A body corporate records search, or pre purchase strata report, is a review and report on the subject body corporate records aimed at highlighting risks in the complex that might negatively impact a buyer.
Buying property, like every investment, comes with certain risks. The property might have termites, or subsidence or any number of other issues that can affect property. People sell their properties for a reason and sometimes that reason is because things have gone pear shaped.
This is why smart investors carry out due diligence investigations, like building and pest inspections, before the contract is conditional so they can avoid circumstances which are more risky than they’d prefer.
A body corporate records search is a due diligence report for those investing in strata titled properties.
Additional responsibilities in a body corporate
There are additional responsibilities when you buy a unit or apartment. Along with your shiny new unit you’re also taking on responsibility for a share of the common property costs.
Care of the common property is funded by owners via contributions, or levies. If there are problems requiring more money that is going to translate to higher contributions or special levies.
This is not to suggest that a unit is more risky than other property: that’s not the case at all. Other forms property can be hugely risky. The chief difference with a body corporate is that all maintenance tends to come with a dollar value.
The worst body corporates are those with little money, infrastructure problems that require funding to rectify, and incompetent management.
Who can do a body corporate records search?
Luckily body corporate legislation requires that certain documents about the management of the body corporate common property must be kept.
Even better, “interested parties”, which includes buyers, may review those records, or appoint an agent like mybodycorpreport.com.au to do it for them.
Authority to search may be requested. This can be in the form of a letter from the seller or seller’s solicitor, or most commonly, a copy of a validly executed contract. Once a buyer has entered a contract to purchase they become an “interested party”.
Smart investors make their contracts subject to and conditional upon a body corporate records search within an agreed timeframe.
What can a body corporate records search tell you?
A good body corporate records search will build a history of the recent past, give insights into what might happen in near future, and highlight inadequacies or inconsistencies in management and planning.
There are specific documents and procedures required for all strata schemes, from the largest towers to sprawling townhouse developments all the way down to the smallest complexes. These documents build the story of the scheme.
Would you still want to buy a unit if you knew the body corporate was involved in a court case? What about if there are major works pending? What if those works required payment of a major special levy? The smart response is “well, it depends”. Buyers have different needs, goals and resources. What might be a major problem for one buyer, or seller, might look a lot like an opportunity to someone else.
The purpose of the search of records is to identify risk factors and hopefully fill in enough context to the situation that buyers can make an informed decision about whether to proceed with, or potentially renegotiate, the purchase based on their wants and needs.
Mybodycorpreport.com.au pre purchase strata report
The true challenge with a body corporate records search is understanding what the records are telling you. Body corporate management can be complex and indicators of potential problems subtle.
A review by a strata professional helps significantly, particularly if you are new to strata.
Each of our pre purchase strata reports, includes two parts: 1) a comprehensive search of records and 2) a comprehensive report following a review by a strata record specialist. The report includes vital information like minutes, reports and insurance, and analysis of those documents to highlight any issues.
Our goal is to build a story of ongoing matters in the subject scheme so buyers can get to know what’s happening. There are five core areas where problems arise and we comment on the performance of the body corporate, good and bad, in each of those areas.
Our reports are designed to be read by lay people with core problem areas identified. Each report contains our review and copies of all documents used in creating the report.
If you have just purchased, or are about to purchase a unit, consider a professional body corporate records search. Ideally you get peace of mind the scheme is well maintained, well capitalised and harmonious.
If you have any questions or would like more information please get in touch. I’d be happy to hear from you.