Safeguards for the termination of community schemes

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Community titles schemes will need the ability to terminate at some point. The Community Titles Bill will provide for a process to terminate one or more community titles schemes in the community scheme via a vote in favour by the majority of owners of lots in the community titles scheme to be terminated and a vote in favour by more than 50% of all other owners of lots in the entire community scheme. This termination process includes all the safeguards proposed in the Strata Titles Amendment Bill 2018 but takes into account the unique nature of a community scheme.

The majority termination process will:

  • provide safeguards for owners
  • provide a termination process that is transparent, reasonable and requires a vote
  • require a termination resolution passed by the requisite majority to be confirmed by the State Administrative Tribunal (the Tribunal) to consider all owners’ views.

If owners in the community scheme vote unanimously to terminate one or more of the community titles schemes, confirmation of the termination resolution by the Tribunal will not be necessary but other aspects of the termination process will still apply.

If all the lots in a community scheme are owned by the same person that person can apply directly to the Registrar of Titles to terminate the scheme if the person has obtained an approved plan of subdivision for termination of the scheme and a plan or diagram of survey endorsed by the Planning Commission.

If a single owner owns all the lots in a community titles scheme but not the community scheme, regulations may be made to modify the termination process.

The vote to terminate a community titles scheme is taken on the basis that:

  • 1 vote may be cast for each lot in the community scheme
  • the value of each vote is 1.

This vote is different to the normal voting requirements (ordinary resolution or special resolution based on unit entitlement).

Overview of the process

The majority termination process is more than just a vote. There is a complete, transparent process that must be followed.

If the vote produces the required majority resolution, but is not unanimous, in order for the termination proposal to proceed further the Tribunal must confirm the termination resolution. A majority termination proposal cannot proceed without an order from the Tribunal confirming the termination resolution.

In a community scheme the Tribunal can only confirm termination if:

  • for a tier 2 scheme, each tier 3 scheme that belongs to the tier 2 scheme can be terminated
  • for a tier 1 scheme, each tier 2 scheme that belongs to the tier 1 scheme can be terminated
  • the Tribunal is satisfied of three key things:
    • the termination process was properly followed, and
    • every owner of a lot in a community titles scheme that is proposed to be terminated who does not support the termination will receive fair market value for their lot (eg: apartment or unit) or a like for like exchange for the lot, and
    • the termination proposal is just and equitable.

There will be extensive guidance to assist the Tribunal in deciding whether the proposal is just and equitable and how a fair market value or like for like exchange is to be determined.

There will be a power to make regulations that require a proponent to make arrangements with owners of lots to obtain independent advice or representation in connection with the termination proposal. The arrangements may include a requirement for the proponent to pay an amount to a trustee to be held in trust for owners of lots who meet specified criteria (vulnerable owners) to obtain independent legal advice or representation, valuation advice or reports or financial or taxation advice in connection with the proposal.

All owners will have access to funding to respond to a full proposal and vulnerable owners will have access to additional funding and assistance to respond to the termination proposal.

The proponent

The termination of a community titles scheme may be proposed by:

  • the owner of a lot in the community scheme
  • a person who has a contract to buy a lot in the community scheme
  • a body corporate formed by 2 or more such persons

is the proponent.

Pre-conditions for a termination proposal

If it is proposed to terminate a tier 2 scheme, the proposal must include a proposal to terminate each tier 3 scheme that belongs to the tier 2 scheme.

If it is proposed to terminate a tier 1 scheme, the proposal must include a proposal to terminate each tier 2 scheme that belongs to the tier 1 scheme.

The termination proposal process

There is proposed to be a 3 part process to terminate the community scheme or one or more community titles schemes in the community scheme.

Part A – The termination proposal

1.   prepare an outline termination proposal

2.   distribute the outline to owners and mortgagees

3.   vote on outline proposal, if no majority the proposal goes no further

4.  then, if the majority approve obtain subdivision approval

5.   prepare a full proposal

Part B – The vote

6.  distribute the full proposal to all parties

7.   vote on the full proposal and if the required vote is not attained the proposal goes no further

Part C – Confirmation of the termination resolution by Tribunal

8.   apply to the Tribunal to confirm the termination resolution when a majority termination resolution is obtained but is  less than 100%. The Tribunal may decide not to confirm the termination resolution and the termination proposal  goes no further.

