Tenant wants a puppy? Thinking of knocking out the wall between the kitchen and dining room? If you live or invest in a strata-titled property, there may be more involved in making these decisions than simply choosing a breed or paint colour.
When you buy into a body corporate property, you’re buying into a complex with other owners. This means that you own your individual property lot but you share ownership of the common areas, such as pools and gardens, with the rest of the owners.
Collectively, all of the owners in a building are known as the body corporate or owners corporation. Every day, homeowners and investors all across Australia buy strata titled apartments without fully understanding what the body corporate is all about. So we’ve compiled this guide, to show you which mistakes to avoid when buying a strata titled property.
Trap 1: Not reviewing the financials
David Ferguson, President of the Institute of Strata Title Management (ISTM), recommends that prospective buyers engage a professional to “search the books and records of the owners corporation, to view the finances and see any issues the owners corporation is facing”.
Trap 2: Failing to read between the lines
Get your hands on as many committee meeting and AGM minutes as possible. Read through the documents carefully to see whether repairs are actioned quickly, how the body corporate committee members work with each other and whether there are any disputes between owners.
Trap 3: Forgetting to check the details
If you’re buying an apartment that has a car space allocated to it, check that the car space or garage you were shown is correctly allocated to the apartment. “The strata plan will usually detail this,” Ferguson says. “Your lawyer should also take you through the contract to ensure you understand each step of the purchase process.”
Trap 4: Getting stuck in the present
While it’s important to ensure the property is in good condition today, it’s also just as important to ensure that the body corporate has adequately planned for future maintenance expenses, such as painting. “Have a good look at the condition of the building and make sure that the funds in the sinking fund match long-term maintenance planned for the next few years,” Ferguson advises.
Trap 5: Taking the agent’s word for it
“Before you buy, check whether the owners corporation will welcome both you and Fluffy into the building,” Ferguson says. “Don’t necessarily take the word of the selling agent when he tells you the block is pet friendly.”
Trap 6: Being a passive owner
Once you buy the property, find out who you need to contact on your executive committee if something goes wrong in the building. Ferguson also suggests that you “take an active interest in what goes on in your building”. “Attend the annual general meeting so that your voice is heard, and consider becoming a member of your building’s executive committee,” he says.
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