An increasingly common question from lot owners and developers following the introduction of Part 10 of the Strata Schemes Development Act 2015 (NSW), the part dealing with strata renewal, what percentage of lot owners must approve the proposal. This is a difficult question for reasons outlined below.
Before outlining the reasons it should be noted that strata renewal is a catch all term used in the Act to describe both a “collective sale” and a “redevelopment”. A “collective sale” is the sale of the whole strata scheme. A “redevelopment” is the redevelopment of the whole strata scheme in a way that alters the scheme to the extent that its termination and replacement by a further strata plan is necessary.
There is a process that has to happen before a strata renewal proposal becomes a strata renewal plan that is voted on by the owners corporation and lot owners. If it helps, think of the strata renewal proposal as an initial idea and the strata renewal plan as the fully mapped out idea. The process of approving a strata renewal proposal and electing a strata renewal committee to develop the proposal into a plan is determined by an ordinary resolution at general meeting. This is a vote of 51% or more.
For most owners and developers the key question is what percentage of lots need to approve the strata renewal plan. There are two steps to this process. First, the strata renewal plan needs to be put to the owners corporation at general meeting for approval. This requires a special resolution to be passed (a special resolution passes if not more than 25% of unit entitlements present and entitled to vote, vote against the motion).
Within 14 days after the owners corporation at general meeting passing the special resolution the strata renewal plan is sent out to all lot owners. 75% of owners must provide a written support notice (and not withdraw it) for the strata renewal plan to go ahead.
It is important to note that utility lots* do not count for the purposes of support notices. The definition of “required level of support” at s154 of the Development Act has the effect that utility lots are excluded for purposes of support notices. This means that if you have a 10 lot scheme and 2 lots are utility lots then only 8 lots can potentially provide support notices and out of those you only need 6 lots to return a support notice (8*75%=6 lots).
After this stage, if the required level of support is reached the owners corporation must resolve to make an application to the Land and Environment Court for approval of the strata renewal plan.
* A utility lot is defined in the Strata Schemes Management Act 2016 as “a lot designed to be used primarily for storage or accommodation of boats, motor vehicles or goods and not for human occupation as a residence, office, shop or the like.”
NOTE: Part 10 of the Act only applies to certain freehold schemes in NSW. This is very general information and not legal advice. You should seek legal advice if your scheme, or a scheme you are looking at buying into, is considering a strata renewal proposal.