Proposed changes to the Strata Titles Act – Part One
By | 29th Feb 16

Proposed changes to the Strata Titles Act – Part One

Understanding Owners Corporation can be confusing but our in house expert Ronald has compiled key information for our blog readers. This post is part 1 of a 2 part series for those wanting to know more about collective sale and renewal process.

COLLECTIVE SALE AND RENEWAL 

By Ronald Perera

The current law allows for the termination of a strata scheme only under certain circumstances such as when there is unanimous support from all the owners.

As the building gets older and fixtures and fittings become outdated, it becomes costly to upgrade. It is estimated that 35% of all owners corporation buildings in Victoria will need to be redeveloped or refurbished in the near future.

The idea of a collective sale could be the answer in the regeneration of ageing housing stock – which will endeavor to deliver urban renewal and boost housing supply in the places that people want to live.

Under the new reforms in New South Wales, 75% of owners can agree to end their strata scheme instead of a requirement for a unanimous agreement (which is a current requirement in Victoria for voluntarily winding up an owners corporation scheme). This change recognizes the rights of owners to jointly end or wind up a strata scheme and to create an alternative process so the site can be sold or developed. Similar models already operate in New Zealand, Singapore, in most states of North America, and the United Kingdom.

Luckily, there are protection clauses put in place to advise all owners and to assist vulnerable owners and elderly owner-occupiers within strata units.

Fair Trading will establish a Strata Renewal Advice and Advocacy Program to provide free advice for residents. This will include an assistance hotline and a free advocacy service for vulnerable residents.

These reforms will ensure that owners receive at least the market value of their lot plus an extra amount to cover costs associated with moving, as required by the Land Acquisition Act 1991 (Just Terms Compensation).

Any plans for renewal will be referred to the court for final consideration, where the court will consider whether the process has been properly followed. It will initially seek to resolve disputes through conciliation or mediation.

The court will be able to reject a renewal plan based on the criteria set below:

  • If proper processes have not been followed or been developed in 'good faith' 
  • If the amount to be paid to a dissenting owner was less than the compensation value of the lot
  • If the terms of settlement were not just and equitable

For more information on collective sale and renewal through a strata scheme, contact Ronald - owner@advantageproperty.com.au