Restructured property creates a $17-million sale.
The Worrells Gold Coast office recently administered the sale of the 'Village Square' site located on Queensland's Hope Island, which was originally established as Australia's first arts and crafts theme park in 1999.
The Village Square site comprised of 3,760 individual lots held by 57 different owners through an established strata property (community titles scheme (CTS)).
Due to lack of attendance of the theme park and subsequent marketplace offering, the development failed and the body corporate for Village Square found itself in the difficult position of being unable to reach consensus on what to do with the site. After several years in limbo, one lot owners (who held the majority of the lots) applied to court seeking to terminate the CTS.
While the relevant legislation differs in each state, section 78 of the Body Corporate and Community Management Act 1997 (Qld), provides that a scheme may be terminated by a resolution of the body corporate (passed without dissent) with all registered owners in agreement of how the termination is to be undertaken. Alternatively, the scheme may be terminated by the court if it considers it is "just and equitable to do so".
As part of the court application, the majority owner took steps to ensure all affected parties were aware of the application and given the opportunity to be heard at the court hearing. This meant serving notice on:
- all registered scheme owners
- financial institutions holding registered mortgages over various scheme lots
- the Gold Coast City Council
- the Queensland Office of State Revenue.
While this may sound like a simple process, when the application was served it was discovered that:
- several corporate owners were deregistered
- one individual owner had passed away
- many joint owners had divorced
- the Gold Coast City Council had acquired several lots due to significant unpaid rates.
Ultimately, the court ordered to terminate the CTS upon the amalgamation of the site into one single lot. The court then appointed Worrells as administrator to sell the newly amalgamated scheme land and to distribute the sale proceeds in accordance with the orders.
Upon our appointment, the Gold Coast City Council was owed over $4.3 million in unpaid rates; with many owners advising they had struggled to meet the ongoing holding costs of their lots given the lack of investment income.
Following a marketing campaign generating enquiries from around the world, Worrells secured a sale of the land for just over $17 million—$3.5 million above the valuation. Such a robust result enabled the administrators to pay out the outstanding council rates and to provide a significant return to the lot owners.
We understand that the purchaser intends to develop over 300 new retirement village apartments on the site, which will create much needed local construction work and other ongoing benefits to the Gold Coast community.
Like the Village Square site, many CTS properties throughout Australia have deteriorating buildings that are no longer viable. The Gold Coast certainly has many buildings with concrete cancer and those owners will have to decide in the near future as whether to raise levies to deal with the issue or get consensus on selling the property. This court appointment illustrates an option available to CTS lot owners to bring finality to a troubled property venture particularly when all owners cannot agree.
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