This Q&A deals with the rights of the lot owner when the Committee explores the termination of a strata scheme in Queensland.
Table of Contents:
- QUESTION: A developer has made an offer on our seven lot scheme. Six owners would like to accept the offer. Can the seventh owner be forced to sell?
- QUESTION: We are an acreage body corporate. If all 7 lot owners agreed, could we terminate our scheme and become individual freehold lots with easements or such to share the road maintenance etc?
- QUESTION: We own both lots in our strata scheme. How can we terminate the strata scheme?
- QUESTION: What does the legislation say about the termination of a strata scheme in Queensland? If 75% of owners want to sell, can the majority force the remaining 25% into selling? How is the price for each lot determined?
Question: A developer has made an offer on our seven lot scheme. Six owners would like to accept the offer. Can the seventh owner be forced to sell?
Seven owners each own a lot in our block of seven units. A developer has made an offer to buy the whole block. Six owners would like to accept the offer. The price offered is reasonable. The final owner refuses the offer and wants to hold out for a ridiculous figure. Can the owner be forced to sell?
Answer: The proposed changes to the QLD legislation would allow a scheme to terminate with a 75% agreement threshold, but only if ‘economic reasons’ exist.
The proposed changes to the QLD legislation would allow a scheme to terminate with a 75% agreement threshold, but only if there are ‘economic reasons’ to do so. I do not know if your situation is an ‘economic reason’, mainly because that term isn’t defined.
You can find out more about the proposed changes about terminating a body corporate in the recording of a recent webinar – Queensland Body Corporate Law Changes And What They Mean For You: Scheme Termination.
Chris Irons Strata Solve E: chris@stratasolve.com.au P: 0419 805 898
This post appears in Strata News #666.
Question: We are an acreage body corporate. If all 7 lot owners agreed, could we terminate our scheme and become individual freehold lots with easements or such to share the road maintenance etc?
We are an acreage body corporate comprising 7 lot owners. The common property comprises 2 access roads to individual properties, 2 automatic gates and 2 intercoms. If all 7 lot owners agreed, could we terminate our scheme and become individual freehold lots with easements or such to share the road maintenance etc?
Answer: Yes, this is possible provided you are also able to obtain the necessary council consents and reach agreement with the owners for all remaining termination issues.
Todd Garsden Mahoneys E: tgarsden@mahoneys.com.au P: 07 3007 3753
Question: We own both lots in our strata scheme. How can we terminate the strata scheme?
We own 2 adjoining blocks of land in Cairns, Qld with 1 industrial building across both blocks. Previous owners created Strata to sell both properties separately. Over time, we have purchased both properties, therefore, we own 100% of Strata.
How can we now Terminate this Strata which has done nothing for more than 10 years?
Answer: A resolution can be passed at a general meeting of the Body Corporate to bring an end to the scheme.
A resolution can be passed at a general meeting of the Body Corporate to bring an end to the scheme. It may be worthwhile involving a town planner to ensure any required council approvals are in place and a lawyer to prepare the motion and provide some specific advice on the issue.
Todd Garsden Mahoneys E: tgarsden@mahoneys.com.au P: 07 3007 3753
This post appears in Strata News #616.
Question: What does the legislation say about the termination of a strata scheme in Queensland? If 75% of owners want to sell, can the majority force the remaining 25% into selling? How is the price for each lot determined?
I own an apartment in a small QLD complex. The managers want to terminate the scheme and sell it to a developer. Can I be forced to sell my apartment to the developer and how is the price for each lot determined?
The manager presented me with a contract. The price offered doesn’t cover my apartment cost and the renovations I completed last year. There has been a verbal agreement of more money and also a lease after the sale, but I’ve received nothing in writing. I haven’t signed either option deed or contract.
What does the legislation say about the termination of strata schemes? If 75% of owners want to sell, can the majority force the remaining 25% into selling? Can I be forced to sell my apartment to the developer and how is the price for each lot determined?
Answer: The manager cannot arrange for the lots to be sold to a developer. Each owner would need to individually agree to this; Any reduction to a lower threshold (such as 75%) does not presently exist.
Section 78 of the Body Corporate and Community Management Act 1997 (Qld) relevantly provides that the Scheme can be terminated through either:
Termination of scheme
- a resolution without dissent and entry into an agreement about termination issues ; or
- by the District Court if it is just and equitable.
A resolution without dissent is only passed if no lot owners vote against the motion.
There has been very little judicial consideration of circumstances of when it is just and equitable. Mahoneys acted in one case that was ultimately resolved by consent with the parties. However, this did consider a number of issues such as the costs to continue maintaining the scheme.
Law reform in this area has been discussed for a long period of time and QUT has published some detailed research on this issue. I have extracted some of that research below:
Determining ‘just and equitable’
The District Court should have reference to the following factors when determining whether a termination plan is just and equitable:
- any structural engineer’s report, quantity surveyor’s report or valuation prepared for the purposes of scheme termination at the scheme;
- any termination plan, collective sales agreement or redevelopment plan prepared by the person proposing the termination;
- the economic reasons for the termination plan;
- the consequences to lot owners (both individually and as a whole) if the scheme is terminated;
- the consequences to lot owners (both individually and as a whole) if the scheme is not terminated;
- the age and condition of the building or any structures on scheme land;
- sinking fund forecasts and current balance;
- the aggregate market value of individual lots compared to the market value of the scheme as a whole in its highest and best use;
- any other factor specified in the relevant Regulation Module; and
- any other factor the Court decides is relevant.
Accordingly, for present purposes:
- the manager cannot arrange for the lots to be sold to a developer – each owner would need to individually agree to this;
- any reduction to a lower threshold (such as 75%) does not presently exist;
- it would not be wise to sign a sale contract that does not include all the promises being made about what you will receive; and
- it might be worthwhile receiving some formal advice as to the documents you have been sent. Option contracts can be relatively complicated as far as sale contracts go.
Todd Garsden Mahoneys E: tgarsden@mahoneys.com.au P: 07 3007 3753
This post appears in the February 2022 edition of The QLD Strata Magazine.
Have a question about termination of strata schemes in Queensland or something to add to the article? Leave a comment below.
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