9.   request Planning Commission endorse the plan of survey

10. impacted persons may apply to the Tribunal for directions about winding up the community corporation(s)

11.  apply to the Registrar of Titles to register the termination.

Part A – The termination proposal

Step 1. Prepare outline termination proposal

The proponent who wants to terminate 1 or more community titles schemes in a community scheme must prepare an outline of the termination proposal, in an approved form and submit it to each of the following community corporations:

  • the community corporation for a community titles scheme proposed to be terminated;
  • each community corporation that is related to that community corporation.

An outline termination proposal must contain certain information:

  • name and address for service of proponent
  • the community titles schemes to be terminated
  • explanation of reasons for proposing termination
  • proposals for contracts to be offered to owners of lots
  • proposals for subdivision and development of the tier parcel of a community titles scheme or community scheme (as relevant) following termination
  • planning approvals that may be required and the extent to which those planning approvals may not comply with the community development statement that is in force
  • stages and timeframes for progress of the proposal if it proceeds
  • consequences of termination
  • if the regulations require, arrangements the proponent must make for independent advice and representation for owners affected by the proposal
  • any other information required by the regulations.

Other matters may be included in the outline termination proposal where required.

Safeguard to protect community corporations from receiving too many proposals

A termination proposal cannot be submitted to a community corporation for a community titles scheme proposed to be terminated:

  • during a period when the community corporation has passed an ordinary resolution in favour of an outline proposal and that proposal has not come to an end
  • during a period (not exceeding 12 months) when the community corporation has, by ordinary resolution, prohibited termination proposals from being submitted to it
  • during a period for which the Tribunal has (on the application of the community corporation or a related community corporation) ordered that proposals are not to be submitted to the community corporation.

If an outline termination proposal cannot be submitted to a community corporation it cannot be submitted to any related community corporation.

Step 2. Distribute to owners and mortgagees

If the outline termination proposal can be submitted to the community corporation and related community corporations which must serve it on all owners and registered mortgagees in the scheme within 14 days of receiving the proposal.

After serving owners and registered mortgagees with the outline termination proposal the community corporation is to give written notice of that fact to the proponent.

The tier 1 corporation must, within 14 days after being given an outline termination proposal, lodge a notification in an approved form with the Registrar of Titles so that the Registrar can record that a termination proposal is current for the relevant community titles schemes (this is to ensure people who search the scheme plan can see if the scheme is considering a termination proposal).

Step 3. Vote on outline termination proposal

An outline termination proposal can proceed further if all community corporations served with the proposal, vote in favour of the proposal, by ordinary resolution within 3 months of receiving the proposal.

If one or more community corporations does not pass an ordinary resolution in favour of the outline proposal, the termination proposal comes to an end and the tier 1 corporation must lodge a notice with the Registrar of Titles in the approved form that the termination proposal cannot proceed further.

The tier 1 corporation must also notify the proponent and each member of the community corporation and each related community corporation.

For a 2 lot community titles scheme, an ordinary resolution is taken to be passed in favour of the outline termination proposal if the vote attached to 1 of the lots is cast in favour (regardless of the unit entitlement of the lot).

Step 4. Obtain approval of plan of subdivision

If the termination proposal can proceed the proponent can apply to the Planning Commission for approval of a plan of subdivision for the proposal (that is for one or more tier parcels to cease being subdivided by a community titles scheme).

It may also be necessary to apply for amendment of the community development statement.

If a community titles scheme at a tier 2 or tier 3 level is proposed to be terminated, the subdivision application will show that the tier parcel will cease to be subdivided by a community titles scheme and become a single lot.

If the community scheme is proposed to be terminated, then the application for subdivision will reflect this and individual subdivisions for the community titles scheme which belong to the community scheme will not be required.

Only if the Planning Commission gives approval for the subdivision, the proponent may proceed with the termination proposal by preparing a detailed termination proposal otherwise the termination proposal process comes to an end.

Step 5. Prepare full proposal

If the proponent has obtained approval of a plan of subdivision then they can submit a full proposal for termination, on each community corporation in the community scheme.

