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New Strata Laws

New strata laws proposed in a government discussion paper could force apartment owners to sell their homes to developers if a majority of the owners in their building vote to sell. Under today’s laws, all owners must agree before a block can be sold.

The issue has a cinematic precedent. In the popular Australian movie, The Castle, blue-collar family man Darryl Kerrigan fights all the way to the High Court to stop his house being “compulsorily acquired” by developers.

Kerrigan wins the case – and saves his house – by invoking a section of the constitution that states the Commonwealth may only acquire property on “just terms”.

But would Kerrigan’s defense work for NSW apartment owners forced to sell their homes?

“[The] answer is no,” said George Williams, a constitutional lawyer and professor at the University of NSW.

“Just terms protection only applies to Commonwealth laws,” he said. “The state parliaments can authorize the acquisition of property as they wish without compensation”.

Many are asking whether the new laws, proposed by the Fair Trading Minister, Anthony Roberts, are in fact fair.

One side asks: is it fair to force people to sell their homes? And the other side replies: is it fair that a minority of dissenters can force their neighbors to maintain crumbling buildings, which would be cheaper to knock down and rebuild?

Peak bodies representing both strata owners and managers say they welcome the new laws.

The NSW president of Strata Community Australia, David Ferguson, says Sydney is littered with ageing apartment blocks full of “unlocked value”, blocked from developers by a minority of unwilling owners.

“Some people don’t realize the value of the land they are sitting on,” said Mr Ferguson, who represents strata managers.

“You are in a collective interest situation in strata.”

A peak body representing apartment owners agrees that the “unanimous resolution” needs to be changed. But the secretary of the Owners Corporation Network, Gerald Chia, admits he worries that owners will be “snowballed by developers”.

“You have to maintain fairness for people who have to be thrown out of their homes,” Mr Chia said.

A prominent strata lawyer believes the only way to protect vulnerable apartment owners is if an independent tribunal is set up to review cases where owners feel they are being bullied out of their homes.

“We’re looking at the Mrs Joneses of this world that won’t have the resources to fight this,” said Colin Grace, the director of Grace Lawyers.

“If you want them out they should have the right to appeal … [and] the other side should have to wear the [legal] costs.”

Newspaper Article 15/09/2012

Sydney Morning Herald 17/09/2012