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Help - Melbourne Strata legal control

Discussion in 'Legal Issues' started by Teh Hun Chook, 10th Jan, 2017.

  1. Teh Hun Chook

    Teh Hun Chook Member

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    Location:
    Melbourne
    As a noobie I bought an apartment in a block in Melbourne about 10 years ago. At the time of signing I did not know that the developer somehow assigned disproportionate voting rights to itself in the body corporate. Its voting rights compared to all other parties is something of the order of 100 to 1. In effect, the developer who also owns the property manager of the apartment block could propose anything and get it passed as a matter of course in any general meeting.

    The developer apparently has sold all its apartments in the building but owns all the ground floor commercial units, basement halls and garages.

    The management of the apartment block has been by and large satisfactory and so has been the rental yield. However, recently, the developer got approval from the Melbourne city council to to build some apartments on the top of the apartment block, modify building facade, ground floor and basements. Many apartment owners were alarmed that the property manager could do that but the developer insisted that the modifications to the building were to the parts owned by it. Most owners doubted that the developer had the right to modify the common property such as the building but felt helpless when they saw the form purported to show the voting rights of owners in the apartment block. The developer had more assigned voting rights than all other owners combined.

    The perceived injustices of how the Developer has behaved are:
    1. assumed property right for itself to build on corporate property ie top of apartment block
    2. use all corporate body sinking funds ($600k) to promote its building plan. New facade will also extend upwards to cover the Developer's new apartments. The Developer has no intention to contribute proportionately.
    3. embedment of massive assigned voting rights to advance its agenda
    4. installed its own property manager to promote its interests
    I cannot imagine that the Victorian legislation on strata administration allows such an inequitable situation to develop in Melbourne. Many apartment owners protested and they seem to have given up of being able to sort out this dilemma.

    Some of the options I have been thinking are:

    Is there a legal guru in this forum who can suggest a way to remedy the situation, now and in the future?

    Is it feasible for a law firm to start a class action on behalf of owners living in Melbourne, interstate and overseas, on a no win no fee basis?

    Is there any use to collectively petition the Victorian Minister responsible for strata administration to close strata voting rights loopholes and annul legacy oppressive conditions?

    How do we verify whether the Developer's assigned voting power is legal?

    Any comment would be welcome, but please do it constructively. Thank you.
     
  2. Perthguy

    Perthguy Well-Known Member

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    You bought the apartment 10 years ago so it should have increased significantly in value. Have you thought about selling up? It might be easier to sell out than fight the Developer on this.

    I had an experience in Perth with a strata manager who made all of the other owners lives a misery. My unit had increased in value so I sold it and got out. Best decision I ever made. I did not want to live with the stress any more.

    I realise this probably sounds like a cop out but realistically it could be very difficult and/or very expensive to change your situation.
     
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  3. thatbum

    thatbum Well-Known Member

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    Yes. Get some specific legal advice. Its impossible to say anything else on the information provided.

    No. Why would it be a class action? Why would they offer to work for free?

    No. You don't even know if there are any loopholes.

    See answer number 1 - get legal advice.
     
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  4. KateAshmor

    KateAshmor Victorian Conveyancing Lawyer Business Member

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    The Owners Corporation Act is currently being reviewed. You can make a submission or write to the Minister.

    You may have options at VCAT but you'll need the majority of members of the OC to agree to undertake action. The misuse of the sinking fund might be a police matter.

    Unless you feel like knocking on a lot of doors and writing to a lot of absent owners, perhaps it would be better to sell and move on, as has been suggested.

    When you purchased the property, the rules of the Owners Corporation would have been in the vendor statement. They would have set out the developer's powers and control over the OC.
     
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  5. Scott No Mates

    Scott No Mates Well-Known Member

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    Sounds like your block and the airspace sit in two different stratum. The developer still owns the entire stratum and would also have positive covenants for support and easements for the provision of services.

    It might be time to bale before it becomes a worksite and difficult to find tenants.
     
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  6. Otie

    Otie Well-Known Member

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    Just out of interest is this a developer that has buildings predominantly in Doncaster/Box Hill/Forest Hill region
     
  7. Teh Hun Chook

    Teh Hun Chook Member

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    Thanks for replying. Feedback below to your comments:


    But thanks for your response.
     
  8. Teh Hun Chook

    Teh Hun Chook Member

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    Thank you for sharing the wisdom of your experience, which I appreciate. Above in red is my feed back.
     
    Last edited: 11th Jan, 2017
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  9. Teh Hun Chook

    Teh Hun Chook Member

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    Thank you for the very helpful comment.

    It appears from your comments that it would not be worthwhile speaking to an expert strata lawyer
    and seek an advice? Can legal voting power be verifiable and verifiable as to a properly served legal process? It seems the crux is whether the voting power situation is acceptable. Would you be able to provide this service and your fee? A few apartment owners resident in Melbourne could come and see you. PM me if you like.
     
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  10. Teh Hun Chook

    Teh Hun Chook Member

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    It is becoming a worksite. Developer/property manager provides lease guarantee and occupancy rate is high, so finding tenants is not a problem as far as I know.
     
  11. Teh Hun Chook

    Teh Hun Chook Member

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    No
     
  12. KateAshmor

    KateAshmor Victorian Conveyancing Lawyer Business Member

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    Not my area of law. You might want to consider getting some advice from a junior barrister, can often be cheaper than a lawyer. Try Joel Silver.
     
  13. sydprop

    sydprop Well-Known Member

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    Might be right or might not.
    If you share the strata documentation you might get more useful opinions. Eg. Letters and AGM / EGM minutes?