The proponent cannot submit a full proposal:

  • if it is more than 12 months since the outline termination proposal was approved by ordinary resolution
  • during any period for which the Tribunal has, on application by the community corporation or related community corporation prohibited termination proposals being submitted to the community corporation.

The detailed termination proposal prepared in an approved form by the proponent must:

  • include the material required to be included in an outline of a termination proposal
  • be accompanied by the approved plan of subdivision for the proposal
  • detail what is proposed in terms of contracts to be offered to owners of lots, including:
    • contracts for sale and purchase of lots in a community titles scheme before termination of the scheme, including:
      • the name and address of the buyer
      • the purchase price or description of how the price is to be determined
      • the terms and conditions of purchase
      • any deductions
    • contracts under which the owner of a lot acquires an interest in land in exchange for the lot including the choices available to the owner, interests that may be acquired and any terms and conditions of exchange (e.g. like for like exchange)
    • contracts under which the owner of a lot retains an interest in land following termination of the scheme or is to acquire a right or option relating to an interest in the land following subdivision or development
  • detail what is proposed to happen with any mortgages, leases and other interests over the lots and common property in the scheme
  • detail what is to happen to the contractual rights of occupiers of lots or common property in the scheme
  • detail what is proposed in terms of subdivision and development for the tier parcels of community titles schemes following termination
  • describe the planning approvals required for the proposed subdivision and development of the tier parcels
  • indicate timeframes proposed for progress of the termination proposal including expectations for when vacant possession of lots and common property will be required
  • describe any temporary relocation proposals for owners of lots
  • contain a statement obtained from the community corporation of the assets and liabilities of the community corporation and any legal proceedings or pending legal proceedings to which it is or proposes to become a party
  • details of steps proposed for winding up the community corporation
  • any other information required by the regulations.
  • a termination infrastructure report (paid for by the proponent) containing:
    • a report from a structural engineer on the state and condition of each scheme building and infrastructure comprising common property in the scheme; and
    • a report from a person specified in the regulations about the work that would be needed to repair or replace scheme buildings and infrastructure, taking into account the report of the structural engineer; and
    • a report from a quantity surveyor estimating the cost to repair or replace the buildings and infrastructure
    • a valuation report (paid for by the proponent) prepared by a licensed valuer stating the market value of each lot in a community titles scheme proposed to be terminated.

Regulations may prescribe matters relating to determination of market value of a lot for the termination report. The valuation must be current as at a date not more than 21 days (or longer if permitted under the regulations) before submission of the full proposal to the community corporation.

A full proposal can contain further information if required.

Part B – The vote

Step 6. Distribute the detailed proposal to all parties

A community corporation must within 14 days of the full proposal being submitted serve it on:

  • each owner, occupier, registered mortgagee or caveator of a lot in the scheme
  • each person whose interest in a lot as a lessee, tenant or mortgagee is recorded in the scheme contacts register
  • each occupier of common property in its community titles scheme.

The community corporation must as soon as practicable after serving the proposal give written notice to the tier 1 corporation.

The tier 1 corporation must within 14 days after being given notice of the full proposal, lodge with the Registrar of Titles notice of receipt of the full proposal in the approved form.

Independent Advocate Safeguard

1. The community corporation must refer the full proposal to an independent advocate (the regulations will specify who can be an independent advocate)

2. The independent advocate will:

  • review the full proposal and provide the community corporation with an independent assessment of the full proposal
  • arrange a briefing session (conducted on a multisensory basis to cater for people with disabilities) for owners and occupiers  to deliver the independent assessment of the full proposal
  • assess which owners in the scheme are vulnerable owners who should receive additional funding to respond to the proposal
  • advise vulnerable owners of their entitlement to additional funding
  • refer the vulnerable owners to specialist advisers (lawyers, etc) who vulnerable owners can see to obtain advice and or representation
  • assist vulnerable owners in obtaining the funding provided by the proponent to pay for the advice and or representation
  • represent vulnerable owners in SAT if the proponent disagrees about who is or is not a vulnerable owner entitled to the additional funding to ensure vulnerable owners have access to funding to pay for expert advice and legal representation.

