Many people love the idea of living in an apartment – it might let you walk to work, be on the spot for city activities, or avoid gardening! But there are a few special areas that apartment buyers need to watch out for before signing on the dotted line.
The seller is required to give you certain information before you make an offer to purchase an apartment. This is called the “pre-contract disclosure” and it explains a few of the key things that buyers need to know. Check the pre-contract disclosure carefully so you know what you’d be in for.
In particular, be aware that you’d share responsibility for the building with the other owners (known as the Body Corporate). Many decisions about the property affect more than one owner, so they have to be made by agreement. It’s a good idea to know how the Body Corporate works, so you can be reasonably sure you’re not walking into any hidden problems.
For example, check what the maintenance obligations are, so that you can be aware of potential costs. If the exterior looks in need of new paint and the Body Corporate only has a small amount of savings, then the owners might well need to pay for the building to be painted in the near future. Alternatively, the painting (and possibly other maintenance) could be put off, but that might result in damage to the building.
Owners are also collectively responsible for insuring the building, so you’ll need to know about factors that may affect the insurance premiums, such as risk of flooding, tsunamis, or earthquakes.
Some of the information that you need should be in the pre-contract disclosure, such as the balances of the Body Corporate’s bank accounts. Make sure you get the following information as well:
- The Annual General Meeting minutes for the last 3 years
- The Body Corporate rules
- Whether the Body Corporate has a committee and chairperson
- Whether the Body Corporate uses a professional management company, and if so who that is
- A copy of the long term maintenance plan
- Whether the Body Corporate has a long term maintenance fund and what the balance is
- Whether the Body Corporate has put any special levies on owners in the past to cover maintenance issues
- Is a carpark included?
- Is there any additional storage?
This information will give you a better idea of how well the Body Corporate is being run, whether there are any arguments going on, and whether the building is being properly maintained.
Storage is always at a premium in apartments and it may be a lot less than you’re used to. Having access to additional storage, even if it is just to park your bike, can be very helpful.
It’s also worth asking whether the apartments are all occupied by owners or are they tenanted? Does the Body Corp allow Airbnb leases? This could give an indication of the number of people entering and leaving the building.
These are just a few ideas. If you’d like to discuss the implications of buying an apartment, or want some assistance with checking the paperwork, please give us a call.
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