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From reader IJ:
I live in a block of flats with four units. Two of the units are owned by one person, who is a very difficult person to deal with. She is an investor and lives elsewhere.
Recently, one of the other two units sold. I am fairly sure the investor is the buyer. If this is so, she will have slightly more than 75 percent of the unit entitlements.
Can she force me out of my unit under the 75%-of-units-can-now-sell-the-block-to-a-developer rule?
At the very least, if one person owns three units in a four-unit block, this will reduce the value of my property, yes?
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It seems that the 75% rule may now me achievable, but there are a number of additional steps required. Most importantly, there has to be an actual redevelopment offer on the table. So you cannot be forced out because the other owner is planning to sell to a developer – there must be an actual deal in place. If it is a sham deal that the owner has concocted to get control of the premises, the Court should be able to detect that, and it would not be approved.
That deal must be fair, having regard to a wide range of factors, including costs you may incur in relocating. You will be able to object if you regard it as unfair, and the arbitration process is set out in the Act.
The process must have been conducted in good faith. In your case, I would guess that this requirement would be examined very carefully, because the 75% used to approve the action was held by associated persons. For instance, if the owner used their 75% voting power to increase your contributions or make other changes designed to force you out before the approval is completed, that could be taken as a clear indicator of bad faith, and the plan could be rejected.
If the other owner is able to come up with a plan that meets all those requirements and which makes it through the Court approval process, the likelihood is that the amount received for your unit will be considerably in excess of the current market value of the lot. That has been the experience to date.
There is free advice and advocacy available to certain people – you should check if you qualify:
https://www.fairtrading.nsw.gov.au/sites/ftw/Tenants_and_home_owners/Strata_schemes/Collective_sale_and_renewal/Strata_Collective_Sale_Advocacy_Service.pageHelp. Is the 75% rule the same for Victoria? How does a committee deal with one owner buying 4 out of 9 units? Essentially, legally, the one owner can now direct owners corporation future decisions and it is more than likely they will at considerable fiscal cost to others – some of whom will not be able to afford updates to the property
As far as I can find out, the 75% rule doesn’t apply to Victoria –
VictoriaIn Victoria, a unanimous resolution of lot owners in an owners’ corporation is required to approve the termination of a strata scheme. We are not aware of any proposal to review or amend this legislation in the near future.So having the last unit in a group of 4 may in fact put you in a stronger position, not a weaker one. If the owner of the other 3 units wants yours as well, they will have to pay you what you want for it – and not a penny less!Not an expert on Strata Law in Victoria (or anywhere, really!) so can’t help with your “4 out of 9” query.
@Keifer said:
How does a committee deal with one owner buying 4 out of 9 units? Essentially, legally, the one owner can now direct owners corporation future decisions…Unless the existing owner is buying four additional properties, four out of nine is not a majority. In any case, major decisions that require a 75 percent vote in Victoria can be overturned if more than 25 percent of owners disagree, even after an interim decision has been made.
You only need two other owners to support you to block any major changes and laws exist to force the majority owners to, for instance, maintain and repair the building.
Victorian strata law is very different from anywhere else in many regards. You need to acquaint yourself with it rather than making assumptions based on other states’ laws. I suggest you start HERE and then move on to THIS FACTSHEET on voting.
By the way, there is a principle in law called something like Fraud on the Minority, where a majority of (in your case) owners make decisions that seem to be legitimate but are actually materially detrimental to the minority and advantageous to the majority.
This principle has been employed many times in strata disputes to protect the minority from a majority owner seeking to force through decisions to their sole advantage.
The opinions offered in these Forum posts and replies are not intended to be taken as legal advice. Readers with serious issues should consult experienced strata lawyers.
Thank you Jimmy T for your useful, detailed advice and clarification. Much appreciated. I feel better equipped to help all the owners. We are after integration and consensus, not conflict.
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