13 Sep What to look for when doing a body corporate search – Miriam Sandkuhler
Miriam Sandkuhler advances our discussion on Strata Title property and some of the areas buyers need to be aware of and how easily it is to come unstuck. She has some good advice on what to do and what not to do.
Kevin: When you’re buying an apartment or a unit, one of the titles that you’ll come up against or you’ll hear about is Strata. So, we’re going to talk about what Strata is all about, and some of the things that you should be aware of if you’re actually buying into that type of title. Joining me to talk about that, Miriam Sandkuhler from Property Mavens. Good day Miriam.
Miriam: Good morning Kevin.
Kevin: Let’s talk about some of the, traps is not necessarily the right word, but things that people should be aware of if they’re going to enter into a Strata title.
Miriam: That’s correct. So what most people don’t understand is when you’re buying Strata title you’re actually buying a share of a larger title and there’s often common property as well. So it’s really one block that’s seems leading to multiple titles and then there’s common property which, everybody ultimately responsible for and they have a share of the ownership also.
Kevin: So therein probably lies the first problem and that is that there are a number of people who are gonna be jointly handling portion of what you think might be yours, therefore you’ve got to get along with ’em. You got to agree with them, don’t you?
Miriam: Absolutely, but before that you need to make sure that you’re getting the contract checked absolutely thoroughly and you’ve got a really clear understanding of what you’re buying into, ’cause when it goes wrong it goes very wrong and there are plenty of owners corporations and body corporations where there is absolute conflict between owners and it’s a nightmare.
Kevin: Okay, what else should we be aware of?
Miriam: So if you’re buying new, understand that buying, well off the plan, is very risky, because you’re basically buying a concept. So while you might save stamp duty buying properly off the plan, you’re buying a concept and once it’s built you’re committed to purchasing it in spite of the building materials used and we are seeing some situations particularly in Melbourne now where there are issues with a cladding that’s highly flammable on a lot the newer apartment buildings that have been built and as a consequence of that, people are gonna struggle to sell their property easily. There’s now massive legal cases that play in terms of who’s responsible, you know the council signed it off, but was it the builder or the developer. Prices and values of properties can be effected. So you really must proceed with caution when you’re buying certainly newer off the plan properties from that perspective.
Kevin: Yeah you talked earlier about taking legal advice on any contracts, but you should also be doing all the proper searches, the body corporate searches and so on. There are two different types of searches that you can make with those and some of them certainly aren’t detailed enough, they don’t go back far enough. I’ve always counselled people to make sure that they go back as far as they can and familiarise themselves with the past minutes Miriam.
Miriam: That’s exactly right. So I suggest at a minimum they want to request one to two years worth of meeting minutes.
Kevin: Yeah, absolute minimum really.
Miriam: Yeah annual general meeting minutes.
Miriam: Because then I can go back and track down the history. What are the larger issues within the property and the development that need to be dealt with. Are there any special levees that are gonna be struck? Is there a capital work fund? Is there a pot of money automatically set aside out of all the owner’s corporation contributions every year that gets built up to deal with those expenses when they come, ’cause when they come they’re huge and you legally have to pay your share of them whether you’ve got the funding for it or not.
Kevin: An example of some of the things that can arise, buildings that have a flat roof as an example can tend to leak, and if there’s some remedial work that’s been done and then we go through a dry spell, which in some cases can last for years, no one really knows whether or not it’s been repaired properly and there could be a massive call in future. So you’ve got to go back quite a way, I think, to find out if there’s been any remedial work done on the block.
Miriam: That’s exactly right and it can be anything. It can be concrete cancer, I mean it usually comes down to poor workmanship or it comes down to the wrong, or poor materials used and that’s why again, when you’re buying a property, even if it is a relatively new townhouse, apartment, you still want to get a defects building report done. Certainly with an older property you want to get a defects building report done as well, or a building and pest report because you need to understand what the issues are, not just with the property that you’re buying, but on a bigger scale with the actual development itself.
Kevin: I think it’s also a good exercise when you are looking at purchasing something like this to ask the solicitor or the conveyancer you’re using, have they got experience with this type of title. Do they know what sort of searches should be done and undertaken Miriam?
Miriam: That’s exactly right, because there are some solicitors conveyancers that specialise in dealing with off the plan contracts and it is an area of expertise. There are lots of things that can often be hidden within an off the plan contract. So you don’t want your average conveyancer dealing with that. You want someone who specialises in that to go through it with a fine tooth comb.
Miriam: Because it could be the difference between making or losing an enormous amount of money.
Kevin: Yeah, because not all conveyancers are the same Miriam, are they?
Miriam: Correct. Neither is anyone in any profession. You know you have to assume in any profession that there are people who are experts and there are people that aren’t.
Kevin: Well it was good talking to you Miriam Sandkuhler. Miriam is the CEO and buyers agent at Property Mavens. Thanks for your time Miriam.
Miriam: Your very welcome Kevin.