Buying selling and terminating strata
All strata properties registered as Strata Titles at Landgate are subject to the Strata Titles Act 1985 (the Act) and will all be subject to changes brought about by the Strata Titles Amendment Bill that is proceeding through Parliament.
How the strata changes affect changing your property
For most people, choosing to make changes to your property is a big decision as it affects your home or livelihood. For a home owner, it’s about making your home into a home sweet home. For a business owner, it’s about your livelihood and setting your business up for success. For a developer, it’s about the ability to create new opportunities where people can come to fashion a new home or business. No matter who you are, understanding your investment and the proposed changes to the Act will ensure you can make informed decisions.
Buying and selling strata
Every buyer of a lot in a strata titles scheme (which can be a strata scheme or a survey-strata scheme) in Western Australia (WA) should receive information about the scheme before they sign a contract (the offer and acceptance). It is very important the right information is provided to buyers before they purchase a property. Strata owners are subject to by-laws, unit entitlement, common property and common agreements. These aspects of strata will impact on the use, ownership and obligations of the owner. Giving buyers information about strata ensures they understand they are buying a property that has different rules and obligations from a non-strata-titled property.
The seller must also give the buyer information about certain variations (changes) to the scheme if they happen between signing the contract and settlement.
Under the current Act if the seller sells the lot off-the-plan, the buyer’s deposit must be held by a solicitor, real estate agent or settlement agent and the plan must be registered within six months (or in the timeframe set out in the contract).
The reforms aim to:
- give the most relevant information to a buyer
- set out the information in a clear way
- make sure the buyer knows where they can get more information
- make sure the obligation on the seller to provide information is reasonable
- clarify on what grounds a buyer can avoid the contract if the seller fails to provide the information to the buyer.
Terminating a strata scheme
Changing your strata may not just be a buy or sell scenario. In some cases, unlike freehold titles, strata titles cannot be redeveloped without going through a particular process to terminate the scheme and ensure everyone who lives there is considered.
The first strata schemes in Western Australia were registered in 1968, but before that were Purple Title schemes, which were similar. Those early multiple-occupancy buildings are ageing and many are costing owners large amounts in maintenance. Therefore, termination and redevelopment of a strata scheme will become increasingly common.
Although terminating a scheme under the current law does have a process for unanimous resolution (100 per cent of strata owners vote in agreeance of the termination), there are also processes under the current Act that can allow for a termination to happen without this vote such as:
- when one owner or one mortgagee applies to the District Court for an order to terminate a scheme (under section 31 of the Act), or
- when one owner applies to the District Court for an order (under section 51 of the Act) deeming that a resolution to terminate is unanimous, provided that a special resolution was reached and the person applying was part of the majority who voted to terminate.
The current law does not provide adequate safeguards for owners in relation to the termination of a scheme as:
- there is no requirement for a detailed proposal be prepared or even given to other owners before launching the District Court action
- there is no requirement for a vote before applying to the District Court
- there is no additional assistance or safeguards for vulnerable owners to help them in responding to the District Court action, and
- the Act provides no guidance to the District Court on how it should assess a termination application.
To protect the assets held by all strata owners, Landgate has revised the process of terminating a strata scheme in the proposed reforms.
The new majority termination process will:
- introduce safeguards for owners
- introduce a termination process that is transparent, reasonable and requires a vote, and
- require a full procedural and fairness review by the Tribunal to consider ALL owners’ views.
For more information
Find out more about the proposed changes on the better buyer information web page and the safeguards for the termination of schemes web page under the topic 'All about the reforms'.
Living in strata
Renovate or renew – the decision made easier
After more than 30 years living in four different units in the same development, Mo is happy to admit it might be time to knock the place over.