Enter your email Address

  • Home
  • What is strata?
    • Strata Legislation
    • What is Strata?
    • Strata Property Basics: Strata Owners Corporation
    • Strata 101: Strata title
    • Understand Strata Management with this Five-Minute Guide
    • Cracking the Strata Fees Code
    • Strata Finance
    • 2021 Updated Guide: Master the Art of Strata Insurance
  • Strata Topics
    • Strata Information By State
      • New South Wales
      • Queensland
      • Victoria
      • Australian Capital Territory
      • South Australia
      • Tasmania
      • Western Australia
      • Northern Territory
    • Strata Information By Topic
      • COVID-19
      • By-Laws & Legislation
      • Smoking
      • Parking
      • Noise & Neighbours
      • Insurance
      • Pets
      • Your Levies
      • New Law Reform
      • Maintenance & Common Property
      • Committee Concerns
      • NBN & Telecommunications
      • Building Defects
      • Renting / Selling / Buying Property
      • Strata Managers
      • Building Managers & Caretakers
      • Strata Plan / Strata Inspection Report
      • Apartment Living Sustainability
  • Blog
    • Newsletter Archives
  • The Strata Magazine
    • The NSW Strata Magazine
    • The QLD Strata Magazine
    • The VIC Strata Magazine
    • The WA Strata Magazine
  • Advertise With Us
    • Site Sponsors
    • LookUpStrata Site Advertising
    • Your Own Branded Newsletter
  • About Us
    • Testimonials for LookUpStrata
  • Help
    • Ask A Strata Question
    • Q&As – about the LookUpStrata site
    • Sitemap

LookUpStrata

Australia's Strata Title Information Site

Whitbread Insurance Brokers
Australia's Top Property Blog Dedicated to Strata Living
You are here: Home / Committee Concerns / Committee Concerns NSW / NSW: Q&A What Do We Do When A Developer Comes Knocking?

NSW: Q&A What Do We Do When A Developer Comes Knocking?

Published June 6, 2019 By Yuhao Gu, Omega Legal 7 Comments Last Updated October 15, 2020

Sharing is caring!

5shares

This Q&A about what happens in NSW when a developer contacts your building has been supplied by Yuhao Gu, Omega Legal.

Jump directly to the QUESTION you are after:

  • QUESTION: We have five owner/occupiers. Seventy-five-percent of five is 3.75. Does that mean that only three owner votes are required for sale? Does it round up or down?
  • QUESTION: When a developer contacts your building with an offer to buy, what steps should you take? What are the committee member’s obligations to the lot owners? What questions do you need to ask the developer?

GET NOTIFIED WHEN WE PUBLISH NEW Q&As, NEWS AND ARTICLES TO THE SITE

Question: We have five owner/occupiers. Seventy-five-percent of five is 3.75. Does that mean that only three owner votes are required for sale? Does it round up or down?

Answer: If you don’t know the unit entitlements of the other owners, then best have at least 4 out of the 5 owners who fully support your vote.

In NSW, a special resolution is a vote by unit entitlement with no more than 25 percent of the total number of votes cast against it. The strata scheme plan determines the unit entitlement for each lot. Not all lot owners have the same unit entitlement.

If you don’t know the unit entitlements of the other owners, then best have at least 4 out of the 5 owners who fully support your vote.

Yuhao Gu
Omega Legal
E: [email protected]
P: 0402 990 108

This post appears in Strata News #255

Advert NSW Mag Banner

Question: When a developer contacts your building with an offer to buy, what steps should you take? What are the committee member’s obligations to the lot owners? What questions do you need to ask the developer?

A developer has contacted our building via phone and he has requests I pass on his inquiry. He is interested in buying our block of apartments and would like to hold a meeting to address all owners within the building. As a Committee Member, at what point do I become liable or responsible to pass on this information? Our building has around 50 units with only a few owner/occupiers. At the moment, I have no interest in selling.

