How strata schemes work on mortgaged properties

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BY CAROL-ANNE SULEGA

MP Rick Hou, a member of the Bills and Legislation Committee (BLC), queries how the strata development scheme will work for fixed term estate owners who have mortgaged their properties.

Hou asked this to the sponsoring ministry of the Strata Titles Bill 2017, the Ministry of Lands, Housing and Survey who appeared before the committee this week.

“How will this work if a current property which is mortgaged and the owner of the property wants to develop it into a strata property how will this work with the bank?

“Will it be apportioned among the different units?” said Hou

Technical Advisor Allan McNeil responded agreeing that the question is in fact very technical.

He then said, “If you are an owner of a fixed term estate and you have a mortgage on your land and wish to do strata development you will need the permission of the bank.

“Key point will be the registration of the new strata lots in the subdivision so as the owner when a strata scheme gets registered then all those strata lots will come into your name and the loan will be transferred as well then he can then sell those lots,” McNeil said.

He then added that this could be a faster way to pay off a loan and is the reason why the scheme is attractive to developers because then they do not necessarily have to sell out all the lots.

They will still be able to keep some.

The BLC will be holding inquiries with various stakeholders on the bill this week and possibly into the next.