At long last, the Land and Environment Court has handed down a judgement dealing with the process and finalisation of the Collective Sale of a Strata Plan. This landmark decision was in the matter of the application by the Owners – Strata Plan No 61299 [2019] NSWLEC 111 and the decision by handed down by Payne, J.
Just Conveyancing and Hones Lawyers have been involved in a number of projects dealing with agreement reached by owners for the collective sale of their apartments and we have been keeping a close watch on developments to understand how the Court will deal with some of the anomalies in the Act. The Court decision puts to rest 2 important elements, the first dealing with valuations and the second dealing with the conflict between distribution, i.e whether distribution is based on unit entitlement or by reference to the Land Acquisition (Just Terms Compensation) Act 1991 (Just Terms Act)
The Court confirmed that 2 independent valuations be obtained and those valuations must determine:
(a) The market value of the whole of the building and its site; and
(b) The values of the individual lots within the Strata Scheme by reference to the Just Terms Act.
The Court neatly resolved the tension between sections 171(1) and s182(1)(d) of the Strata Schemes Development Act by determining that unit entitlements be reallocated for reasons set out in section 236(1) of the Strata Schemes Management Act 2015.
This decision affirms the position that the proposed distribution of the proceeds of sale for the whole of the strata scheme must be apportioned in such a way that the compensation value payable for the lots is just and equitable in the circumstances and in accordance with the Just Terms Act. The need for the reallocation of unit entitlements in the matter arose out of a considerable difference in values between commercial and residential components within the Strata Scheme.
This is a very brief summary of a small portion of the provisions and how they operate. Just Conveyancing and Hones Lawyers will be glad to provide information to developers or lot owners wishing to formulate the redevelopment of their Strata Scheme.