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Regarding an over-55s complex with a strata title which was built in the 1980s. The builder had it written into the by-laws that 10% of capital gain on sale of the unit must go back to him and this must go first mortgage on the title. Of course, no bank will go second on a mortgage so you can't get a loan. Have you heard of anything like this? Can by-laws be changed or are we stuck with this forever?
The builder is now deceased and the 10% goes to his estate.
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This is a new one on me but I'm no longer surprised at the schemes, scams, rorts and gouges that builders and developers get up to.
OK, without seeing the by-laws, there's a fair chance that this rule isn't legal. Also, unless it's a special by-law – one of those that requires agreement with the beneficiary of the by-law – it can be changed with a 75 percent vote of the owners.
What you really need to do, as a strata plan, is to talk to a specialist strata lawyer right away (there's a whole bunch of them listed HERE). They will tell you what you can and can't do and what the best way is to do it.
They will charge you for it, of course, but if it means you and your neighbours saving 10 percent of the value of your home, then it will be well worth it.
I'm not sure what you mean by “first mortgage” but the advice doesn't change. Talk to a specialist strata lawyer.
By the way, this is a perfect example of the kind of contract that would have been struck down by our Federal Fair Trading laws – if they hadn't specifically excluded strata from them. Why did they exclude strata? Because vested interests persuaded the politicians in Canberra that if they weren't allowed to rip strata owners off with impunity, then they couldn't afford to build apartment blocks.
This is, of course, self interested nonsense. The best developers are building communities that people want to live in (and therefore they have no problem selling their properties). But too many of the others are greedy, heartless robber barons whose morality is based on the notion “if I can get away with it then it must be OK.” Here endeth today's spray.
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Dear StrataEze
There is not a clear cut answer to your question and it is quite a complex matter. You must look to the terms of your contract for sale and analyse the original resolutions passed in respect of this by-law.
A general by-law, however can be amended or repealed by special resolution at a general meeting. This requires a quorum and for not more than 25% to vote against the amending by-law.
Yours Faithfully
Simone Balsara
Lawyer
TEYS Lawyers
The Strata Law Experts
02 9562 6500
https://www.teyslawyers.com.au