My role is to find body corporate problems. Find them and report them to the buyer or buyer’s Solicitor. But not all body corporate problems are actually, well, problems. A lot depends on their impact.
This article is about weighing the pros and cons of body corporate problems to decide if they’re an issue for you, as a buyer.
Finding the issues
One of the key things search agents do when searching records is to pretend they are the buyer.
If I were buying in this building what would be of interest to me? What would concern me? What would make me down right nervous?
The issue is, body corporates, particularly larger body corporates deal with hundreds, thousands, hundreds of thousands of different issues, one after another after another.
Pulling the issues out of body corporate records is a good reason to get a strata search. Even then however, the report will be quite broad because the strata searcher has no idea of the personal circumstances of the buyer. Everything of a potential impact is reported and it’s up to each buyer to decide if that matter is relevant themselves.
How do you decide what’s relevant to you as a buyer?
Ask these three questions to decide if problems affect you
When I’m searching records I have three questions in mind. They’re the lens through which I view everything that’s happening within a subject body corporate. They are:
- Will this impact on the lot owner’s ability to enjoy the lot?
- Will this create a problem for the body corporate?
- Will this create financial liability for the lot owner?
Answering these three questions will make it pretty clear whether or not a problem is likely to affect you.
Will this impact on the lot owner’s ability to enjoy the lot?
All sorts of things can impact on the owner’s ability to enjoy the lot if they plan to live there themselves, or alternatively interfere with a tenant’s enjoyment and make the property harder to rent.
These would be things like noisy neighbours such as crowded restaurants working into the night, to smelly bins, cars parked blocking the driveway or even some sort of building defect like an ongoing roof leak.
It can also apply to the common property as well. Perhaps the pool needs major work and will be out of commission for a summer or there are ongoing problems with the neighbours illegally accessing the facilities of the body corporate.
Some of these issues may not even have solutions, say for instance a noisy road which cannot be overcome.
Will this create a problem for the body corporate?
One of the biggest questions that arises in body corporates is “Who is responsible for this?”
It makes a lot of difference. For instance, say a lot developed an ongoing water leak, the most common body corporate defect. It’s enormously beneficial for the lot owner to have the issue declared a body corporate responsibility. Its much easier to pay 1/5th or 1/10th or even 1/100th of a major repair than to fund the works themselves.
Equally the body corporate will be invested in declaring expenses lot owner responsibility. Every additional issue for the body corporate will correspond to an increase in levies to all the lot owners.
Consequently it’s very important to find out if there are ongoing issues that may create a liability for the body corporate.
Some may only result in some extra work for the Committee, Body Corporate Manager or Building Manager. Others will create real problems for which financial solutions are the only recourse.
Will this result in financial liability for the lot owner?
Financial liabilities for lot owners come as either direct or indirect costs.
Direct costs are costs that must be met by the lot. For instance, if your neighbour complains about water hammer noise or your washing machine overflows flooding the apartment beneath, you will be expected to rectify the problem, and if body corporate responsibility cannot be established, fund the works yourself.
Indirect costs come from unexpected increases in strata levies. For instance, something I’ve seen quite a lot of recently has been large scale fire system upgrades, spurred by new fire legislation, requiring collection of large sums from lot owners. On top of regular levies.
Most significant financial liabilities will come from indirect costs.
Applying the three step method
Let’s look at an example.
A strata search on a body corporate, a medium sized gated community (standard format plan) turned up an issue.
A lot owner came home from work one day and found that their puppy was desperately ill. They rushed him to the vet who was able to save him.
“Go home and check out your yard” he instructed the lot owner, which they subsequently did.
What they found was poisoned meat, which investigations showed most likely came from the neighbouring lot.
The same lot that the lot owners had recently complained about to the body corporate. The residents were a couple. They fought. A lot, loudly and with much abuse screamed backwards and forwards.
The noise issue had been going on for months. The lot owners had, on several occasions, asked the residents to be quieter, usually receiving a mouthful for their efforts. Many complaints had been laid with the body corporate who eventually took the action of issuing a breach notice to the resident.
The lot owners were furiously angry.
They were also devastated. The puppy was a recent addition to their lives replacing another family pet that had recently died unexpectedly, whilst home, in the back yard.
Is this actually a problem?
People acting badly, even horrifically is not something that’s limited to strata schemes. Terrible neighbours are everywhere. Strata schemes simply have mechanisms to record and search this sort of information.
The question is, from the perspective of the purchaser, is it really a problem?
Is it likely to impact on their enjoyment of the lot?
The lot being purchased was nowhere near these two lots. In fact it was on the other side of the complex well out of earshot, so no, the problem is unlikely to impact.
An argument could be made about not wanting to live in the same place as someone who would act so heartlessly, but again, that’s incredibly subjective. It would bother some people and not others. The buyer must decide for themselves.
Is the situation likely to create a problem for the body corporate?
Although this situation is definitely traumatic it really hasn’t much to do with the body corporate. There isn’t going to be a by-law saying “don’t poison your neighbour’s dog”, because it’s unnecessary. There are already laws controlling this behaviour and police to enforce them.
The noise by contrast is a body corporate matter and it can and should be dealt with by the committee, following procedures set down in the legislation.
From the body corporate’s perspective, at most it’s a noise issue.
Certainly it will create tension within the scheme, and it definitely does need to be controlled, but, if the committee is on top of things, it’s a situation that will most likely be resolved reasonably quickly.
What would be more telling is how the body corporate manages the process. If they do poorly, it speaks to the effectiveness of management.
Is it likely to directly create a financial problem for the lot’s owner?
Its very unlikely that this matter would lead to financial problems for the lot owner.
So … would you want to buy there? Only you can decide.
Conclusion
Strata searching is done with one objective in mind: giving the lot owners an overview of what’s happening. It’s then up to each individual buyer to decide for themselves, with the help of their Solicitor or Conveyancer, to decide if the matter is likely to be an issue given their personal circumstances.
Applying the three step method will help you critically review the issues and how they may impact you.
photo credit: One Way Stock via photopin cc
Unless stated otherwise all the information on this website relates to Queensland legislation.
I think it’s so interesting that body corporate problems can affect so many people. It’s no wonder that there are people who can help with it! It seems like it would be a good idea to hire a professional for it. Thanks for sharing!