Breaking news: Court orders first Strata Renewal Plan for the collective sale of a strata scheme

The Land and Environment Court has determined the first Strata Renewal Plan be given effect under the Strata Schemes Development Act 2015 (the Act).


In the case of Application by the Owners – Strata Plan No. 61299 [2019] NSWLEC 111 before Pain J, the Court approved the strata renewal plan allowing the strata renewal committee to sell the entire building to the developer.

The strata scheme renewal plan proposed was a collective sale of all lots in the strata plan, not a redevelopment.

The Court was satisfied that for the purposes of the Act, the proposed distribution of the proceeds of sale apportioned to each lot was not less than the compensation value of the lot and the terms of the settlement under the strata renewal plan were just and equitable in the circumstances.

Accordingly, the owners of the lots were ordered to sell their lots in accordance with the Deed of Agreement entered into between the developer/purchaser and the strata renewal committee.

The Court also ordered that, in accordance with section 183(1) of the Act, upon termination of the strata scheme, the assets of the former owners corporation vest in the former lot owners (and not the purchaser) as tenants in common in shares proportional to the unit entitlements of their former lots, the balance of the administrative fund being distributed to the lot owners in accordance with their respective proportional ownership of the assets, within 14 days of termination of the strata scheme.

Lease interests

Unlike the Land Acquisitions (Just Terms Compensation) Act 1991 under which all interests in the land are extinguished and acquired by the acquiring authority, the Act is directed only to the freehold interest in the land.

The Court addressed the leasehold interests and observed that the Act does not require that a collective sale cannot occur subject to a lease.

The Act provides some mechanisms for the termination of leases if vacant possession is required under a strata renewal plan. However, the strata renewal plan did not provide for vacant possession of the commercial leased premises. The strata renewal plan in this case contemplated for existing leases to continue without extinguishment or sale.

The Court noted that the leases accordingly will terminate in accordance with their terms, rather than by a Court order.

The Application was not opposed by any of the non-consenting owners or their mortgagees, so this case presented the Court with a good opportunity to consider the legislative mechanism of terminating the strata scheme without any impediments.