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Sale of a strata scheme plus surrounding houses and compulsory acquisition
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26/04/2018 - 1:36 am
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A developer intends to create a large block of land for development by buying ten adjoining house blocks plus the collective sale of the strata scheme of townhouses I am in. The area is zoned for high density development.

At various meetings, we have been told that if the developer gets agreement from at least 75% of house owners then they can compulsorily acquire the townhouse strata scheme as part of the consolidated development block, even if less than 75% of strata lot owners disagree.

The strata scheme is more than 20 years old. 

Does any law existing in NSW that allows for compulsory acquisitions (as detailed above) in areas zoned for high density development to enable the consolidation of smaller blocks of land?

Many thanks

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26/04/2018 - 9:05 am
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This is a confusing question (and I notice you have posted another related one elsewhere on this site).

Only the strata scheme can come under the provisions of Section 10 of the Strata Schemes Development Act 2015 and Part 6 of the Strata Schemes development Regulations which govern the “collective sale” of strata units.

Adjoining free-standing houses that are not part of the strata scheme, even if they are part of the proposed project, have no bearing on the sale of the strata units.

Unless the developer has bought 100 per cent of the units in the strata scheme, even with more than 75 per cent support for the sale, the strata unit owners (including the developer) would have to go through a fairly lengthy process required to compulsorily purchase the remaining units if their owners don’t want to sell.

As explained comprehensively in THIS POST, if just one home owner holds out, the process can take up to three years – so you can see why a developer might want to push things along and perhaps massage the facts to accelerate matters.

An honest and sensible developer would be making very generous offers now (and we’re talking as much as double the estimated value of the units, if not more) because they will still make a huge profit when they develop the whole block.

As the ‘last man standing’ or, more realistically, a minority of owners who haven’t sold, you may not be able to prevent the collective sale but you can still slow the process to encourage the developers to come up with a reasonable offer.

You and your neighbours need to speak to an experienced strata lawyer as soon as possible to protect your interests, get a clear understanding of what’s on offer and make the most of your investment.

If you are a pensioner or member of a low income group you may be able to take advantage of Fair Trading’s Collective Sale Advocacy Service.  

Meanwhile you you will find more information about collective sales HERE on the Fair Trading website, including a fact sheet that you can download and print out for your neighbours to read.

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