By Alex Smale – Owners Corporation Manager
There is a lot to consider when buying a new property. This is even more true when purchasing a property within a Plan of Subdivision or Strata Plan.
Included in your section 32, will be an Owners Corporation Certificate which should highlight any potential issues with the property. However, without knowing what to look for, purchasers may be lost in a sea of information.
Most owners when purchasing a property will be concerned with the cost of strata fees. However, it is worthwhile looking beyond the sales agent’s statement of information so you can determine not only what the fees are currently, but whether they are likely to increase.
The Owners Corporation Certificate will include a statement of the financial position. You should be concerned if the financial statements show a deficit. Conversely, a healthy maintenance fund is a good sign as it shows the property is prepared and the likelihood of special levies needing to be raised is reduced. There will also be a section where any work which may lead to additional charges will be declared. Here any defects or major projects should be disclosed, the previous year’s AGM minutes should also be reviewed for more details.
Owners Corporation Certificates are required to disclose any building orders or building notices imposed on the property. Works the council imposes can lead to costs and this is one of the places where you may see combustible cladding disclosed.
A different problem is difficult personalities which can have a huge impact of the quality of life of residents. It is difficult to tell when purchasing a property if the other residents are friendly. However, there are giveaways that may be included in the certificate. The first is the committee election in the AGM minutes. In most Owners Corporations, everyone who nominates will be voted on. If the minutes note that committee members are voting against each other, it can indicate that the committee is fractured.
Another giveaway is in the number of complaints received. Any formal complaint must be recorded at the AGM. Purchasers should consider the content and frequency of any complaints received. For example, a simple parking dispute should not dissuade you. However, complaints can also include allegations of antisocial behaviour. Further if they are numerous and vexatious, it can indicate deeper issues within the property.
Finally, the Owners Corporation Certificate will also include information on the current contracts between the Owners Corporation and another party. Here you can find out whether there is an embedded network or if the Owners Corporation is a party to any long-term contracts that may not favour you.
While conveyancers may be able to point some of the above out, they are not typically Owners Corporation experts and therefore it is worthwhile looking through this documentation yourself and familiarising yourself with the areas where potential issues could be disclosed.
This article was first written for and published by The CBD News.
This article also appears in the November 2020 issue of The VIC Strata Magazine.