More flexible staged strata subdivision

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A staged strata / survey-strata subdivision is a scheme that is intended to be subdivided in stages by one or more amendments to the strata / survey-strata plan. This is different to a scheme which is complete at the point that it is first registered.

Sometimes a developer will choose to subdivide a strata / survey-strata scheme in stages so that funds from selling the lots in an earlier stage can be used to fund the construction of later stages.

How it works currently

Currently, if a developer intends to undertake a staged subdivision, the by-laws registered with the plan will set out what will be built in future stages. Usually the scheme will be constructed as it is set out in the by-laws. But in some cases, the developer may need to change the subdivision from what was originally proposed.

An owner of a lot in a staged strata / survey-strata subdivision wants to know:

  • what can be changed after I have bought a lot within the scheme?
  • what protection do I have against changes that may affect me negatively?

Developers on the other hand, have to manage situations where changes in the market or even changes in planning requirements imposed by planning agencies mean they need to amend the proposed subdivision in order to complete it.

Currently, any major variation to a future stage in a strata survey-strata scheme requires:

  • the consent of all the lot owners and
  • the consent of all people who have a registered interest (such as a mortgage) in a lot or who are caveators of a lot within the scheme.

Strata subdivision can come to a standstill for long periods while the developer obtains all of the consents needed to make the change, making it difficult for everyone.  This leaves owners living in a strata scheme next to unfinished concrete slabs and without access to the common property facilities that were meant to be delivered in the later stages.

Proposed changes

The new legislation will ensure the rights of lot owners who have already bought into earlier stages of the subdivision and the rights of registered interest holders are protected while making the process less cumbersome for developers.

Note that the staged subdivision of a strata / survey-strata scheme is different to the subdivision of a community scheme and the required processes and documents are not the same.

Management statement

Currently the practice is for developers to include details of a proposed subdivision of the scheme in the Management Statement, which is part of the by-laws for a scheme. This means that a scheme can have by-laws:

  • dealing with the ongoing management, such as parking and behaviour of occupants
  • setting out the subdivision, such as the floor plans for the final buildings.

The use of a Management Statement, which is a separate document, has been confusing to some people who do not understand that the Management Statement is part of the scheme by-laws.

The reforms will clarify this.

Schemes will no longer require a Management Statement.  If a developer wants to undertake the subdivision of a strata / survey-strata scheme, the developer can set out those stages of subdivision in the by-laws. By-laws that deal with stages of subdivision will be referred to as staged subdivision by-laws.

Consent to variations in a staged subdivision

When a developer needs to vary what was originally proposed for a staged subdivision currently, they will need to either:

  1. Demonstrate that the variation, for a stage of subdivision is a minor variation (as defined under the Regulations), in which case the developer does not need to get the approval of the strata company (through a unanimous resolution) or the consents of people with a registered interest in lots or caveators. The regulations currently define ‘minor variation’ in a very narrow way.
  2. If the variation to the staged subdivision is a major variation (as set out in the current Regulations), the developer will need to obtain consents before the developer can apply to register the plan of re-subdivision.

Changes to a stage of subdivision which are ‘major variations’ are currently set out in the Regulations, and include such things as altering the number of lots or altering any lot by greater than 10 per cent.

The consents currently required where there is a major variation to a stage of subdivision

Currently, a developer needs to get the written consent of every owner (through a unanimous resolution) and of every registered interest holder and caveator for each affected lot, when variations to a stage of subdivision are major. Obtaining all of these consents can be very difficult because:

  • there is no requirement for registered interest holders or caveators to provide their response to the proposed variation of the proposed subdivision in a timely manner
  • there is no requirement for registered interest holders or caveators to have reasonable grounds for objecting to the variation of the proposed subdivision.

Reforms: owner consent still required where there is a major variation

Reforms will still require consent from every lot owner in a scheme where a change to a future stage of subdivision is major.  That consent will be in the form of a unanimous resolution of the strata company.

Reforms: deemed consent process for people with a designated interest

The current Strata Titles Act 1985 gives registered interest holders and caveators a right to object with no obligation to be reasonable in objecting to the variation or even provide grounds for the refusal. This system is open to abuse with parties bargaining for benefits in exchange for consent.

The reforms will introduce a deemed consent process that will apply to people with a designated interest.

If a developer proposes varying a stage of subdivision in a staged scheme and that variation is major, the developer will:

  • notify the people with a designated interest of the proposed variation
  • people with a designated interest will have sixty days to respond to the proposed variation
  • if the people with a designated interest do not respond within sixty days, they will be deemed to have consented to the proposed variation
  • if a person with a designated interest objects to the proposed variation, they must notify the developer they object within sixty days and provide written reasons for their objection.
  • The developer will be able to apply to the State Administrative Tribunal (the Tribunal) to review the grounds of objection given by people with a designated interest
  • If the Tribunal finds that the grounds for objection are unreasonable, the Tribunal can make an order that the consent of that person with a designated interest is deemed to be given.

Deemed consent does not apply to owners of lots.

Note: A designated interest means: a registered mortgage; a registered lease; a caveat recorded under the Transfer of Land Act 1893; the interest of a judgment creditor named in a property seizure and sale order registered under section 133 of the Transfer of Land Act 1893; the interest of a person named in a memorial registered under the Transfer of Land Act 1893 as having a statutory right requiring the consent of the person to any dealing with the land; a plantation interest registered under the Transfer of Land Act 1893; or a carbon covenant registered under the Transfer of Land Act 1893.

Expanding the definition of minor variations

Reforms will expand the definition of what is a minor variation to provide more flexibility in staged subdivision (this will be done through amendments to the Regulations).


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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: 19 Jul 2018