Queensland unit owners could soon join their counterparts in NSW in being forced to sell their homes against their will if 75 percent of the neighbours in their block agree.
And even if the “forced sale” vote threshold isn’t reached, under proposed changes to apartment laws, individual owners and Body Corporates will be able to appeal to a District Court to push their plans through.
The forced sales proposals are the centrepiece of wide-ranging plans to update the Body Corporate and Community Management (BCCM) Act – the state law governing apartment blocks and community developments.
The report was commissioned by the state government from Queensland University of Technology’s Commercial and Property Law Research Centre, with a view to creating new legislation later this year or next.
The proposals are a response to concerns nationally that outdated and often deteriorating unit blocks have to be maintained, often at great expense, but are occupying prime land where larger, better and safer apartment blocks could be built.
However, there is a simple commercial argument too: older blocks often occupy the best sites for the simple reason that they were there first.
Currently the law only allows strata schemes to be ‘terminated’ if 100 percent of owners agree – leading to claims that opportunistic hold-outs and stay-put pensioners are impeding progress.
Late last year developer lobby group Property Council Queensland supported calls for an urgent reset of “thresholds for termination of strata title schemes in Queensland” to something closer to NSW’s 75 per cent requirement.
A group of four small three-storey blocks in Cronulla, Sydney, recently sold for $54 million, doubling the value of the units if they had been sold individually.
“Our current legislation costs owners and the broader community dearly by preventing the majority from exerting their property rights,” Property Council Queensland Executive Director, Chris Mountford said.
However, if the QUT proposals were broadly accepted by the government, there would be no mad rush to tip granny out of her crumbling flat and into a retirement home.
Information would have to be collected, a strata ‘termination plan’ formulated and then, after each of two long cooling-off periods, votes taken by the owners to decide whether or not to move forward.
The QUT proposals are more complicated in many regards than the laws recently introduced in NSW and more streamlined in others.
Firstly, the Body Corporate would have to agree to gather information and expert reports on the viability and wisdom of any plan, as well as a valuation of the common property and the individual lots.
Then lot owners would have at least 90 days to decide whether or not it made economic sense to proceed.
The report recommends that the Body Corporate should then appoint a “facilitator” – such as a developer – to put together a collective sales agreement and plan. The proceeds of the sale of the entire block would be allocated relative to the exisiting market value of each lot.
Lot owners would then have at least a further 120 days before the body corporate held a general meeting to vote on the plan, which could be approved with a vote of at least 75 per cent.
Unlike in NSW, the 75 per cent would only apply if there were sound economic reasons for termination, based on the information provided. This would have to be agreed by half the owners in the scheme, not merely half of them actively voting. If the economic argument couldn’t be made, the termination would only go ahead if no owner objected.
Whichever way the owners voted, either losing side – pro or anti forced sales – would be able to appeal the decision at a District Court to either quash the plan or force it through.
The District Court will be expected to examine whether the plan is “just and equitable” and take into account the consequences to lot owners, both if the plan went ahead and if it didn’t.
“Some stakeholders have expressed concern that the current thresholds and processes for terminating community titles schemes are too onerous,” said Attorney-General and Minister for Justice Yvette D’Ath in a press release.
“QUT have provided recommendations on this issue. Before considering them further, the government is seeking the community’s views.”
Queenslanders have until May 5 this year (2017) to have their say on the Government Property Law Review report.