The new NSW strata legislation commenced late in 2016 with the
showstopper reform that owners in a strata scheme can now take part
in a collective sale of the whole scheme on a 75% and above
The ability for a group of owners to force the sale of a
neighbour's property against their will is one of the most
dramatic changes in Australian law.
On one view, the legislation gives private citizens a power
previously only the Government could exercise (compulsory
On another view, the legislation provides owners the protection
that when their strata building comes to the end of its useful life
and is onerous to continue to maintain, they will not be prevented
from reaching a sensible decision to sell or redevelop by a single
owner or small group of owners.
Whether this is just in the circumstance will not always be easy
to determine. An apartment will be someone's
home – much more than an investment
vehicle. Also true is that there are many cases
where the last owner to sell in a block has managed to extract
significantly more than any other owner in the building for their
property – just by being the last holdout.
Regardless of the view one has on these issues, the legislation
has commenced and before too long there will be a test case before
the Land & Environment Court.
With this in mind, we thought we would provide you with our view
on some of the conduct, statements and opinions we are seeing in
Collective sales are achievable
A collective sale is likely to be approved by the Court
1. The owners follow the process to the letter (ie get good
2. The owners act in good faith, openness and transparency, in
particular in all dealings with any dissenting owners;
3. There is no question that the compensation available to the
owners is significantly above market value;
4. on a common sense and objective review, the proposal is
'just and equitable in all the circumstances'.
For many groups of owners, achieving the above is not likely to be
More schemes will be redeveloped as a result of plans for
collective sale than plans for redevelopment.
The legislation allows either for collective sales – the
sale of the whole strata scheme, or redevelopment, where there is
greater flexibility and owners can for example stay on and have a
share of the possible development profit.
In the foreseeable future we predict most strata renewal will be
achieved by way of collective sale as the process is simpler and
the compensation payable to a dissenting owner is far easier to
As long as you have 75% of owners on board you will be able to
achieve a collective sale.
There is a lot more to getting a proposal approved by the Court
than a simple vote!
The conduct of the owners and the adherence to the process will
be major factors.
Only older blocks where there is a need for redevelopment can be
sold under the Act
There is no express requirement that a scheme be derelict for the
legislation to apply. It may however be a strong factor in the
Court determining that the proposal is 'just and
The Real Estate Team at Dentons in Sydney are currently
assisting several groups of owners and developers in facilitating
collective strata sales. If you would like to know more, please
contact Sally or Chris.
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