A Guide to the New Strata Renewal Process

As from 30 November 2016 a new procedure has been introduced allowing for a strata renewal (i.e. either the collective sale of the whole strata scheme or the redevelopment of the whole strata scheme such that its termination and replacement by a further strata scheme is necessary) with the support of at least 75% of the lot owners.

It is governed by Part 10 of the Strata Schemes Development Act 2015 (“SSD Act”) and the Strata Schemes Development Regulation 2016 (SSD Reg.”) and must be strictly adhered to avoid challenges by dissenting owners or rejection by the Court. Here are the important steps in the process:

1. Opting in to Process The process automatically applies only to strata schemes which commenced from 30 November 2016. For strata schemes already in existence before that date the owners have to agree to the new process applying by a vote in favour by more than 50% of the lot owners in a general meeting.

2. Consideration of Proposal To initiate the process a written strata renewal proposal (“proposal”), complying with Regulation 30 of the SSD Reg., must be submitted to the owners corporation for consideration by the strata committee. If the strata committee decides that the proposal warrants further consideration by the owners corporation it must convene a general meeting of the owners corporation to allow it to do so.

3. Appointment of Strata Renewal Committee If a majority of lot owners decide that the proposal warrants investigation by a strata renewal committee, the owners corporation must vote to establish a strata renewal committee to prepare a strata renewal plan and elect its members.

4. Functions of Strata Renewal Committee Once established, the strata renewal committee has up to one year to prepare a strata renewal plan, containing the information required by section 170 of the SSD Act and Regulation 33 of the SSD Reg. relating to the proposal for consideration by the owners corporation. Such information can be prepared with the assistance of valuers and lawyers and must include the market value of the strata complex and the proposed compensation payments to lot owners.

5. Consideration of Strata Renewal Plan Once the strata renewal plan has been prepared, a general meeting of the owners corporation must be convened to allow owners to consider the plan. Apart from provisions allowing for amendments of the plan, in order for the matter to progress at least 75% of lot owners at the general meeting must vote in favour of giving the plan to the owners for their consideration for at least 60 days during which they can get independent advice on the plan.

6. Approval of the Strata Renewal Plan Provided at least 75% of lot owners support the plan within 3 months, a general meeting of the owners corporation must be convened to decide whether to apply to the Land and Environment Court to give effect to the plan. If the application is approved, dissenting owners and others can object to the plan in Court. The Court will consider a number of matters before it grants its approval including whether the correct process was followed and the amount of compensation being offered to lot owners. The Court may order mediation to try and resolve disputes. If satisfied, the Court can then order that the plan be approved and will take effect in accordance with its directions including the termination of the strata scheme and notification to the Registrar-General. The lot owners will then have to sell their lots in accordance with the approved plan.

February 2017