What are Owners Corporations?
As our population grows so too does our unit or living lifestyle. This greater need for housing has in turn created more subdivided land and apartment complexes, so it’s safe to assume that if you’re buying an apartment or a unit or even a townhouse it is more than likely going to have an Owners Corporation
What are Owner Corporations?
An Owners Corporation, previously known as a Body Corporate, manages the common property of the land, be it residential, commercial, retail industrial or mixed-use. Common property is the land that’s not part of any of the owned lots and, is in turn, collectively owned by all of the lot owners. Common property typically includes driveways, fences, gardens and walls. Management of the Corporation can either be by the residents as self-managed or by a private company.
How do you know if your property has an Owners Corporation?
The vendor is legally bound to say if the property has an Owners Corporation in the Vendor Statement. The Vendor Statement is the document attached to the back of the Contract of Sale and includes all of the relevant information relating to the land such as, and not exclusive of;
If the land is subject to a mortgage
The rates, taxes and charges affecting the land
Whether there are any easements, covenants or other restrictions on the land
If it’s in a designated bushfire prone area
If it has access by road
Planning information; and
Information regarding the Owners Corporation.
The information included for the Owners Corporation includes the Owners Corporation Certificate, the Owners Corporation rules, the Statement of Advice and Information for Prospective Lot Owners, a copy of the resolutions and minutes from the latest General Meeting and a Statement that further information can be obtained via the Owners Corporation register.
Now this is a lot of information to read and process and can be quite overwhelming, so it’s important to know what you should look out for and to ultimately engage an expert to review the document for you!
Types of Owners Corporations
Firstly, identify what type of Owners Corporation it is – is it self-managed or managed through a Private company? This affects the amount of fees and the level of involvement you will need to attend to.
Secondly, the fees. The Owners Corporation will require an annual fee for the maintenance, administration, insurance and other ongoing costs for the common property, as well as special fees that may arise unexpectedly and need to be paid by the lot owners. For information regarding fees it is important to look at the Owners Corporation Certificate to see what the current annual fee is, whether there are any planned works that will require a special fee or if there any additional charges. As well, look at the minutes of the latest General Meeting to see whether there are any plans to change the Insurance, the Management or if there are any planned works which may increase the annual fee.
Thirdly, the insurance. Check to see what kind of insurance is offered within the Owners Corporation as it may cover your Building Insurance, in which case you won’t need to take out subsequent insurance yourself, in turn saving you money.
If you’re buying into an Owners Corporation it is very important to look at these documents as the potential fees and the time commitment may just be the reason you decide to bid or unfortunately signals that the property is just not within your budget.
Argent Law will review the Contract of Sale
It is the little things like this that you may not know to look for in a potential property, so let our property lawyers in Melbourne help you by reviewing the Contract of Sale and Vendor Statement for your prospective property so we can advise on what you should be looking out for to ensure you make the right purchase.