When buying an apartment or unit, one title you will always come up against is Strata. There are a number of things a buyer should know and be aware of before buying into that type of title.
What should you be aware of heading into a Strata title?
What many people don’t realise when getting involved with a Strata title is that a number of people are going to be jointly handling portion of what you think might be yours. Because of this, you have to get along with them.
Miriam Sankuhler from Property Mavens explained: “So what most people don't understand is when you're buying Strata title you're actually buying a share of a larger title and there's often common property as well. So, it's really one block that's seems leading to multiple titles and then there's common property which, everybody ultimately responsible for and they have a share of the ownership also.
“So, if you're buying new, understand that buying, well off the plan, is very risky, because you're basically buying a concept. So, while you might save stamp duty buying properly off the plan, you're buying a concept and once it's built you're committed to purchasing it.”
As Miriam says, you are committed to purchase, no matter, for instance what building materials are used. In recent years, Melbourne has seen issues with cladding that is highly flammable on new apartment buildings. People are then struggling to sell these properties again.
What should you do before getting involved?
There are a few things you should do before you get involved in a Strata title, the first of which being researching the subject thoroughly. You should be doing all the proper searches lie body corporate searches for instance. Some, however, are not detailed enough and don’t go back far enough, so you should always request two years’ worth of meeting.
Miriam advised: “You need to make sure that you're getting the contract checked absolutely thoroughly and you've got a really clear understanding of what you're buying into, because when it goes wrong it goes very wrong and there are plenty of owners corporations and body corporations where there is absolute conflict between owners and it's a nightmare.
“Because then I can go back and track down the history. What are the larger issues within the property and the development that need to be dealt with. Are there any special levees that are gonna be struck? Is there a capital work fund? Is there a pot of money automatically set aside out of all the owner's corporation contributions every year that gets built up to deal with those expenses when they come?”
What problems can arise?
An example of one common problem is flat roofing which has a tendency to leak. After a long dry spell, which could often be years, no one knows whether the roof has been repaired properly, leading to costs in water damage.
Miriam said: “It can be anything. It can be concrete cancer, I mean it usually comes down to poor workmanship or it comes down to the wrong, or poor materials used and that's why again, when you're buying a property, even if it is a relatively new townhouse, apartment, you still want to get a defects building report done. Certainly, with an older property you want to get a defects building report done as well, or a building and pest report because you need to understand what the issues are, not just with the property that you're buying, but on a bigger scale with the actual development itself.”
Who can you talk to?
You should always ask your solicitor or conveyancer if they have experience with this type of title, and whether they know what searches should be done.
Miriam agreed: “There are some solicitors conveyancers that specialise in dealing with off the plan contracts and it is an area of expertise. There are lots of things that can often be hidden within an off the plan contract. So, you don't want your average conveyancer dealing with that. You want someone who specialises in that to go through it with a fine-tooth comb.”
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