WA: Q&A Termination of strata titles scheme – Strata Titles Act 1985, Part 12

This article is about the termination of a strata tiles scheme or bylaw review process in WA, particularly after the amendment to the Strata Titles Act 1985.

Table of Contents:

• QUESTION: Maintenance costs are rising in our ageing building. I’ve had an architect draw up exciting redevelopment plans, but the COO will not distribute them to the owners. How can I ensure owners get access to this option?
• QUESTION: There is interest in selling our Perth strata complex to a developer, but there are 8 unit owners who stubbornly say they will never sell. Are there new Strata rules that allow for termination of schemes by a majority vote?

Question: Maintenance costs are rising in our ageing building. I’ve had an architect draw up exciting redevelopment plans, but the COO will not distribute them to the owners. How can I ensure owners get access to this option?

Owners in our ageing 1970s strata building on the Perth foreshore are concerned about the rising maintenance costs.

I contacted a well-known architect who designed a beautiful new Plan of Complex, from our old two-story into a five-story building.

The project will be funded by the pre-sale of stories 3 – 5. Each owner will receive a new apartment.

I have submitted the plans to the council of owners, but the council refuses to pass this on to all owners. They are split 50/50 on the redevelopment. Are they required to pass the information on to owners?

Our strata manager refuses to provide me with owner email addresses. How do I proceed to ensure owners are aware of this option?

Answer: The council should convene an EGM if owners who hold at least 25% of the unit entitlements make that request to the council in writing.

In situations like this, legal advice is recommended so that proper consideration can be given to the scheme by-laws and exactly how the requests you refer to have been made. 

Given the nature of the issue, the best course of action is likely to be requiring the council to convene an Extraordinary General Meeting, at which the issue can be discussed. The council should convene an EGM if owners who hold at least 25% of the unit entitlements make that request to the council in writing (section 128(2)(b) of the Act). If such a request is made and the meeting is not convened by the council then the Act allows the owners who made the request to convene the EGM. If you do not have the support of owners who hold at least 25% of the unit entitlements, there may be other options but it will depend on the particular circumstances.

Carolyn Meighan
Bugden Allen Graham Lawyers
E: carolyn@bagl.com.au
P: 08 9254 6304

This post appears in Strata News #700.

Question: There is interest in selling our Perth strata complex to a developer, but there are 8 unit owners who stubbornly say they will never sell. Are there new Strata rules that allow for termination of schemes by a majority vote?

I am the owner of a Perth unit in a complex of 27 units. The whole complex is more than 50 years old and showing signs of ageing.

At Strata meetings, there is interest in selling the whole complex to a developer, but there are 8 unit owners who stubbornly say they will never sell. Can we force the issue? I was told the new Strata rules allow for termination of schemes by a majority vote. What is the legal position for termination of schemes?

Answer: Part 12 of the Act is quite detailed and fairly onerous.

Firstly, it’s always important to point out that section 91 (1) the general duties of the strata company require that they must keep in good service and repair, properly maintain and if necessary, renew and replace the common property. So there is a positive obligation for schemes to maintain their buildings.

By the sounds of it, this complex is now starting to show signs of its age and depending on where it’s located you may see that the underlying land value exceeds the gross realisation of the units.

The new legislation did introduce termination of schemes, Part 12 of the Act: Termination of strata titles scheme. It is quite detailed and fairly onerous. But it’s not a majority vote, it’s actually an 80% requirement that owners vote in favour. If there is 27 units, they need 22 units to vote in favour of the termination of the scheme. If there is a suggestion that there are eight units that stubbornly refuse not to sell, it would be very challenging for them to be able to achieve an outcome that sees the scheme terminated.

Ultimately, I think they need to get their 10 year maintenance plan undertaken, and look to get ahead of some of those maintenance issues that seemed to be a concern now. If you get a 10 year maintenance plan drawn up, it will draw the attention to how much money you’re needing to put into the reserve fund over the next five plus years.

It’s certainly a big debate with some of our older schemes that we’re seeing right now. Particularly in the western suburbs were you have such a high land value. We are having these discussions with our owners on a very regular basis about what their strategic plan should be going forward, particularly when they do get a 10 year maintenance plan and there might only be eight lots and yet you’ve got concrete cancer, and you’ve got subsidence and some of these very expensive maintenance issues that need to be addressed.

Owners are now starting to question ‘Do we want to have to keep contributing $100,000 a year and a reserve fund for such a small scheme? Or do we now have to think about realising the underlying land value and potentially terminating the scheme and and moving on?’

Scott Bellerby
B Strata
E: scott.bellerby@bstratawa.com.au
P: 08 9382 7700

This post appears in the July 2021 edition of The WA Strata Magazine.

Have a question about the termination of a strata tiles scheme or something to add to the article? Leave a comment below.

Read next:

• WA: Leasehold Strata Schemes: an Introduction
• WA: Section 110 (Previously s43) of the Strata Titles Amendment Act 2018

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