Last year, NSW Parliament enacted significant changes to the State's strata laws. Amongst these changes, the NSW Government broke new ground, introducing a whole new part to the Strata Schemes Amendment Act which relates to the renewal of a freehold Strata Scheme.
Coleman Greig eagerly awaits more guidance around when these changes will come into effect and what their impact will be. What we do know is that some key changes that property investors and tenants alike will need to be aware of include the following:
- A building's Body Corporate can sell the premises with only 75% of lot holders agreeing to the sale. There will be some entitlement to compensation if you're not part of that majority.
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The process will involve the following four steps:
- Establishing a Committee and developing a strata renewal plan
- Obtaining relevant approvals for any works
- Receiving approval of the Court
- Lodging registration with the Registrar General.
Our lawyers have some concerns around what will happen to tenants who have leases in place if the decision of whether to sell is being made. Whilst the amendments are clear in so far as how the interests of registered owners are dealt with, there is no clarity as to what conversations, if any, the tenant can have.
The amendments merely state that the lease of a lot in the strata scheme is terminated on the day stated in the strata renewal plan for giving possession of the lot to the developer or on such later date as may be specified by the court order. The new laws also state that lease termination of the lease doesn't affect what rights or remedies a person may have under a lease.
It's not clear yet what this will mean in practice, and, at this stage, it's not clear if a tenant has any standing to object to any such strata renewal plan.
This is why we hope that communications around the relevant regulations will be key to providing greater insight about the impact on property leases.
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