Answer: As a strata committee member, you have the duty to act in the benefit of the owners corporation with due care and diligence.

The Strata Schemes Development Act 2015 (NSW) (Act) provides the processes for the acquisition of an entire strata scheme. Since your strata complex was likely registered before 30 November 2016, the majority of the owners (more than 50% of the owners) need to first agree for the processes in the Act to apply to your scheme in a general meeting (opt-in meeting), otherwise the developer may have to acquire each unit in the Strata individually from its owner. For an overview of the strata renewal process visit the NSW Office of the Registrar General webpage.

As a strata committee member, you have the duty to act in the benefit of the owners corporation with due care and diligence. Some initial steps for your consideration include:

  • qualify the developer’s interest by asking them to put their expression of interest in writing to the owners corporation, rather than approaching you as an individual
  • avoid putting yourself in a position of conflict – even if you do not presently have any intention to sell does not mean you can outrightly reject an approach by the developer for the entire strata if their approach is a genuine expression of interest
  • consult the strata committee about any preliminary information you have received from the developer before taking further action.

What preliminary information can the developer provide before calling the ‘opt-in meeting’?

developers offer buy building Before the strata committee calls the opt-in meeting, it would be prudent to ask the developer to substantiate that their interest is genuine by asking for written expression of interest. The expression of interest could outline some important preliminary information to satisfy the committee members that the developer’s interest is genuine and therefore warrants further exploration.

The information could include background on the developer, current valuations of the property, indicative proposal for the acquisition, its source of funding, and any fee reimbursement for the owners corporation to undertake the required work to progress the developer’s request.

If the strata committee is satisfied with the developer’s written expression of interest they can then call the opt-in meeting for the owners to decide whether the acquisition processes prescribed by the Act should apply. If the majority of the owners do not agree, then no further action can be taken in respect of the processes under the Act. The developer may still negotiate with each owner for the acquisition of individual units.

What if the owners opt-in?

Once the owners opt-in to the processes under the Act, the developer will need to submit a strata renewal proposal, which is a prescribed document under the Act for consideration and approval by the owners at a general meeting.

At least 75% of the owners by lot need to approve the strata renewal proposal. This majority is a much higher threshold than the usual standard for passing of a resolution under an ordinary general meeting (which is normally the majority of the owners present/by proxy).

If the strata renewal proposal is approved, then certain prescribed steps under the Act will need to be taken, including obtaining a court order for the acquisition by the developer, before the sale of the entire complex can be affected.

If your strata scheme has few owner occupiers, attendance of the general meeting by a sufficient number of owners to approve the strata renewal proposal could be quite a challenging task. Therefore it is important that before any effort is spent accommodating the developer’s request, steps are taken to verify the genuineness of the interest and readiness of the developer.

Yuhao Gu
Omega Legal
E: [email protected]
P: 0402 990 108

This post appears in Strata News #255

Have a question about what to do when a developer contacts your building or something to add to the article? Leave a comment below.

Embed

Read next:

  • NSW: Q&A Proxy Votes & Quorum Requirements for Annual General Meeting
  • NSW Strata Renewal: Tips For Oc’s – Finding A Way Through The Renewal Maze
  • NSW: Q&A If Executive Committee isn’t Acting Appropriately

Visit Strata Committee Concerns OR NSW Strata Legislation.

Looking for strata information concerning your state? For state-specific strata information, try here.

After a free PDF of this article? Log into your existing LookUpStrata Account to download the printable file. Not a member? Simple – join for free on our Registration page.

Comments

  1. Avatarpeter hartney says

    January 31, 2021 at 4:36 pm

    Hi, Block of 8 units, a developer expressed interest four units on ground level have different sized courtyards whilst four units on first level have none. How do we treat area of large common area and car park value.

    Reply
  2. Avatarmichael cretikos says

    October 26, 2020 at 5:55 am

    My experience of the value of strata property is that the value of the buildings is much higher than the Valuer General’s value upon which rates are applied for each strata lot.

