Friday, 12th July 2013

On-site auctions are a well recognised way to sell your property, however, your by-laws can prohibit the use of signboards and having on-site auctions and a recent CTTT decision confirms that it can.

In 2006 the owners corporation of a strata building in Sydney’s Eastern Suburbs introduced a by-law prohibiting owners from holding auctions for the sale of their apartments in the apartments or on common property without prior written approval of the owners corporation.  In about May 2013 an owner in the building advertised her apartment for sale in the local newspaper.  The advertisement indicated that the apartment would be sold at an on-site auction.  The owner had not applied to the owners corporation for permission to hold an on-site auction.

The strata manager wrote to the owner’s selling agent to request the the on-site auction be cancelled.  The selling agent refused to ca

ncel the auction.  The owners corporation’s lawyer subsequently wrote to the lawyer for the owner to request a written undertaking that the auction would not go ahead.  Again the owner refused to give an undertaking and instead asserted the by-law prohibiting on-site auctions was invalid.

The owners corporation applied to a strata schemes adjudicator for an order restraining the owner, and her selling agent, from holding the on-site auction in breach of the by-law.  The owners corporation argued that the terms of the by-law were clear, the owner could not hold an on-site auction without the owners corporation’s permission (which she did not have), and that there were strong grounds for an adjudicator to make an order to prevent the auction proceeding.

The adjudicator agreed and within 48 hours of lodging the application, the owners corporation obtained an interim order restraining the owner, and her selling agent, from holding the on-site auction.  The adjudicator was satisfied that the owners corporation had given the owner ample warning that the on-site auction of her apartment would constitute a breach of the by-laws and that the owner had not provided a meaningful response to the owners corporation of its lawyers.  On that basis the adjudicator was satisfied that an order restraining a breach of the by-law should be made.

The case shows that by-laws prohibiting or placing restrictions on on-site auctions for the sale of lots in strata buildings are valid and, if appropriate, will be enforced by restraining orders made by strata schemes adjudicators.  In this particular case the owner complied with the adjudicator’s order, cancelled the on-site auction and held the auctions elsewhere.