How are 99yr lease terms of common property fairly calculated to reflect the benefit of exclusive use to private lot owners? How do they work in relation to lot entitlement?
It is difficult to assess what is the appropriate value that an Owners Corporation should put as the rent or payment for a 99 year lease as each circumstance will be different.
In Victoria, a 99 year lease can be as valuable as having the land registered in your name. The value will depend on the area to be leased and the value that the area adds to the person leasing it.
It is difficult to assess what is the appropriate value that an Owners Corporation should put as the rent or payment for a 99 year lease as each circumstance will be different and there is no legal requirement that it be for a particular sum. As common property does not attract lot liability, the only payments the Owners Corporation will receive from a 99 year lease are those set out in the lease document. This could include rent, outgoings or other contributions. It is important that such leases are appropriately drafted, that the Owners Corporation obtains expert advice (including legal and potentially valuation advice) and ensures that the appropriate resolution is passed authorising the lease.
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Phillip Leaman specialises in Owners Corporations law, adverse possession and compulsory acquisition and is the Principal for the Owners Corporation team at Tisher Liner FC Law. Phillip provides practical and strategic advice to Owners Corporations in respect to all types of disputes concerning the Owners Corporations Act 2006, defect claims arising from original building works under the Domestic Building Contracts Act 1995 and disputes between lot owners, contractors and managers. He also assists Owners Corporations in governance and other property law advice required such as interpreting plans of subdivisions, leasing and licensing, adverse possession and dealing with managers and contractors. He acts for Owners Corporations in Victoria and the Australian Capital Territory. Phillip Leaman has been recognised on the Best Lawyers List between 2019 to 2022 in the category of Real Property Law. For information useful to Owners Corporations see our website at: https://tlfc.com.au/expertise/owners-corporation/
Phillip is a regular contributor to LookUpStrata.
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