3. The community corporation will be required to pay the independent advocate for the services listed above.

4. The community corporation can require the proponent to reimburse the community corporation the cost of the independent advocate’s services.

All owners will have access to funds to respond to the proposal

The person seeking to terminate a strata scheme (proponent) must provide funding to all owners in the scheme to:

  • pay for legal advice on the termination proposal
  • pay for expert reports including obtaining a valuation report for their lot
  • pay for expert advice on the taxation and financial implications of the termination.

The Regulations will:

  • specify what amount needs to be set aside for every owner and
  • specify what the owner can use that money for.
Vulnerable owners will be given additional protection

The proponent must also provide additional funding to vulnerable owners to respond to the proposal. Vulnerable owners can then use that funding to:

  • pay for legal advice on the termination proposal
  • pay for legal representation in the Tribunal
  • pay for expert reports including obtaining a valuation report for their lot
  • pay for expert advice on the taxation and financial implications of the termination.

The Regulations will:

  • define who is a vulnerable owner
  • specify what amount needs to be set aside for each vulnerable owner and
  • specify what the vulnerable owner can use that money for.

If there is an argument about who is a vulnerable owner, the Tribunal will decide.

Step 7. Vote on the full termination proposal

Multiple meetings may be held to understand and negotiate with the proponent on the termination proposal.  The council of a community corporation may meet with the proponent to clarify and provide further information to the affected people and all people who were served the full proposal can make submissions to the proponent and the community corporation. If required, more than one general meeting of a community corporation may be held.

A vote in favour of the termination proposal is only effective if it happens between two and six months after the proposal was served; a maximum four-month window. Only 3 votes are permitted during that period.

A person who is independent of both the community corporations and the proponent of the termination proposal, is appointed to tally and count the votes on the proposal.

The vote is taken as follows:

  • 1 vote may be cast for each lot in the community scheme
  • The value of each vote is 1.
Unanimous vote

A termination resolution is passed unanimously if the number of votes cast in favour of the termination resolution equals the number of lots in the community scheme. If the vote to terminate is unanimous there is no need for a Tribunal review, so the process continues at step 9.

Majority vote

If the vote is not unanimous but the required percentage of owners vote in favour, the proponent can apply to the Tribunal to confirm the termination resolution. (step 8).

This majority vote depends on which community titles schemes in the community scheme are being terminated.  The proposal may be to terminate:

  1. all of the community titles schemes in the community scheme
  2. one or more tier 2 schemes (remembering that that entails terminating their related tier 3 schemes if they exist)
  3. one or more tier 3 schemes.

1. For a proposal to terminate all of the community titles schemes in the community scheme:

  • If there are only 2 lots in the community scheme (ie. only the tier 1 scheme created) at least 1 vote is cast in favour of the termination proposal
  • If there are 3 lots in the community scheme at least 2 votes are cast in favour of the termination proposal
  • If there are more than 3 lots in the community scheme the number of votes cast in favour of the termination proposal is ¾ or more of the total number of lots in the community scheme.

2. For a proposal to terminate one or more tier 2 schemes (together with their related tier 3 schemes):

  • If there are 3 lots in the community scheme at least 2 votes are cast in favour of the termination proposal
  • If there are more than 3 lots in the community scheme:
  • for each tier 2 scheme proposed to be terminated, the number of votes cast in favour of the termination proposal by the owners of lots in the tier 2 scheme and any related tier 3 scheme is ¾ or more of the total number of lots in those related schemes; and
  • the number of lots cast in favour by owners of all lots in the community scheme is ½ or more of the total lots.

3. For a proposal to terminate 1 or more tier 3 schemes:

  • for each tier 3 scheme proposed to be terminated the number of votes cast in favour of the termination proposal by the owners of lots in the tier 3 scheme is ¾ or more of the total number of lots in the tier 3 scheme
  • the number of votes cast in favour of the termination proposal by the owners of lots in the community scheme is ½ or more of the total number of lots in the community scheme.
Role of the independent person

The independent person has the role of ensuring the confidentiality of the voting process to protect owners from harassment or undue influence.

