Is this Legit? 200 Years of Lease for just $1 to pay to the Body Corporate???

[Rwang8721]

Hi Guys,

Still quiet new to the forum, sorry if I am posting at the wrong place

Okay, this is what has just happened to one of my friend recently (let's name him X), and just wondering if there is anything he can do about the situation. Now here is the story:

X has just recently made a purchase into a complex of 69 apartments, where the original developer still retains a remainder of 16 lots. (By the way this is just a fresh strata scheme with most of other owners still in a process of settling into the complex).

So just about 2days ago, a letter arrived from the strata and practically advised that as per the grant of proxy voting rights contained in the initial contract of sale, which effectively appointed the original developer as the proxy holder for all owners of the complex during the 1st year of the scheme scheme, the Body Corporate has therefore in accordance with his motion, entered into a leasing contract with the developer to lease some of the common areas in the complex including visitor parking spaces for a period of 200 YEARS at the cost of just $1??????

X was absolutely mad when he saw the decision by the Body Corporate and was wondering if there is anything he could do about it????? as he was told if he was going to block this decision he would require a majority vote of 75%??? which effectively means that all the owners of the remainder 53units have to be present at the meeting to motion and second the motion???? The same requirement applies if he wishes to motion an end to the grant of proxy voting rights????

Is there anyway other way around this? I mean is the developer and hence the Body Corporate's decision legitimate??? Does this mean as long as the developer contains an effective control of the Body Corporate he can just get away with everything that he rules in his favor???

Is the grant of the proxy voting right legit at the first place???

 

[Scott No Mates]

What has x's solicitor said?

Proxies are legal you do it if you cannot attend a meeting.

Leases over 10 years are often classed as subdivisions - so legal advice should be sought.

Also contact the OFT - strata division and query the legitimacy of having to sign over the proxy and the powers of the developer in the first year once units have been transferred.

 

[RPI]

He is probably trying to access the depreciation available to him through a long term lease. If that was what he was trying to do it would not, in all likelihood, affect your mate. However the terms appear uncommercial and without a legitimate reason the developer would fall foul of the anti-avoidance provisions of the tax act.

 

[Rwang8721]

Rumor has it that if any one is interested in gaining access to those extra parking spaces the developer now has in his possession, you can do so by paying an once-off fee of $30k and he will grant you a further sublease at a nominal value of $1 for the next year 99 years......Any one heard anything like this before?

 

[Terry_w]

I don't know much about this area of law, but think the rules were tightened recently to prevent developers doing this.

You should talk to the Dept of Fair Trading first and then seek out a solicitor who specialises in strata.

 

[DaveM]

http://www.muellers.com.au/

I would suggest giving them a call and run the scenario by them for the legality and options to counter this absurd action.

It sounds like the developer is tryinig to find a way to make more money by converting common property into additional car spaces for lot owners for $30k a pop.