Whether you’re a first home buyer, empty nester, or investor, you’ve made the decision to purchase an apartment.
Good for you!
Apartment ownership as opposed to freehold house ownership has its quirks, and these may not be apparent in the Section 32. As an Owners Corporation Manager, I have seen it all! Here are some things to look out for to make sure that your investment is solid and your sanity saved.
- Account balances – does the Owners Corporation have a healthy bank balance, both in the Administration and Sinking Funds?
- Owners Corporation Rules – are there any rules that would not suit you as an owner or diminish the ease of finding a tenant? In particular, look at rules relating to pets, car parking, storage, use of balconies and courtyards.
- Procedures for things such as apartment renovations, air conditioning installations, or changes to the external appearance. Note that you may not have the right to install or change what you like without the permission of the Owners Corporation.
- Does the building have an elevator, a pool/gym, automatic car park gate, cooling towers, hydronic heating, or any other major plant equipment? These shared facilities are what make apartment living great, but be aware of the high costs associated with maintenance and replacements. Ensure the Owners Corp has an up to date Maintenance Plan and is accumulating money in the Sinking Fund for the eventual replacement of these capital items.
- Is there a well-functioning and active committee? A quick chat with the Owners Corporation Manager should give you a good idea.
- If buying off the plan – take the first year OC fees, and double them! This is a more realistic figure of what the fees will be in subsequent years. Developers often create a low first year budget as most building components are still under warranty, and of course to attract buyers.
- When reading AGM minutes, any of the following phrases should raise a red flag: “water leak/ingress”, “structural issues”, “legal action”, “dispute”, “VCAT”, “Special Levy”. Read between the lines to check for ongoing disputes, personality clashes, and difficult members.
- Look around the building for any components that look old or outdated such as painting, window frames, floor surfaces, gardens, lifts. Chances are it will be on the agenda to carry out these works in the next couple of years so be prepared for that expense or ask the OC Manager if funds are already being put aside for this.
- Check the plan of subdivision for where your lot boundaries are and what is included on your title – some plans have the lot boundary as the internal face of the walls, whereas other have it as the exterior face. Each has different implications in determining who is responsible to pay for works. If you’re unsure, check with the OC Manager.
If it all checks out, enjoy the high life in your new apartment with (hopefully) no nasty surprises.
- Caitlin See, OC Manager
- Caitlin See, OC Manager