With land in high demand within Sydney, and some older properties more expensive to repair than to sell, many owners consider selling their strata property collectively. If 100% of the owners are on board then this can be an easily done deal, but if not a strata scheme can follow the collective sale process.
What is the collective sale of a strata scheme?
The new strata legislation in NSW has meant some changes to the way strata schemes can be sold and ended. If the new sale process has been voted in by a strata scheme and certain conditions are met, then owners can collectively choose to sell and redevelop their property if 75% or more of the owners agree. Every one of the owners would need to receive at least market value for their property through this process.
Does that mean my home can be sold out from under me?
There are a number of carefully thought-through measures to make sure the collective sale process does not boot anyone out of their home without fair consideration. First, the owners corporation must opt-in to the new collective sale option with at least a 50% favourable vote, if the strata scheme was registered before 30 November 2016. If a majority vote is not reached, the 75% rule is not available.
If it is an available option, each owner will have at least 60 days to consider their decision and seek advice if they want to. The sale also needs to be approved by the Land and Environment Court, which manages any disputes and can refuse the sale if the process has not been followed correctly or was not developed in good faith. There is also a free advocacy service aiming to assist people from vulnerable groups, such as the aged or disabled.
The collective sale and renewal procedure
- If the process is voted in and a proposal to sell or renew is made, the strata committee must consider this proposal and call a meeting of the owners corporation.
- If a majority vote is reached for the proposal, a strata renewal committee will be formed to develop an in-depth strata renewal plan. This would need to include an independent valuation report and the individual amount that each owner would receive, amongst other details.
- Owners will have at least 60 days to consider the plan and seek independent advice before deciding if they would like to supply a support notice. At least 75% of owners must provide this notice, otherwise the renewal plan will lapse after 3 months.
- Next the owners corporation can apply to the Land and Environment Court for their final assessment and judgement on whether everybody will get their fair share with the agreement.
If successful, the sales process can be set into motion. If a strata renewal plan lapses at any stage throughout the process, there will be a 12 month delay before the plan or a new plan can be considered by the owners corporation.
Detailed information on the 75% rule can be found at NSW Fair Trading. If you have any questions or concerns about the collective sales process, contact your strata manager at Real Property Services.