Are you aware of the traps in collective sales and the potential problem with option agreements?

What are Option Agreements?

Option agreements are frequently used as a mechanism to facilitate collective sales of lots in a strata scheme.  Such option agreements (commonly called “Options”) provide a number of helpful mechanisms and tools to provide a degree of flexibility.

The Traps of Collective Sales Option Agreements

A recent decision of the Supreme Court of NSW has demonstrated that there can be traps for owners of strata lots who are using Options as part of a collective sale process.

The case provides helpful reminders about how options should be used in a collective sale process, and the matters to be aware of if lot owners are going to be properly protected in that process.

What Should You be Aware of?

Here we discuss option agreements and what to be aware of with strata block collective sales Traps in Strata Block Collective Sales

For all NSW strata legal advice including by-laws, building defects and levy collections contact us here or call 02 9562 1266, we’re happy to assist.

One of the big ticket items introduced as part of the new strata laws that commenced in November 2016 was strata renewal or collective sales. These laws allow a strata building to be sold or redeveloped with the approval of at least 75% of owners.

However, many stakeholders in the strata industry including strata managers have needed clarification and clearer guidance in regards to the strata renewal and collective sale process.

Indeed, the industry has been looking for more practical and specific guidance from regulatory bodies on the implementation of strata renewal reforms.

In late 2018 new guidelines and resources were published by the Office of the Registrar General and can be found on their website.

If you’re looking for some guidance it’s a great first step. The website includes information about:

• preparation of a strata renewal plan
• strata renewal information sheet
• support notice relating to a strata renewal plan and withdrawal

The website also confirms that strata managers should now be making all inquiries with the Office of the Registrar General in relation to strata renewal (or collective sales) and NSW Fair Trading is no longer able to assist.

The Office of the Registrar General website outlines 6 steps for the strata renewal process as follows:

1. Vote to opt into the process
2. Initiate the collective sale/renewal process
3. Form a strata renewal committee
4. Develop a strata renewal plan
5. Consider the plan
6. Approval of the plan

For more information visit Office of the Registrar General or for more detailed legal advice please contact us here or call 02 9562 1266, we’re happy to assist.

Up until recently, there have been no reported cases of where the Land & Environment Court has dealt with an application to permit the collective sale or redevelopment of a strata scheme under the new strata laws.

That changed on 19 February 2018, when the Land & Environment Court issued preliminary decisions in two cases involving proposals for the collective sale of two strata schemes in Sydney.

So, what can we learn from the first two collective sale cases? To find out download this paper Collective Sales Cases Hit the Land and Environment Court.

For NSW strata legal or levy collection advice please contact us here or call 02 9562 1266, we’re happy to assist.