The independent person appointed to tally and count the votes is to:

  • make a record of each vote identifying the lot for which it is cast, the date it was cast and the tally of votes
  • as soon as practicable give written notice to each community corporation in the community scheme of whether the termination resolution was passed and whether confirmation of the resolution from the Tribunal is required
  • if confirmation of the resolution by the Tribunal is required the independent person must provide the record of the voting to the tier 1 corporation otherwise they must not disclose information about who cast votes for or against the proposal or for which lots votes were cast to anyone.

There will be power to make regulations about the process for voting on a termination proposal.

Required vote not attained

If the required majority vote is not attained, the termination proposal comes to an end.

Part C – Confirmation of termination resolution by Tribunal

Step 8. Apply for a Tribunal review

If the full termination proposal attains the required majority vote (but not 100 per cent) the proponent can apply to the Tribunal to confirm the termination resolution.

The application must be made within 28 days after the close of voting on the termination proposal or within an extension of that time given by the Tribunal.

A judicial member or a judicial member and other members of the Tribunal must decide whether or not to confirm the termination resolution and make any ancillary orders.

Tribunal safeguard

A termination proposal that attains the required majority vote can only proceed further if the Tribunal confirms the termination resolution.

The Tribunal cannot give an order confirming the termination resolution unless the Tribunal is satisfied of the following matters:

  • for a tier 2 scheme, that each tier 3 scheme that belongs to the tier 2 scheme can be terminated
  • for a tier 1 scheme, each tier 2 scheme that belongs to the tier 1 scheme can be terminated
  • in any case the proponent satisfies the Tribunal that:
    • the termination process was properly followed and
    • every owner will receive fair market value for their lot or a like for like exchange for the lot
    • the termination proposal is otherwise just and equitable.

If the Tribunal is not satisfied on these matters the Tribunal must order that the termination proposal comes to an end.

Just and equitable

There will be extensive guidance to assist the Tribunal to decide whether the termination proposal is just and equitable.

The Tribunal must consider:

  • the interests of owners of lots in the community scheme
  • the interests of occupiers of lots and common property in the community scheme
  • the interests of registered mortgagees of lots in the community scheme
  • the interests of any infrastructure owners (persons who own and operate infrastructure on common property in the community scheme under a written contract with the community corporation who manages and controls that common property and where the community corporation has granted the infrastructure owner an infrastructure easement pursuant by ordinary resolution (if utility or sustainability infrastructure) or special resolution in any other case
  • the interests of any other person with an estate or interest in, or right over, a lot or the common property in the community scheme that is registered or recorded in the Register
  • evidence of any impropriety in the termination process including evidence of proxy votes being exercised invalidly or votes being affected by undue influence and evidence of false or misleading information in the outline or full termination proposal
  • the proportion of owner support for the termination by number of lots and unit entitlements of lots and in terms of each community titles scheme to be terminated and across the community scheme
  • the termination infrastructure report and options readily available to address problems identified in the report (including the extent to which contributions would need to be increased for implementation of an option)
  • any arrangements for the owner of a lot in a community titles scheme that is to be terminated to buy back into the subdivided land following redevelopment
  • the benefits and detriments of the termination proposal proceeding or not proceeding for all those whose interests must be taken into account in terms of each community titles scheme to be terminated, each community titles scheme not terminated and across the community scheme.
Tribunal proceedings

Each community corporation in the community scheme will be entitled to a copy or notice of the proponent’s application to the Tribunal.

Each community corporation will be taken to be a party to the proceedings before the Tribunal.

A community corporation that receives notice of the proponent’s application must serve notice of the application within 14 days on each owner, occupier or registered mortgagee of a lot in its community titles scheme, each occupier of common property and each person who the Tribunal requires to be served with notice of the application.

If the community titles scheme constitutes or includes a retirement village within the meaning of the Retirement Villages Act 1992 the community corporation served with notice of the application must serve notice of the application on the Commissioner within the meaning of that Act.

The tier 1 corporation has a duty to provide the record of voting to the Tribunal together with any community development statement in force for the community scheme.

All community corporations in the community scheme have a duty to provide to the Tribunal minutes of all meetings of the community corporation and council at which the termination proposal was considered, all written submissions made to the community corporation about the termination proposal and if the community titles scheme is proposed to be terminated, the scheme documents for the scheme.

