) Act came into force with the first strata being registered in Burwood. 55 years on and we now see a lot of strata buildings become very tired with minimal refurbishment and updating. On 28th October, 2015 the NSW Parliament passed legislation in relation to strata schemes in NSW. This new reform makes it possible for owners in a strata scheme to jointly end the strata scheme so the site can be sold or developed. The reforms are intended to promote urban renewal of our ageing strata schemes. The changes allow for only 75% of the owners to be in agreement to end a strata scheme. Current laws require a unanimous support to end the strata scheme.
Steps for Collective Sale and Renewal
Strata schemes will have to follow a process to ensure all owners are treated fairly and equally and will at least compensate the owners for the market value of their lot plus moving costs.
Firstly 50% or more of the Owner’s Corporation must support the idea or negotiations can go no further. The Executive Committee must first consider a proposal for the collective sale and renewal process. It will then call a general meeting to be considered by all owners.
A committee will need to be elected to investigate and develop the proposal. The committee can engage professionals including lawyers, accountants and property professionals to assist in preparing the proposal. The collective plan is to assure lot owners make informed decisions on the sale of their property. It will show the amount each lot owner will receive, the proposed settlement date, plans for moving out of the building and also detail costs that the Owner’s Corporation will be liable for.
Finally the proposed purchaser or developer must give a full and frank statement as to the intended use of the property for consideration by the Land & Environment Court.
Lot owners will have at least 60 days to consider the proposal and seek advice. For the plan to be approved it needs at least 75% of owners to agree or the plan will lapse after 12 months.
Final consideration is given by the Land & Environment Court. The court will decide whether the process has been followed and try to resolve any disputes through mediation. The court will also look at each owner’s entitlement is just and equitable and adheres to the principles of the “Just Terms Compensation”.
This new law comes into effect in the second half of 2016. Should you be interested in discussing the full potential of your strata scheme contact the experts at your local Taylor Nicholas office.