2016 saw a major overhaul of strata legislation in NSW with over 90 changes. With more than a quarter of NSW’s population living or owning in a strata these changes with effect many of us. This is part 6 in our series summarising of some of the major changes to strata laws and focuses on the new strata renewal process.
The strata renewal changes probably received the most publicity and public debate of all the new strata laws. This is because under the strata renewal process, after a number of processes and safeguards have been complied with, dissenting owners can be compelled to sell their lot if a special resolution is passed by at least 75% of lots in the strata. Note this 75% of lots in the strata not 75% based on unit entitlements.
The strata renewal process steps are essentially:
- The owners corporation is to opt into the new legislation – this only applies if the strata existed before 30 November 2016
- Submission and consideration of a strata renewal proposal by the strata committee and then general meeting
- The establishment of a strata renewal committee
- The development of the strata renewal plan
- The designated process for decision making by lot owners in respect of a strata renewal plan
- Application for orders from the Land and Environment Court to give effect to the strata renewal plan
- The Court making orders to give effect to strata renewal plan.
Interestingly, there is no requirement that the building be in disrepair or nearing the end of its useful life for the strata renewal process to occur.
Any person may give a written proposal for the collective sale or redevelopment of a strata scheme. The proposal is to meet certain requirements and contain certain information set out in the legislation. The person providing the proposal may be an owner or a third party.
Within 30 days of receiving the proposal the strata committee must consider it in a meeting of the strata committee.
If the strata committee decides that the proposal warrants further consideration of the owners corporation, the strata committee must organise a general meeting of the owners corporation within 30 days of making that decision.
The proposal will lapse if the strata committee decides that it does not warrant further consideration or if the owners corporation decides the proposal does not warrant investigation by a strata renewal committee.
If the owners corporation resolves that the proposal warrants further investigation by strata renewal committee, the owners corporation must establish the strata renewal committee to prepare s strata renewal planThere are provisions in the new legislation which detail the composition of the strata renewal committee and who may not be elected on the committee, as well as provisions for the declaring of conflicts of interest. The strata renewal committee may exercise its functions for up to 1 year, unless extended by special resolution of the owners corporation.
If a strata renewal committee is formed it is to prepare a strata reneal plan. The plan must meet to meet certain requirements and contain certain information set out in the legislation
The strata renewal plan is then to be considered by the owners corporation in a general meeting and the owners corporation may by special resolution decide to give the strata renewal plan to the owners for their consideration.
Owners in the strata then have at least 60 days after receiving a copy of the strata renewal plan to consider the contents and to provide a notice supporting the plan in which the owner agrees to participate in the proposed collective sale or redevelopment under the strata renewal plan. The required level of support is the support of owners of at least 75% of lots (not unit entitlements) in the strata.
The strata renewal plan will lapse in a number of circumstances, including where the required level of support is not received within 3 months after the owners corporation decided to give the plan to owners for their consideration.
If the required level of support for the strata renewal plan is obtained, the owners corporation may resolve to apply to the Land and Environment Court for an order to give effect to the plan. A dissenting owner may file an objection to the application to the Court. There are a number of provisions in the legislation dealing with the hearing of the application in the Court, the making and contents of the order by the Court and the effect of the Orders.
If a strata renewal plan is for a collective sale of a strata scheme, the amount to each owner must not be less than the compensation value of the lot. If the strata renewal plan is for a redevelopment of a strata scheme, the amount paid for the sale of a dissenting owner’s lot must not be less than the compensation value of the lot. The compensation value of the lot is the value determined essentially in accordance with the Land Acquisition (Just Terms Compensation) Act 1991.
This article is for general information only and not legal advice. Legal advice should be obtained before taking any action or otherwise rely upon the content of this article in any way. This article was prepared on 17 January 2017 and has not been revised to account for any changes in the law since that time.