Buying a strata unit

Matters to be considered in purchasing a strata unit

There are particular issues related to buying a strata unit. Effectively, you are buying into a strata corporation and will become a member of the strata corporation. As well as being responsible for maintaining your own unit, you will share the responsibility for maintaining the common property (the external structure and foundations of the buildings and pipes, cables, wires, ducts and drains).

As a prospective purchaser, you may apply to the strata corporation for a range of information for moderate fees (see The strata corporation: Access to information by unit holders).

If you enter a contract, the vendor must provide certain information (see below), including the notice in Division 3 of the Schedule of Form 1, which sets out a range of issues to consider when buying into a strata corporation. The following issues are part of the notice:

Governance
You will automatically become a member of the body corporate, which includes all owners and has the job of maintaining the common property and enforcing the rules. Decisions, such as the amount you must pay in levies, will be made by vote of the body corporate. You will need to take part in meetings if you wish to have a say. If outvoted, you will have to live with decisions that you might not agree with.
Use of your property
You, and anyone who visits or occupies your property, will be bound by rules in the form of articles or by-laws. These can restrict the use of the property, for example, they can deal with keeping pets, car parking, noise, rubbish disposal, short-term letting, upkeep of buildings and so on. Make sure that you have read the articles or by-laws before you decide whether this property will suit you.
Depending on the rules, you might not be permitted to make changes to the exterior of your unit, such as installing a television aerial or an air-conditioner, building a pergola, attaching external blinds etc. without the permission of the body corporate. A meeting may be needed before permission can be granted. Permission may be refused.
Note that the articles or by-laws could change between now and when you become the owner: the body corporate might vote to change them.
Are you buying a debt?
If there are unpaid contributions owing on this property, you can be made to pay them. You are entitled to know the financial state of the body corporate and you should make sure you see its records before deciding whether to buy. As a prospective owner, you can write to the body corporate requiring to see the records, including minutes of meetings, details of assets and liabilities, contributions payable, outstanding or planned expenses and insurance policies.
There is a fee. To make a request, write to the secretary or management committee of the body corporate.
Expenses
The body corporate can require you to maintain your property, even if you do not agree, or can carry out maintenance and bill you for it. The body corporate can require you to contribute to the cost of upkeep of the common property, even if you do not agree. Consider what future maintenance or repairs might be needed on the property in the long term.
Guarantee
As an owner, you are a guarantor of the liabilities of the body corporate. If it does not pay its debts, you can be called on to do so. Make sure you know what the liabilities are before you decide to buy. Ask the body corporate for copies of the financial records.
Contracts
The body corporate can make contracts. For example, it may engage a body corporate manager to do some or all of its work. It may contract with traders for maintenance work. It might engage a caretaker to look after the property. It might make any other kind of contract to buy services or products for the body corporate. Find out what contracts the body corporate is committed to and the cost.The body corporate will have to raise funds from the owners to pay the money due under these contracts. As a guarantor, you could be liable if the body corporate owes money under a contract. 
 
Information and documents a vendor is required to provide

Along with the information that must be provided in relation to any proposed sale of land, certain information about a strata corporation must also be provided under Division 2 of the Schedule of Form 1, Land and Business (Sale and Conveyancing) Regulations 2010:

  • particulars of contributions payable in relation to the unit, including details of arrears of contributions related to the unit;
  • particulars of the assets and liabilities of the strata corporation;
  • particulars of expenditure that the strata corporation has incurred, or has resolved to incur, and to which the unit holder of the unit must contribute, or is likely to be required to contribute; and
  • particulars of the unit entitlement of the unit.

The following documents should also be provided:

  • a copy of the minutes of the general meetings of the strata corporation and management committee for the preceding 2 years;
  • a copy of the statement of accounts of the strata corporation last prepared;
  • a copy of current policies of insurance taken out by the strata corporation; and
  • a copy of the articles of the strata corporation (copies of the articles may also be obtained from the Lands Titles Registration Office).

Note that, if the vendor has no agent but the purchaser has an agent, the purchaser’s agent must apply for the information s 9(2) Land and Business (Sale and Conveyancing) Act 1994.

The notice in Division 3 of the Schedule of Form 1 must also be provided to the purchaser. This notice sets out a range of issues to consider when buying into a strata corporation.

Documents you may inspect

You are entitled to inspect [s 41(1), reg 11]:

  • a copy of the accounting records of the corporation (fee: $5);
  • the minute books of the corporation (fee: $5);
  • any documents received by the strata corporation from the original registered proprietor under s 38(3) (fee: $5);
  • a copy of any contract with a strata manager (no fee); and
  • the register of unit holders (no fee).
Buying a strata unit  :  Last Revised: Mon Jul 25th 2016
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