Collective Sale of Strata Scheme: The 75% rule

9 May 2025 in Property Dispute Lawyers | 4 min read | skip to FAQs

This article discusses the highly structured process of the collective sale of a strata scheme, exploring the required level of votes at each stage from owners to effect a collective sale. Making a collective sale of a strata scheme is a significant endeavour with several well defined steps required. Understanding the complexities of the legislation governing this process can be challenging.

Definitions

Strata schemes refer to a type of property ownership where individuals own a portion, known as a lot, of a larger development, such as an entire apartment building. The building, or group of buildings, is divided into individually owned lots and common property. Collective sales occur when the entire strata scheme is sold in one transaction.

The Process of Collective Sale of a Strata Scheme

The strata renewal laws under Part 10 of the Strata Schemes Development Act 2015 (NSW) (“the Act”) and the Strata Schemes Development Regulations 2016 (NSW) (“the Regulations”) prescribe the process of a collective sale of a strata scheme as follows:

Proposal Submission

The first stage is set out in section 156 of the Act and provides that a proposal may be put forward by any person, whether a lot owner or not. Section 157 of the Act states, in part, that the Strata committee must consider the proposal for the sale or redevelopment.

Section 30 of the Regulations sets out the requirements of any proposal for a collective sale.

Initial Consideration by the Owners Corporation

Section 157 provides that within 30 days, the owners corporation must convene a meeting to consider the proposal. If the owners corporation decides the proposal warrants further investigation, a general meeting with the owners must be held within another 30 days.

Formation of the Strata Renewal Committee

If the general meeting supports the proposal, a strata renewal committee must be formed. This committee oversees the preparation of a strata renewal plan, which includes valuations of individual lots and the whole scheme, along with other information prescribed by section 170 of the Act.

Should a strata renewal committee be elected, it must decide on the proposal by way of a quorum which is described in detail in section 17 of the Strata Schemes Management Act 2015 (NSW).

Distribution of the Strata Renewal Plan

A special resolution must be passed by the owners corporation to distribute the plan to owners for their consideration. Owners supporting the plan, send a support notice to the strata committee.

75% Lot Support Threshold 

The Act provides under section 154 that the required support by the owners, for a strata renewal plan, is that of owners of at least 75% of the lots, other than utility lots in the scheme. Utility lot owners are those who own car spaces or storage units rather than residential property.

If the required level of 75% support is reached, the owners corporation must convene a general meeting to decide whether to apply to the Land and Environment Court (“the Court”) for an order to proceed with the plan.

Application to the Land and Environment Court

An application containing information prescribed by section 179 of the Act is submitted to the Court. The application is served upon all owners, mortgagees, and any proposed purchaser. Any dissenting owners can object to the application.

Court Review

The Court considers the application, with reference to considerations set out in section 182 of the Act and decides whether to grant the order.

Court Granting of the Order

If the Court grants the order, the strata scheme is terminated upon completion. Section 184 provides that each owner must sell the owner’s unit or units in accordance with the terms of the strata renewal plan.

Common Misconceptions of Collective Sale of Strata

1. A common misconception is that unanimous support is required to sell a strata scheme collectively. This was true before Part 10 of the Act came into force in 2016. Since then, a reduced threshold has applied. Under section 154 of the Act, owners of at least 75% of lots must support the termination and collective sale for the strata renewal plan to proceed.
2. Another common misconception is that this 75% support is calculated based on unit entitlement. Unit entitlement refers to the proportional share of the scheme of each lot based on market value. For example, if there are two lots in a strata scheme and one is worth $600,000 and the other is worth $400,000, their unit entitlements are 60/100 and 40/100 respectively. Unit entitlement affects strata levies with higher unit entitlement lots attracting proportionally higher strata levies. Additionally, unit entitlement can affect voting power. For special resolutions, generally, the value of a lot’s vote is based on the unit entitlement of that lot. However the 75% support required for a collective sale is not based on unit entitlement and those with a higher unit entitlement do not get a bigger vote. Each lot’s support counts equally, regardless of relative market value.

In summary, support notices must be received from at least 75% of non-utility lot owners in the scheme for the strata renewal plan to progress.

Exemptions to Strata Renewal Laws

Section 153 of the Act provides that the strata renewal laws apply to all freehold strata schemes except:

1. Strata schemes subject to a development contract; and
2. Strata schemes that contain a retirement village.

How can BSM Sydney Lawyers assist you?

Understanding the process of collective sales under the strata renewal laws is difficult and complex. At BSM Lawyer Sydney, our property dispute lawyers have extensive experience in reviewing and providing advice on strata schemes. Our property lawyers remain up to date with the most recent strata laws and are able to advise you of the strict processes required under the legislation relating to the collective sale of strata schemes. The lawyers at BSM Sydney Lawyers can also explain how the 75% voting threshold is calculated and who is excluded. Our experienced property dispute lawyers provide free 20-minute consultations.

FAQs

BSM Lawyer Sydney have offices conveniently located in Sydney CBD, Sutherland, Parramatta, Shellharbour and Wollongong