How Does a Collective Sale Work in a Large Strata Property?


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In August of 2019 we saw the first-ever judgement by the NSW Land and Environment Court approving a collective sale of a strata property; a mixed residential and commercial property at 252 Sussex Street, Sydney.

This attracted some attention, because it’s the first time that the new collective sale or renewal process has been implemented by a court order in New South Wales under the Strata Schemes Development Act 2015.

How does the collective sale process work?

Previous to the 2015 Act, every owner of a lot in a strata scheme had to consent to sell if a developer wished to buy the entire property. The new legislation now outlines that if 75% or more of lot owners in the scheme agree to the sale of all lots, an application can be made to the court for an order that approves and requires the sale of all lots. While there have already been several sales by mutual agreement since the new legislation was put in place, this is the first time that a majority group of owners has received a court order approval.

Now – this might seem unfair to the owners who haven’t agreed to sell, but there are a number of safeguards in place to ensure that the order doesn’t disadvantage anyone. Certain criteria must be met, ensuring that the sale is just and equitable and that each owner receives fair compensation. Rest assured that you won’t suddenly be forced to sell your strata lot – there would be plenty of discussion and consideration if this is even a possibility for your strata scheme.

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How has the new legislation changed things?

It’s taken a while for the new court-ordered collective sale process to be used, but that doesn’t mean the legislation hasn’t had an effect before now. It’s quicker, easier and more cost-effective to arrange a collective sale by unanimous agreement rather than going through a court process, but this hasn’t always been possible – sometimes due to an owner living overseas, being uncontactable or unwilling to sell strata.

Since the new legislation has been put in place, this might well have encouraged a more collaborative approach to mutual sales between lot owners. And this can have a positive impact for properties that may have seen better days, and that could be put to better use.

There are other NSW strata laws for common property that help to maintain a great lifestyle, and now the collective sale process can help a large strata scheme reach a decision on the future of its property.

If you have any further questions about collective sales or NSW strata laws for common property, your strata manager can be a useful point of contact. If yours isn’t, then consider making the change to a strata manager who offers the strata management services and knowledge to make your strata lifestyle simple.

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