At proceedings of the Tribunal on the application the Tribunal may hear and receive submissions from each community corporation and person required to be served with notice of the application.

Fair market value and compensation safeguards

In deciding whether an owner in a community titles scheme that is proposed to be terminated who does not support the termination proposal will receive fair market value for the lot the Tribunal must be satisfied that:

  • the owner will receive an amount that is at least the amount of compensation that would be required to be paid by an acquiring authority under the Land Administration Act 1997 for taking of the lot without agreement
  • the owner will not be disadvantaged in terms of the owner’s financial position as a result of the termination of the community titles scheme.

In considering the amount of compensation that would be payable under the Land Administration Act 1997, the Tribunal may also award an additional amount appropriate to compensate for the taking without agreement (but it may not be more than 10% of the amount otherwise awarded or offered unless the Tribunal is satisfied that exceptional circumstances justify a higher amount).

Without limitation, the Tribunal must consider the loss or damage, if any, sustained by the owner by reason of any of the following:

  • removal expenses
  • disruption and reinstatement of a business
  • liability for capital gains tax, goods and services tax or other tax or duty
  • conveyancing and legal costs and other costs associated with the creation or discharge of mortgages and other interests, including for the acquisition of a replacement property.

In determining whether an objecting owner will receive a like-for-like exchange for the lot, the Tribunal must consider:

  • whether the value of what is offered in exchange is equivalent to the fair market value of the current lot
  • how the location, facilities and amenity of what is offered in exchange compares with the current lot (including if the lot is proposed to be incorporated into another community titles scheme in the community scheme without a change in ownership).

The Tribunal can modify the termination proposal to:

  • ensure each objecting owner receives fair market value
  • ensure that lessees will be properly compensated by the proponent, if the termination goes ahead.
Orders

The Tribunal may confirm the termination resolution (with or without modification of the termination proposal) or decide not to confirm the termination resolution.  The Tribunal may make ancillary orders including but not limited to orders giving effect to an order confirming the termination resolution such as:

  • that an owner execute a transfer of ownership of the lot
  • persons with interests in a community titles scheme proposed to be terminated take steps necessary for the discharge, withdrawal or removal of those interest from the Register
  • that leases are terminated on the termination of the scheme and that tenants are compensated for termination of the lease
  • that an occupier of a lot or common property must vacate the lot or common property.
Notice of the decision to the Registrar of Titles

A community corporation must as soon as practicable after being given notice of the decision of the Tribunal lodge a notice of the decision with the Registrar of Titles in an approved form and give written notice of the decision to each person who was entitled to receive notice of the application.

Step 9. Request Planning Commission to endorse the plan of survey

If the Tribunal confirms the termination resolution (or the termination proposal is supported by a unanimous resolution), the proponent can request the Planning Commission to approve a scheme plan or plans or amendments of scheme plans (if the termination proposal does not involve termination the community scheme) or endorse the plan of survey (if the land in the community scheme is ceasing to be subdivided by a community scheme) required to register the termination.

If the Planning Commission does not endorse the relevant scheme plans, amendments or plan of survey, the termination proposal comes to an end.

Step 10. Order for directions about winding up a community corporation

Before a community titles scheme is terminated the community corporation, a member of the community corporation, a registered mortgagee of a lot in the scheme or a judgment creditor may apply to the Tribunal for directions about winding up the community corporation.

An application may be made as part of the proceedings for confirmation of the termination resolution.

Orders that the Tribunal may make on such application include the sale and disposition of property of the community corporation, discharge of liabilities of the community corporation and the administration and functions of the community corporation.

Step 11. Apply to the Registrar of Titles to register the termination

The proponent of a termination proposal can apply to the Registrar of Titles to terminate a community titles scheme if:

  • the Planning Commission has endorsed relevant plans of subdivision by community scheme or a plan of survey
  • the proponent has taken the steps required under the termination proposal or orders made in connection with winding up of the community corporation.

The proponent must apply within 12 months after the termination resolution is passed or, if the termination resolution requires confirmation from the Tribunal, the Tribunal makes an order confirming the termination resolution.

