Should you attend your next Strata meeting? Changes to Strata NSW Laws on Collective Sale and Renewal take effect mid 2016 –the numbers have changed!

The bills to amend the current Strata Schemes Management Act and Strata Schemes Development Act were passed at the Parliament on 28 October 2015. The changes are expected to be introduced in the middle of 2016. Amongst the list of extensive changes introduced, one of the key changes was the law on collective sale and renewal.

Current Strata laws allow for the termination of a strata scheme under certain circumstances such as when there is a unanimous vote in support from all the owners. Under the reformed law, the requirement has been reduced to 75% of owners. This would mean that there may be a situation where 25% of the owners are forced into sale or renewal. To some owner groups however, this new law would be a significant advantage and relief.

To assist owners there will also be schemes to compensate the lot owners with at least the market value of their lot plus moving costs, as detailed in the Land Acquisition (Just Terms Compensation) Act 1991

The new process introduced under the reform will apply only to existing schemes if the owners corporation agrees to opt in to the new law. If the majority of owners, (50% or more), don’t support the decision, no further action can be taken. New Strata projects will automatically come under the new regulations.

In order to initiate the process the Strata Committee, (Executive Committee), would be required to hold a general meeting to discuss the proposal for the renewal or collective sale. If the majority of owners (50% or more), are in support of the proposal then the Strata Committee would develop a plan to carry out the proposal for renewal or collective sale. There would need to be number of meetings to determine the contents of the plan and professionals to be employed, such as valuers, lawyers, and tax experts to assist them. The plan should also list the compensation that is to be paid to each lot owner in dollar terms.

The final proposed plan developed by the Strata Committee after meetings with the owners would lapse if it is not supported by 75% of owners within 12 months.

Once there is a 75% support from the owners, the final plan for renewal will then be referred to the Land and Environment Court for final consideration. The Court would consider whether appropriate processes have been properly followed in accordance with the law. The Court in most circumstances, if required, would also encourage owners to resolve any disputes through conciliation or mediation.

The Court has the power to reject a renewal plan if it was found that the plan was not made in ‘good faith’ or followed due process. The Court will also examine the amount to be received by each owner in accordance with Land Acquisition (Just Terms Compensation) Act 1991.

Next time there is a notice calling for a Strata meeting, make sure to pay close attention.

Koffels can assist with planning submissions and/or in the event of a dispute. Always seek qualified support in such events. Like your building, projects going forward need to be built on a solid foundation. Getting help after the event is always a much harder route to resolution.

Min Hur

Associate