FOMO V FOMO
December 14, 2021
The Fear of Missing Out (FOMO) is heightened amongst property owners in South East Queensland at the moment. Growth that we haven’t seen for decades continues to baffle and amaze everyone I talk to. The hot question of course being: “Should I sell now to take advantage of this growth?”
Of course, the various responses are tempered by a myriad of issues, including (to mention just a few), whether the opportunist is an owner occupier or an investor, the type of property, whether it has development potential, their age and their emotional attachment to the property.
If the property has development potential, consider the additional complications if you throw into the melee of issues the rights and obligations under Community Title living.
If you think you or someone in your strata building may suffer from either Fear of Missing Out (FOMO) or the Fear of Moving Out (FOMO) read on.
We all know that Queensland is dragging the chain compared to other states when it comes to the required voting protocol to terminate an existing Community Title Scheme (CTS). It’s a resolution without dissent or it’s just not happening.
Given the glacial speed with which our legislators are responding to take up the nationally recognised imperative (consider the minimal substantive changes of the regulation modules approved last year which took effect this year – some two years after they were legislated to expire) there is certainly no legislative reprieve on the horizon!
I am seeing a lot of old schemes, especially on the Gold Coast, where it’s a small scheme, the building is squarely at the end of its economic life and all bar one of the owners are keen to sell to one of the many circling Developers and turn their tired old investment into a tidy profit.
Invariably, the resistance comes from an owner occupier who, quite simply, is attached to their dear old home and has no interest in even considering a plan B, irrespective of how much of a mountain of tax-free cash may be dumped on them. The Fear of Moving Out (FOMO) is a fear that we Queensland strata owners are completely justified in perpetuating. A private statutory right that helped us convert our psyches to the strata paradigm. It is currently one of our inalienable freehold rights.
So, what to do?
The respective FOMOs are at logger heads.
Imagine the increased tension if the relevant town plan applying to the Scheme land is about to change, with the outcome being that the Scheme land will become significantly and permanently less valuable than before as the development yield is about to plummet and that mountain of cash is looking more like a mole hill…
Someone needs to make that Development Application (DA) in order to preserve that yield!
So, again, what to do?
A compromise that helps to at least preserve everybody’s value is for the Body Corporate to resolve to make or permit someone else to lodge a DA before the town plan changes.
In my experience, the Fear of Missing Outers will generally be only too willing to arrange, at their cost, for the application to be prepared, lodged and processed, especially if the Fear of Moving Outer is not inclined to invest in the future. It’s a code assessable application, so there’s no expensive appeals or other dramas to deal with. Once the development approval is obtained it will run with the land and, if necessary, can be extended.
This will allow time for the Fear of Moving Outer to continue to reside in their lovely home, while preserving the overall values for all the FOMOs. This valuable time allows an opportunity for opinions and legislation to change.
Of course, there’s one more potential catch. The Body Corporate needs to consent (ordinary resolution) to the DA – AND each of the FOMO lot owners need to consent to the DA too. Yes, the Fear of Moving Outer needs to provide a written consent to the application also.
Such a consent does not in any way oblige the Fear of Moving Outer to sell.
Remarkably, some Fear of Moving Outers still refuse to provide their consent because they simply do not understand the disconnect between the act of making an application and obtaining an approval and any obligation to sell. Those are completely separate and distinct things. However, it is generally a much easier proposition to explain, as it represents an opportunity to ensure that no one misses out completely. Both the Fear of Missing Outers and Fear of Moving Outers are more likely reach a consensus for the greater harmony of the Scheme overall.
This article was contributed by Paul Morris, Partner, Nicholson’s Solicitors