In a perfect world, home buying would be easy. But in reality, there’s no such thing as a “simple” real estate transaction. When it comes to buying a unit in Queensland, there’s plenty to do. Here’s a brief overview of what’s involved.
The body corporate
First, you need to know exactly what you’re getting into. If you’re buying a unit in Queensland, you’re most likely buying into a community titles scheme on a property with a body corporate.
So what does that mean? Basically, the body corporate is the entity created by law when the land was partitioned and registered under the Land Title Act 1994 to create the community titles scheme. It is responsible for the administration of common property and body corporate assets that benefit all owners, and to carry out tasks required under relevant laws.
This means the body corporate has certain duties including:
- maintenance, management and control of the common property for the owners;
- deciding how much owners must pay in dues/fees to ensure the body corporate can operate;
- making and enforcing its own rules, called by-laws;
- obtaining insurance for the owners, such as public risk insurance over the common property as well as building insurance;
- managing and controlling its assets;
- keeping all relevant records such as minutes of meetings, ownership information, financial accounts, asset ledgers, and documentation of improvements to common property by owners, engagements and authorisations.
You automatically become a member of the body corporate when you buy your unit, and do not have a choice about participating.
What you need to know about levies
One of your responsibilities as an owner is making financial contributions to help cover the title’s scheme’s daily operating costs. These payments are called ‘levies’.
The amount you’ll have to pay can vary among title schemes and depends on several factors including:
- the condition and age of common areas;
- the condition and age of shared facilities.
No matter what, you should expect operating costs to increase.
You should also be aware that if you don’t pay levies on time, you may accrue interest at a higher rate (up to 30% per year), along with additional costs. Another concern is that you will be liable for outstanding levies owed by the current owner, so it is important to find out if any exist and have them addressed before you purchase the unit.
Important information about by-laws
These are an additional set of rules specific to each scheme. They govern the conduct of owners, occupiers and guests while on the common property and within their designated lots. As such, by-laws typically pertain to issues such as acceptable noise levels, parking and pets.
To avoid any unpleasant disputes with the body corporate, you must research the by-laws for the scheme you want to buy into before you pull the trigger. By doing so, you will know what’s allowed, what isn’t allowed, when permission is required, and most importantly, whether you could live with the rules.
You can usually find the relevant information in the community management statement.
Make sure you get a disclosure statement
Legally, anyone selling a lot (unit, apartment, etc.) must give you a disclosure statement. If you don’t get this document, as required by the Body Corporate and Community Management Act 1997, or if it doesn’t contain all of the requisite information prescribed by law, you have the right to cancel the contract. If the disclosure statement contains false, misleading or inaccurate information meant to convince you to buy the unit, you can cancel the contract. You can also cancel the contract if you cannot verify information in the disclosure statement after making “reasonable efforts” to do so.
The disclosure statement should include the following information:
- the number of annual contributions currently set by the body corporate that you must pay;
- details of any improvements on the common property for which you are responsible;
- any other information as dictated by relevant rules.
Because full and accurate disclosure is so important, you must review it carefully. In fact, we highly recommend that you consult our legal team if you have any questions or concerns about the disclosure statement. Even if you don’t suspect anything is wrong, it is best to exercise caution and consult us so that you can be sure your contractual and statutory rights are protected.
Doing a body corporate records inspection
Thorough due diligence also requires the completion of a body corporate records inspection. This is a physical review of all records held by the relevant body corporate. This may mean looking through hundreds of records. But the effort is well worth it because this inspection is the best way to identify the ‘red flags’ that indicate serious issues. Finding these warning signs early on can save you from making a very expensive mistake.
The scope of the inspection is up to you. However, some experts recommend reviewing body corporate records from the past three years. Specifically, you should look through:
- financial records;
- insurance records;
- reports (about relevant property inspections);
Getting advice from qualified professionals
Buying a unit in Queensland is not for the faint of heart. It can be an intimidating process that leaves many people feeling confused, if not overwhelmed. That’s why it’s so important to find the right legal professionals to help you along the way.
At Big Law, our legal team has the skills and experience needed to guide you through each step of the process and ensure that your rights are protected. We’ll also ensure that your concerns are heard and addressed and that you have all of the information you need to make informed decisions. But it’s up to you to take the first step. Contact our Strathpine lawyers by phone at 1800 431 592 or email at [email protected] to schedule an appointment today.