Buying Property in a Community Titles Scheme: What you should look for
Purchasing a home or investment property is often the largest financial decision that a person will make during their lifetime. Noting this, it is important to ensure that you properly investigate the property prior to committing to an unconditional contract.
What can you do to make sure you have fully investigated the property?
The simplest way to assess the property itself is to order a full body corporate search through your solicitor. This search goes above and beyond the standard body corporate search that is usually undertaken (revealing administration levies, insurance levies, and sinking fund contributions) as it provides you with the full set of body corporate meeting minutes. This search is additional to the standard searches that are often conducted and reveals details related to the body corporate only.
It is important that when you purchase a unit or a townhouse in a body corporate that you are buying into a scheme whereby the body corporate is responsible for the maintenance and repair of all common property. This includes the outside walls, driveways, communal walkways etc. This means that if a repair is needed and the body corporate cannot fund the repairs, the owners of the body corporate need to contribute a share of those costs.
What does the full body corporate search reveal?
A full body corporate search will often reveal the following upon proper examination:
- Whether there are any problems with the property that haven’t been disclosed on the contract;
- Whether the body corporate members have discussed proposing extra levies being imposed;
- The balance of the current sinking fund;
- If there are any works that are to be conducted in the near future that the owners (which be include you in the future) will need to be financially responsible for; and
- Past issues and levies that have occurred which give an idea of how other property owners in the scheme tend to deal with issues.
While this search can be three or four hundred dollars more expensive than the standard body corporate search, it allows you to make a more informed decision prior to committing to a completely unconditional purchase. While the cost of this may seem high in comparison to a standard body corporate search, it may save you money in the long run.
For example, the owners of a property may discuss at a body corporate meeting some major works needing to occur at the property, such as replacing the roof. The seller may not have been part of these meetings, this may not be disclosed on the contract, or alternatively they may have chosen not to disclose the information (we note however that there may be other contractual avenues and recourses available at this point in time). The roof replacement may come at a substantial cost and you may be in a position where major works are needed that dramatically alters your financial state post settlement occurring.
We strongly recommend all clients purchasing properties in a community title scheme to order a full body corporate search early in the transaction in order for the results to be returned and reviewed prior to the contract becoming unconditional.
If you are looking at purchasing a unit or other type of property in a Community Titles Scheme then please contact our office on 07 5248 1111 to speak to an experienced solicitor.