Changing the strata law and improving outcomes for property owners

 

By Nick Allingame – UDIA WA President    www.UDIAWA.co.au/

Strata title reform is imminent in Western Australia as new legislation is set to be introduced to state parliament in the next few weeks.

The reforms will cover a broad range of strata-related issues, including introducing two new forms of land ownership – leasehold schemes and community schemes – which will provide new and more flexible frameworks for the delivery of mixed use and other strata developments.

The legislation will also provide more flexibility for staged subdivisions, improve strata management practices, simplify dispute resolution processes, improve information regarding strata schemes for buyers and implement rigorous safeguarding measures for the termination of schemes.

The changes around the termination of schemes in particular has prompted some concerns within the community due to the move away from the requirement for a unanimous resolution of all owners to terminate a scheme.

Under the new legislation, a scheme with four or more lots will require at least 75% of lots in favour of a termination. In the case of a three-lot scheme, at least two lots in favour and for a two-lot scheme, at least one in favour.

It is important to note rigorous measures are being put in place to protect owners and ensure all owners’ rights are taken into consideration in the case of a proposal to terminate a scheme. In fact, the new legislation introduces more safeguards than are currently in place, particularly for vulnerable owners.

The new process will be transparent, will need a detailed proposal to be prepared and will require a full review by the State Administrative Tribunal (SAT). Vulnerable owners will also have access to funding for assistance to respond to the termination proposal, including legal advice.

This means that even after owners have voted on a proposal for the termination of a scheme and the required number of votes is attained, the SAT is still required to review that decision.

In reviewing a proposal, SAT will consider a range of factors including whether the termination process was properly followed and if a proposal is ‘just and equitable’. SAT must also be satisfied each owner who objects to the proposal will receive at least fair market value for their property and be no worse off financially.

In determining if a proposal is ‘just and equitable’, SAT must consider the interests of all owners, occupiers and mortgagees and ensure that there has not been any impropriety in voting or giving of false information. SAT also needs to weigh up the benefits and detriments of the termination for relevant parties.

The proposed strata reforms provide an opportunity to ensure our legislation is keeping up with the evolving needs of the community and facilitates the best possible outcomes for future development.

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