This year saw new strata legislation put in place in NSW which changes the way strata schemes can be ended and buildings sold, especially those that are aging. Land is a hot commodity in Sydney, and greater NSW, and many of the older properties are quite often better off demolished and rebuilt as a new project, on a cost basis. If the new project has been voted in by the strata scheme and a set of conditions are met, then the owners can collectively choose to sell up and allow the redevelopment of their property, as long as 75% of owners agree.
What is the Collective sales process?
The legislation is very clear on how this works with a number of measures in place to ensure the process is fair, and owners are looked after.
● The owners corporation must opt-in to the new collective sales process with at least a 50% yes vote (if the scheme was registered before the 30th November 2016).
● If the 50% vote is not reached, the 75% rule is no longer valid
● Owners have 60 days to consider their decisions and seek legal advice if they wish
● All sales need to be approved by the Land and Environment Court. They have the capacity to refuse the sale if the legislated processes have not been followed.
● An advocacy service is available for those who are aged or disabled.’
● It’s a condition that every owner needs to receive at least market value for their property.
So what is the process?
Once the 75% of agreeing owners has been achieved, the plan for the property is then issued to all owners who have 60 days to review. Owners are then required to register their yes or no. The plan has to be supported by 75% over the 3 month period. Once approved, it then moves to the Land and Environment Court for further consideration. The court can reject the plan if it sees fit.
Try to keep an open mind on the issue. Some of the older buildings may not be safe, and your payout may allow you to move to a better location. Major renovations are costly, and you may end up forking out more in the end. It’s not everyday you get the paid opportunity to start somewhere new!
What are your options if you don’t want to sell?
Apart from not accepting the proposal, there are a few other options to consider. One being alternative dispute resolution. Mediation and arbitration might benefit you and other owners who don’t want the proposal to move forward. There are quite possibly certain aspects of the sale like timing or terms that can possibly be negotiated. You always have the opportunity to be heard. Mediation or arbitration are smarter alternatives to taking these
processes and plans to court. A mediation for example, can commence within 48 hours, and with quite a few of our mediators in New South Wales, they will be aware of the legalities around these types of disputes.
If you are a developer or commercial real estate agent involved in these negotiations or interested in them but don’t know how to get the conversations started contact SHAW and we can help provide the process for everyone to be heard and the way forward.