Qld to allow forced sales of ‘hold-out’ units

Queensland’s body corporate laws are to move closer to one of NSW’s most significant strata law changes of recent years, with a proposal to allow collective sale of apartment blocks  announced this week.

Dubbed “forced sale” by its opponents, the new law will allow 75 percent of owners to agree to sell their block – probably to a developer – if it has become too expensive to maintain.

But owners desperate to sell out of crumbling buildings might want to keep the champagne on ice – it could be a couple of years before the new laws come in.

The proposed change will remove the requirement for unanimous votes by owners to sell an entire block for redevelopment where the body corporate has agreed it is more financially viable to redevelop the site than maintain or remediate the building.

This will allow for the termination of a community titles scheme with the support of 75 per cent of lot owners – getting around “hold-outs” who seek an inflated pay-outs, while leading inevitably to concerns about forced sales of apartments from under long-term owner-residents.

However, there are reportedly multiple older blocks costing owners huge sums to maintain as they deteriorate over time, that could be replaced by bigger, newer, cleaner and safer buildings were it not for for one or two residents who don’t want to move out or sell.

Currently, a community titles scheme may only be terminated if no owner opposes the plan, or if the District Court is satisfied it is just and equitable to terminate it.

The proposed changes will allow for the termination of a scheme by a super-majority of owners.

Pets and smoking

In other flagged changes to body corporate laws, schemes will be able create by-laws to prohibit smoking in outdoor and communal areas and they will be prevented from banning pets, except in specific circumstances.

A government press release said that this package of reforms will also include allowing bodies corporate to tow vehicles which are preventing access or causing a hazard.

And they are intended to improve body corporate governance and management, including by making it easier for residents to lodge disputes, while expanding adjudicators’ powers.

Consultation on the draft legislation will begin later this year after appropriate committees have been created, submissions have been invited and assessed and a process created that will allow for collective sales while presumably protecting individuals who, for instance, may find they are getting undue pressure from other owners or investors.

NSW has had a collective sales system running for six years now, so their northern neighbours can see what mistakes were made and how problems were solved.

However one uniquely Queensland issue that the legislators will have to deal with is pre-sold management rights.  If owners want to extinguish a strata scheme which I could be near the beginning of a 10 or 25-year strata management contract, they will have to pay that out at considerable expense.

Management rights are supposed to be under review in the next tranche of body corporate law changes to be tabled later this year.  But since one proposal is that existing contracts be “grandfathered”, that won’t solve the problem of caretakers having a contract but no building to manage.

Unit owners

However, the proposal has met with general if cautious approval. The Unit Owners Association of Queensland (UOAQ) sent out a newslatter saying ”it is noteworthy that 75 per cent support from the general meeting will only be required for schemes where owners have “agreed it is more financially viable for lot owners to terminate rather than maintain or remediate the scheme”. 

“The [government] press release also mentions certain safeguards for dissenting owners, such as application to the District Court.

“For reasons of termination other than the aforementioned, the termination of a scheme will still require a vote without dissent (i.e. no owners voting against).

“As always, the devil is in details, which are still to come.  The UOAQ will keep monitoring the situation and will bring you updates when they occur.”

Strata managers

Meanwhile Laura Bos General Manager of SCA (Qld) – the state’s peak body for strata managers and service providers – said this was one of the biggest levers governments could pull to begin easing the Queensland housing crisis.

“I am absolutely thrilled to see Deputy-Premier Miles announce today that he and the Attorney-General will be moving to legislate to reduce the requirements for scheme termination from 100% of lot owners giving consent to 75% of lot owners,” said Ms Bos.

“In established parts of all Queensland’s major cities there are schemes that are simply not making full use of the land they take up. There is a capacity for us to better use of these existing development footprints in these existing urban areas, particularly along public transport spines without impacting amenity.”

“This change will make it much easier to renew our urban areas with well designed strata development which will benefit all members of our community.”