Everything you need to know as a first-time sectional title buyer
Category Industry News
Whether you're a prospective property buyer embarking on your first purchase, an experienced investor exploring new opportunities, or contemplating a downsizing move, there are crucial inquiries to address before committing to a sectional title property.
Over recent years, sectional title residential properties have gained popularity, attracting buyers seeking conveniently located complexes near work hubs and providing an appealing lock-up-and-go lifestyle, especially for young professionals taking their initial steps on the property ladder.
To avoid potential buyer's remorse, it's essential to pose both obvious and less apparent questions before finalizing the transaction.
Pets, Parking, and People If you're considering keeping pets, need additional parking space, contemplate short-term rentals, ponder the possibility of running a home-based business, or worry about rule violations, the body corporate's regulations hold the answers. Request a copy of the body corporate's conduct and management rules, governing communal living aspects, especially focusing on the "Pets, Parking, and People" guidelines.
Ensure that the rules provided are the correct version, duly approved by members, and either registered at the deeds office or reviewed and sanctioned by the Community Schemes Ombud Service (CSOS).
Financial Health of the Body Corporate Prospective buyers must delve into the financial standing of the body corporate. While a robust bank balance indicates effective management, a deeper examination is necessary. Review audited and trustee-approved financial statements, along with approved administrative and reserve fund budgets.
Inquire about special levies-whether recently imposed, currently underway, or planned in the near future. Understanding the reason, amount, and duration of the special levy is crucial, as you become liable for contributions from the transfer registration date. Additionally, investigate any outstanding levies, legal actions taken, and the body corporate's approach to recovering debts.
Understanding Sectional Plans: While initially appearing complex, comprehending sectional plans is relatively straightforward. These plans offer an overview of the development, delineating sections, exclusive use areas, and common property. Scrutinize parking spaces, garages, courtyards, balconies, and other areas to understand their legal nature, your responsibilities, and liabilities.
Verify the inclusion of any extensions in the sectional plan, as financing from a bank may be contingent on this. Be aware that developers may retain the right to build within the scheme, as indicated in the sectional plans.
Maintenance Considerations Evaluate the maintenance, repair, and replacement needs within the scheme, such as painting, electric fencing, and elevator upkeep. Each body corporate must have a '10-year maintenance plan,' outlining the maintenance schedule for common property items. Understand your responsibilities as an owner, including maintaining and repairing your section, contributing to the exclusive use area, and sharing expenses for common property upkeep.
Managed or Self-Administered? Determine whether the scheme is self-administered or managed by a professional agent alongside trustees. Review minutes from meetings to gauge member concerns and trustee collaboration. Investigate potential disputes, the scheme's registration with the CSOS, and adherence to prescribed levies.
Despite these considerations, don't let them dissuade you from investing in a suitable sectional title scheme. The benefits of community living and security often outweigh these complexities. If in doubt, seek guidance to ensure a thorough due diligence process.
Author: Harcourts
