The proliferation of high-rise apartments and higher-density living has turned the focus on Owners Corporations. Before you consider buying a property that is subject to an Owners Corporation – make sure you do your research.
Every high-rise and every block of flats or units has an Owners Corporation (OC) – it’s simply a body corporate that is incorporated upon registration of a plan of subdivision or a plan of strata or cluster subdivision. When an owner sells a property that is part of an OC, that owner is required to provide special details for the Vendor Statement under Section 32.
Those details include the fees – actual and proposed – payable to the OC, insurance, repairs and maintenance, funds held by the OC, liabilities, contracts, leases, licences and agreements affecting the common property, among other things.
Before you purchase a property that is part of an Owners Corporation,you should:
- Scour the minutes of recent AGMs and Extraordinary Meetings;
- Check and verify the balance sheets and available funds; and
- Ascertain what other costs are likely to be levied in addition to the actual levies set out in the OC Certificate.
An active OC may have a building sub-committee of owners who meet regularly to report on the state and maintenance of the building.
Buildings require ongoing maintenance and expense and it is important that there is sufficient money for the required
tasks and that the work is carried out.
If the OC is inactive, the Vendor must specify in the Section 32 statement that this is the case.
A well-managed property, which is part of an active and well-run OC, will be a better investment than one where good management is ignored.
It is important that a vendor provides complete information about an OC-and, on the purchaser’s side, it is a vital aspect of due diligence.