An application for termination of a community titles scheme must be in an approved form, be accompanied by evidence that the requirements for termination of the scheme have been complied with, be accompanied by the plans approved by the Planning Commission, a statement of how items registered or recorded for the scheme are to be dealt with and the fee fixed by the regulations.

On an application to the Registrar of Titles for termination of a community titles scheme the scheme is cancelled when the Registrar registers or records the termination in the Register.

Proponent withdrawal of termination proposal

The proponent can withdraw their termination proposal at any time before registration of the termination by giving notice of withdrawal to each community corporation that was given notice of the termination proposal.

The community corporation must give notice of the proponent’s withdrawal of the termination proposal to:

  • every member of the community corporation,
  • each registered mortgagee of a lot in the community titles scheme and,
  • if the full proposal has been served by the community corporation, each occupier of a lot or common property in its community titles scheme

A tier 1 corporation that is given notice of withdrawal of a termination proposal must give notice of the withdrawal to the Registrar of Titles in approved form within 14 days.

Termination proposal cannot proceed further

A tier 1 corporation has an obligation to lodge a notice with the Registrar of Titles when a termination proposal cannot proceed further, for example if there has not been a vote on an outline proposal within the 3 month period, or if at the end of 6 months after service of the full termination proposal a termination resolution has not been passed.

In these circumstances the tier 1 corporation must also give written notice confirming that the termination proposal cannot proceed further to the proponent and each member of the community corporation and each related community corporation.

Protection for vulnerable owners

Regulations may require the proponent to enter into arrangements with owners of lots in a community titles scheme the subject of a termination proposal to obtain independent advice or representation in connection with the proposal. The arrangements may include a requirement for the proponent to pay an amount to a trustee to be held in trust for owners of lots who meet specified criteria (vulnerable owners) to obtain independent legal advice or representation, valuation advice or reports or financial or taxation advice in connection with the termination proposal.

Expenses associated with a termination proposal

The proponent will have to cover the expenses of many activities linked with a termination, including preparing the outline and full termination proposal, making the planning applications and paying for the infrastructure and valuation reports.

If the community corporation needs to do things during the termination process (such as serve notices on the owners or registered mortgagees or pay for the independent advocate's services) the community corporation may charge the proponent reasonable fees to cover the costs of the activity. A community corporation need not undertake the relevant activity until the fees have been paid.

Effect of termination of community titles scheme

When the Registrar of Titles registers the termination of a community titles scheme:

  • the scheme documents cease to have effect
  • if the tier 1 scheme is terminated the community development statement for the community scheme ceases to have effect
  • the lots and common property that belonged to the terminated scheme cease to exist
  • if it is a tier 3 scheme, the tier 3 parcel becomes a tier 2 lot
  • if it is a tier 2 scheme, the tier 2 parcel becomes a tier 1 lot
  • if it is a tier 1 scheme the tier 1 parcel becomes a parcel of land that is not subdivided by a community scheme
  • the community corporation for the scheme ceases to exist
  • all rights vested in the community corporation immediately before it ceased to exist are vested in the persons who became owners of the lot or parcel of land on termination of the scheme
  • the persons who become owners of the lot or parcel become jointly and severally liable for all of the liabilities of the community corporation subsisting immediately before the community corporation ceased to exist (and those persons are liable to contribute in the same proportions as apply to their ownership of the lot or parcel
  • legal proceedings begun or against the community corporation may be completed by or against the persons who were owners of lots in the scheme immediately before its termination
  • if 2 or more persons own a lot in a community titles scheme that is terminated, the owners hold their share in the new lot or parcel of land as tenants in common or joint tenants in the same manner as they owned the lot and, if they owned it as tenants in common, in the same proportions as they owned the lot.


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Disclaimer

This information has been prepared for the purposes of informing stakeholders and the community on the nature and scope of the proposed reforms to the legislation relating to strata title. Every effort has been made to ensure the information presented is accurate at the time of publication. Because this information avoids the use of legal language, information about the law may have been summarised or expressed in general statements. This information should not be relied upon as a substitute for professional legal advice or reference to the actual or proposed legislation. The contents should not be relied on as a guide for current or future legislation relating to strata title or community title in Western Australia or in relation to current or future subdivision or development proposals, commercial transactions or dealings in strata title.

This page was last updated on: 07 Nov 2018