A potential purchaser recently asked just what they should look out for when buying a unit title. I am sure they did not expect a list that was quite as long as I had in my mind but there are a lot of things to take into account. Here is a summary of some of the things that are worth turning your attention to.
Exactly what are you buying?
Fundamental as it may seem, it is always worthwhile checking the unit plan to see that the unit you think you are buying is precisely the one that the contract refers to. You will be surprised at how often that is wrong. Have a look too at the car park, any storage areas and any access areas to make sure that precisely the right units are described.
Once you are sure that the property is correct it is worth taking the time to understand the relevant legal description.
• Are you buying a unit that is freehold or leasehold?
• What easements or restrictions are registered against the title and how do they impact on your use of the property?
• What easements or other restrictions are registered against the supplementary record sheet that impact on your use of the common property?
• Have the rules been properly created i.e. are they lawful?
• What is the unit entitlement that attaches to your unit and to the accessory units (this will be relevant to body corporate levies and other responsibilities)?
• Understand what happens if the unit plan is ever cancelled and what rights others have to change any aspect of the property or your use of it.
What obligations go with the purchase of this unit?
• Read the rules and be clear you can live with these rules.
• View the budget and understand the extent of your financial obligations as depicted in the budget.
• Are these significant expenses that are anticipated?
• View all minutes of the body corporate and fully understand the issues that affect the community living in the development and how that will impact on you.
• Understand your voting rights and the obligations that go with them. There is often an obligation to give the mortgagee the right to vote on your behalf.
It is also worth considering the type of environment that exists in the community. Influences on the environment include:
• Who manages the development and how well do they do it?
• Does the manager live onsite?
• Is there transparency in the management style?
• Is there a sinking fund and is that adequately used?
• Is there a long term maintenance plan?
• Are other owners all paying their levies?
• How are decisions made that affect the development?
• Have all code compliance certificates issued?
• Does the LIM record anything of concern?
• Is a current building warrant of fitness required? on display?
Our advice is that you take legal advice to ensure all of the relevant issues are addressed.