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This one definitely should be added as a ‘case study’ to the Fair Trading website in future, when everything is settled.
We are one of 9 owners in a strata town-houses complex.
There are a number of development sites around us already had construction works began.
Recently, we had real estates agents approached us proposing selling the complex as a whole.
After some discussion, all 9 owners are willing to sell, but at what price and what’s the share for each owner:
– The price would be known if the complex is put onto the market.
– The share would only be ascertained if all owners agree on the split-method.
And that’s the problem – “how to split the proceed, if the complex is to be sold as one”.
The logical one is to use the Unit Entitlement as the split-method – as the Unit Entitlement should be a reflection of the value and size of each unit comparing with each other.
If all units had the same or similar value and size, then using Unit Entitlement would seem to be fair and fine.
However, in our complex, the 2 largest units have 36% of the area but only 24% of the Unit Entitlement.
So, using the Unit Entitlement, on paper, would seem to, unfairly, benefit the other 7 with smaller areas.
Hence, there is no agreement on the split-method.
So the group of 7 owners (G7 – with smaller areas) decided to go to the market on their own – excluding the other 2 who have larger unit area.
Considered the future strata law (if it passes and in its current proposed form), only 75% of owners are needed to dissolve the strata scheme.
And that, once acquired these 7 properties, the developer (or buyer) would have:
– 78% of the votes (based on one-unit-one-vote)
– 76% of the votes (based on Unit Entitlement)
Some interesting questions then:
1. Would the G7 owners find developers (or buyers) NOW willing to buy just 7 out of 9 properties
– for FUTURE development of the whole site?
2. If these 75%-owners become 75%-developer (once properties acquired by the developer), would the developer be allowed to force the 25%-owners to sell – in the same way as the 75%-owners?
3. If the G7 owners sold at a development premium, would the ‘market prices’ then be the prices-with-the-development-premium or just the market-going-prices at the current market?
(with the new proposed law, the 25%-owners could be forced to sell their properties at the ‘market prices’ plus moving costs)
Appreciate your thoughts on these.
Duplicate post – please delete or remove. Thanks.
Please see Forum: Levies and Unit Entitlements
If…” href=”http://www.flat-chat.com.au/forum/levies-and-unit-entitlements/75-unit-entitlements-and-forced-selling/#p15655″>75% Unit Entitlements and Forced-Selling
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