This article about Strata Renewal in NSW has been supplied by Bannermans Lawyers.
The level of interest in the strata renewal of existing strata schemes continues to increase despite a fall in property values in the Sydney market.
This interest is either from lot owners working collaboratively together to find a buyer, where owners are achieving inflated prices for their units selling collectively rather than individually, or, when a developer may approach an owners corporation with an offer to purchase the whole site.
This is particularly evident in areas which have been re-zoned or where blocks are underdeveloped within existing planning regulations.
When 100% support for a sale is not achieved, a sale is still possible as a result of the strata renewal legislation commenced on 30 November 2016 pursuant to Part 10 of the Strata Schemes Development Act 2015 (Part 10) if owners holding more than 75% of lots and unit entitlements are in support of the sale.
Some important tips for owners corporations in maneuvering the Part 10 maze are:
- Be aware that the developer’s solicitor cannot also act for the owners corporation. The owners corporation requires its own lawyer.
- The owners corporation is the applicant in the Part 10 proceedings, not the developer.
- It is the owners corporation’s application which will fail if all of the technical legislative steps required under Part 10 have not been followed.
- There are strict time limits for various meetings to be held and documents to be provided after receipt of a Strata Renewal Proposal by an owners corporation. If one of these time limits is missed, this could potentially affect the Court’s power to make the orders.
- All meeting notices and procedures must be adhered to.
- The Part 10 process is expensive and external valuation and possibly planning consultants and lawyers are required.
- Early steps should be taken to enter into an agreement with the developer to indemnify all costs incurred by the owners corporation associated with the Part 10 process.
- Part 10 provides for the owners corporation paying a dissenting owners’ reasonable costs of the proceedings. These costs should also be indemnified by the developer otherwise the owners corporation may find itself having to provide security for costs in the Court proceedings for the dissenting owners.
- The Strata Renewal Plan is prepared by the Strata Renewal Committee elected by the owners corporation, not the developer. The Plan must be ‘just and equitable in all the circumstances’.
- Owners should obtain independent tax advice in regards to any sale transaction.
- NSW: Strata Renewal and lot owner consent – what percentage of support is required and when?
- NSW Strata Title, Strata Scheme, Strata Plan. What is the difference?
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North Sydney NSW 2060
The information contained in this article is general information only and not legal advice. The currency, accuracy and completeness of this article (and its contents) should be checked by obtaining independent legal advice before you take any action or otherwise rely upon its contents in any way.
This post appears in Strata News #231.
This article has been republished with permission from the author and first appeared on the Bannermans Lawyers website.