Flat Chat Strata Forum Common Property Current Page

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  • #8295

    I am at a loss who to ask / get advice for the following problem.

    I talked my son into buying a investment  unit last year as he had a small amount of disposable income at the end of each week and I wanted him to get into the property market early to get a good start in life.

    So after rent he has to put in approx $80.00 a week plus exp for his rental property. There are 6 units on the block.

    I have just found out 4 of the 6 units are going to purchased by a property consulting group who are going to renovate and sell 4 of the 6 units. I have been made aware they have intentions of spending approximately 75,000.00 on the units within the next 12 months. I have been told this will go ahead as they will have more than 75 % of votes in the affirmative to go ahead with the work. This work is not for repairs. It will be to render the brick work, put up new fences and re establish new gardens purely for resale value. My son has been told he will have to pay his share been 12,500.00. 

    I have no idea where he would get that kind of money from as the banks would not lend it to him as he has borrowed to full capacity. I am all for repairs and maintaining the property…and yes i would like to see some work done to improve the value but surely any one can see not every one can come up with over 12 thousand dollars immediately.

    Have they a right to force this upon him and has my son any options / recourse at all?

    Thanks for any advice / help.

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  • #16053
    Sir Humphrey
    Strataguru


      @MATHO
      said:
      …Have they a right to force this upon him and has my son any options / recourse at all?

      Thanks for any advice / help.

      Well, 4/6 is not 75%. There is one other owner who would have to be on-side for the work to go ahead. I would be speaking with that other owner. Perhaps the works would increase the value of your son’s investment and be of benefit to him but it is not reasonable or affordable to do the works all in one big hit in one year even though that is what the 4/6 owner would like to do. Since the works might be desirable but not essential it would seem reasonable to save up for them.

      Do the NSW strata laws have a ‘special purpose fund’ as an option along side the admin and sinking funds? I am a treasurer in ACT. We recently established a special purpose fund, distinct from our sinking fund, into which we will contribute for the next several years a smaller amount until we have enough for some worthwhile but non-urgent improvements. That way the levies do not increase too drastically for anyone but the money is quarantined away for this purpose.

      Finally, there are legal concepts of ‘oppressing’ or ‘defrauding the minority’. It might comply with the statute for the owners of the other 5 units to vote to have a very large levy increase in one year but it would be unfair to impose this on the minority owner and such decisions can be overturned on those grounds. 

      #16054
      Jimmy-T
      Keymaster

        Just a couple of quick points on PeterC’s reply, the four owners out of six may have the requisite votes to change common property via a by-law if they have the Unit Entitlements (e.g. if their properties are larger).

        However, I’m not sure the developer even needs anything more than a simple majority at a General Meeting to undertake works that can be classified as repair and maintenance.

        This particular rort, is a pattern that’s being repeated all over Sydney (and probably Australia) where developers buy up the majority of units in a small  block, embark on big ticket spending and then, lo and behold, are able to buy out the minority owners who can’t afford the special levy, often at a bargain price because no one wants to buy an apartment that has a special levy about to be imposed.

        Even if they aren’t looking to own the whole building so they can, for instance, redevelop, it’s a good way of getting their hands on the accumulated fund of the owners corp from which they will benefit most.

        My tactic right now would be to apply to the CTTT for the statutory appointment of a strata manager to take over the running of the building from the Owners Corp, on the grounds that it’s being managed to the serious detriment of a substantial minority.

        PeterC’s reference to a fraud against the minority may be correct, but only if the individual owners weren’t getting anything in return – in this case, they are benefitting from improvements to common property.

        I think the son’s options are threefold – fight this in the CTTT (outcome unpredictable), go to the developers and offer to sell or get a short term loan and wait out the improvements, selling his apartment for a profit (some ambush marketting by latching on to the developers’ open days would be an appropriate revenge).

        Even if he can’t get a loan, the penalty interest on unpaid levies is only 10 percent, he could make that back and more on the improved value of the apartment.

        But first, I’d be talking to the CTTT and at least asking for a mediation or, even better, an emergency ruling to stop all work until the case for a statory strata manager can be heard.  Meantime I’d be having a long chat with a specialist strata lawyer.  There’s an ad on the Home Page – no harm in clicking.

        The opinions offered in these Forum posts and replies are not intended to be taken as legal advice. Readers with serious issues should consult experienced strata lawyers.
        #16062

        Thanks guys…its a lot to get your head around when we just bought the property as a small long term investment in the hope he would make some money in say about ten years. And yes they have 83 % of vote as I know the other unit owner is fully on board, in fact he is going to love it.

        In fact he has text me twice this morning asking if Brendon (my son)  is going to sell…funny question dont you think?

        I think the son’s options are threefold – fight this in the CTTT (outcome unpredictable), go to the developers and offer to sell or get a short term loan and wait out the improvements, selling his apartment for a profit (some ambush marketting by latching on to the developers’ open days would be an appropriate revenge). I dont quite understand this Jimmy.

        Im having a look at the CTTT website now. Again thanks for all the advice guys. Laugh

        #16064
        Jimmy-T
        Keymaster

          Ambush marketting – wait until the property is all done up and the developers have advertised their apartments for sale then stand there with information for your apartment when potential purchasers come to see theirs.

          The opinions offered in these Forum posts and replies are not intended to be taken as legal advice. Readers with serious issues should consult experienced strata lawyers.
          #16086
          Anonymous

            Hi Matho,

            Jimmy is right this is becoming a too common occurrence lately.

            With respect you have been given some direction on this issue below, however it’s not professional or legal advice. The wrong strategy or decision may see your Sons problems just made worse.

            Go and get legal advice, the Flat Chat web site sponsor is a legal firm that has experience with this issue, your first interview is normally at no charge so give them a call.

            Chris Mo’ane
            GMD Integrated Consultancy Group.

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