    Example; Rates are applied on each lot according to the proportion of valuer generals rate for the site.

    The current land rated value for the site is $2.84m whereas the current market sale values for the lots is c.$9.6m

    There is a difference in what type of valuation is applied and what lot owners would accept, I would presume.

    Reply
  3. AvatarJason says

    September 29, 2020 at 7:53 am

    We have five owner/occupiers. Seventy-five-percent of five is 3.75. Does that mean that only three owner votes are required for sale? Does it round up or down?

    Reply
    • Omega Legal Omega Legal says

      October 6, 2020 at 5:30 pm

      We have responded to your comment in the article above.

      Reply
  4. AvatarJanne says

    May 5, 2020 at 5:58 am

    Should the Body Corporate get a land or site valuation prior to moving forward?

    Reply
    • Omega Legal Omega Legal says

      May 6, 2020 at 11:02 am

      Yes, a land valuation report can be useful in providing an indicative price range.

      Reply
  5. AvatarPeter Ross says

    June 9, 2019 at 3:59 pm

    Thank you Sophia for a really intelligent and helpful response.

    Reply

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Search For Strata Articles

  • Advert Stratabox
  • StrataBox Advert
  • Advert: StrataLoans
  • Advert: StrataLoans
  • Advert: StrataLoans
Subscribe Newsletter

TESTIMONIAL

"The newsletter is very helpful and gives great guidance with commonly asked questions." Gayle, Lot Owner – November 2020
"I love your regular emails and now this fantastic magazine! Keep up the great work. " David, Lot Owner – August 2020

Quick Login

Log In
Register Lost Password

Categories

  • COVID-19
  • Ask A Strata Question
  • New South Wales
  • Queensland
  • Victoria
  • Australian Capital Territory
  • South Australia
  • Tasmania
  • Western Australia
  • Northern Territory
  • ByLaws & Legislation
  • Smoking
  • Parking
  • Noise & Neighbours
  • Insurance
  • Pets
  • Levies
  • Law Reform
  • Maintenance & Common Property
  • Committee Concerns
  • NBN & Telecommunications
  • Building Defects
  • Renting / Selling / Buying
  • Strata Managers
  • Building Managers and Caretakers
  • Strata Reports / Plans
  • Sustainability

Recent Comments

  • Liza Admin on NSW: Owners Corporation Run With No Meetings + No Maintenance
  • Tim on NSW: Who Pays the Fire and Rescue Call Out Fee?
  • h on NSW: Who Pays the Fire and Rescue Call Out Fee?
  • Jennifer Engwirda on QLD: Q&A Privacy and Correspondence within a Body Corporate
  • Tim on NSW: Who Pays the Fire and Rescue Call Out Fee?
  • Leslie on NSW: Strata Records Not Protected by Privacy Laws
  • Jana Koutova on QLD: Q&A Body Corporate Audits and Tax
  • Helen on QLD: Q&A Can I Access Body Corporate Records?
  • IRENE on SCA (WA): Three Changes Strata is Crying Out for at This WA Election
  • Tim coulson on ACT: Common Property Boundary Lines – Class A and Class B

WEBSITE INFORMATION

  • Privacy Policy
  • Terms and Conditions of Use
  • Terms of Use for Comments and Community Discussion
  • Advertising Disclosure
  • Sitemap

SCA Membership

SCA WA Membership

ASK A STRATA QUESTION

Disclaimer

The opinions and/or views expressed on the LookUpStrata site, including, but not limited to, our blogs and comments, represent the thoughts of individual bloggers and our online communities, and not those necessarily of LookUpStrata Pty Ltd. In all instances, information should not be taken as advice and independent legal advice should be consulted.

CONTACT US VIA EMAIL

Copyright © 2021 · LookUpStrata ® Pty Ltd · All rights reserved