It used to be called “strata extinguishment” and it’s now called “collective sales and renewals” but basically it’s all about strata schemes selling off the entire block so someone can build something bigger and better. That used to require a unanimous vote – as of next year it will be 75% hjowever, there will be safeguards as you can read here.
1. Vote to ‘opt in’ to sale/renewal process
Before a proposal to sell or redevelop a strata building can be formally considered by an owners corporation, the owners corporation must first agree to ‘opt-in’ to this process. This means that if a simple majority (that is, 50 per cent) of the owners aren’t interested in entertaining a collective sale or renewal, then no further action can be taken and the process outlined below will not apply. The opt-in vote can be held at any time prior to step 3 below.
2. Initiation of sale/renewal proposal
A proposal to sell or renew a strata scheme must first be submitted to the strata committee for consideration. If the committee thinks that there is merit to the proposal then a general meeting is called. If the committee fails to call a meeting, one can be called with the support of 25 per cent of the lot owners.
3. Formation of strata renewal committee
If the owners corporation agrees to further investigate a proposal, it must elect a strata renewal committee comprising lot owners and provide the committee with a budget for expenses. The strata renewal committee will be responsible for investigating and further developing the proposal in consultation with all interested parties. The committee will be allowed to appoint professional advisers, such as real estate agents, lawyers, valuers, tax experts etc to help them develop the plan.
The strata committee will be required to inform all owners and residents of the decision to develop a plan and to provide them with information about the process.
4. Development of strata sale/renewal plan
The strata renewal committee will develop a plan. The plan will need to address certain prescribed matters (for example, the amount that each lot owner will receive from a collective sale) and contain sufficient detail to enable each lot owner to make an informed decision about whether to support the collective sale/renewal proposal.
5. Consideration of strata sale/renewal plan by owners
The final plan will be provided to all lot owners and mortgagees who will have a minimum of 60 days to consider the proposal and to seek independent advice. Any decision by a lot owner to support the proposal would become void after 12 months if the plan has not progressed.
6. The Strata Commissioner
If more than 75 per cent (but less than 100 per cent) of the lot owners support the plan, an application to terminate the scheme can be made to the Strata Commissioner, a person at the Land and Environment Court. The Strata Commissioner will consider whether the process has been properly followed and that all the owners have been treated fairly.
The Strata Commissioner will initially seek to resolve any dispute through conciliation or mediation. If the matter can’t be resolved in this way, it will go to a hearing of the Land and Environment Court. The Court will listen to any dissenting arguments when considering if the process has been followed and everyone has been treated fairly.
The aim of this process is to ensure that every lot owner is kept well informed, is able to provide input to the proposal, is treated fairly and has their views taken into consideration.