There is no reason why Company Title buildings should not be converted to Strata Title. Converting Company Title to Strata Title may be in the financial interests of all existing shareholders. This is particularly relevant in the current financial market, where standard banks are now taking a harsher line in respect of lending to prospective owners of Company Title shares.
There are a number of things that a Board need to be able to do. These steps include:
Ascertaining shareholder sentiment
Talk to the Shareholders at the General Meeting to see what they are interested in. This step will allow you to ascertain the general level of interest and engagement of Shareholders and is cost free.
Our view is to always get a 100% of Shareholders to vote in favour of the conversion process for the following reasons:
- If you have one or two Members who are not in favour of the resolution, that may be because there is a concern that the Shareholder’s right to occupy their unit would be adversely affected by the proposes strata title stricture. This may result in costly litigation against the Company.
- Furthermore, as a matter of practicality if a Member is against any proposed resolution, and has a mortgage over their shares, they can refuse to cooperate with the Company in obtaining the mortgagee’s consent.
Once the general position of Shareholders has been ascertained the following steps should be considered:
- The Company should have an Extraordinary General Meeting for the members to pass a special resolution giving effect to the conversion process. We always recommend that 100% of Members should vote in favour of the special resolution for the reasons listed above.
- Consider whether the building is compliant with fire orders. It is reasonable to assume that the council will serve the building with a fire order, as soon as an application is made to convert to Strata. It could take approximately 12 months for a building to become fire compliant.
- A section 73 Compliant Certificate would need to be obtained from Sydney Water, which may involve the requirement that each unit is separately metered. Generally, this work can be completed during the completion of any fire upgrades.
- The building will need to be compliant with the Strata Schemes Management Act 2015 (NSW) including the installation of window safety locks and any other matters that apply to the building code. This process could take up to 12 months.
Who manages the conversion process?
JFMLAW works closely with Mr John Avigdor, [architect]. As a first step, we would recommend that you organise a conference with JFMLAW and Mr Avigdor. That consultation is on a free of charge basis and allows the Board to work out exactly what steps need to be taken to manage the whole process and engage the appropriate consultants.
OTHER TECHNICAL STEPS
Once the Strata Plan has been approved by the Shareholder, the following technical steps require consideration:
- All owners need to be given a Certificate of Title. If there is a mortgage on the shares that mortgage needs to be registered on the title to each lot.
- Stamp duty needs to be paid. Every single building needs to have different processes associated with stamp duty and JFMLAW helps you with that.
- Managing the conveyancing process. JFMLAW helps you manage the conveyancing process.
What are the costs involved with the company title to strata title process?
Mr Avigdor’s fees should be discussed with him. However, on a standard basis, Mr Avigdor usually charges between $1000-$1500 per unit.
JFMLAW charges between approximately $1000 – $2500 per unit depending on the building.
Remember, patience is everything in conversion from Company Title to Strata. It can take a year at least and maybe 2 years. Some special levies may be required to upgrade the building for the purposes of building compliance.
If you would like to have John Morrissey or Mariam Chalak attend a Board meeting to discuss these matters, we are happy to do so on a free of charge basis. Our best contact number is 02 9331 0266 or email Mariam Chalak – firstname.lastname@example.org.