Introduction
For first
home buyers, buying an apartment can be pretty daunting. Especially since you have
to realize that purchase price is only a small part of the total cost. There
are many other things that need proper attention like, owner corporation fees, unexpected
special levies and building maintenance issues. These things can significantly knock
of your expected budget.
However, If you review the building’s financial records, several important legal documents etc. you can save yourself multiple cost surprises.
Owners Corporation Fees
Owners corporation fess AKA body corporate, includes the cost of shared areas, like facilities, lifts, garden areas or common property maintenance. It generally covers insurance, or in some cases ongoing maintenance as well. Cost can vary depending on various aspects, like how old the building is, requirements of facilities and maintenance.
For
example, an apartment in Melbourne\'s CBD with lifts, a gym and a swimming pool
may have higher fees than a smaller apartment complex.
Before
signing, check:
- The current quarterly or
annual fees.
- The building\'s maintenance
plan and financial reserves.
- Any outstanding fees or
proposed fee increases.
Special
Levies
These are
the additional charges by the owner’s corporation to cover random repairs, like
roof replacement or lift upgrades. These costs can be high if the building
doesn’t have enough funds to cover it all.
Before
signing you can ask whether any special levies have been approved or proposed.
Moreover, you can review recent meetings for planned maintenance or disputes
that could result in additional costs.
Identify Apartment Building Red Flags
When
buying an apartment in Melbourne, look beyond the individual unit and
investigate the entire building.
- Building defects: Cracks, water leaks, mold or
damaged common areas may indicate maintenance issues.
- Poor financial management: Low reserves, unpaid fees or
repeated fees increases warrant further investigation.
- Legal disputes: Ongoing disputes or claims
involving the owner's corporation may create financial uncertainty.
- Inadequate insurance: Check the building\'s
insurance arrangements and coverage.
- Restrictive rules: Review rules affecting pets,
renovations, parking and the use of shared facilities.
Review the Section 32 and Owners Corporation Records
Section 32,
In Victoria, signifies the vendor’s statement that includes owner’s corporation
certificate and all the documents accompanying it and where they are
applicable.
You can
have your conveyancer review these documents, and others like insurance details,
maintenance information etc. If they are outdated and not recent you can
request further information but make sure you are provided with all the right
information, so you don’t end up paying any extra costs.
Conclusion
I think it
is safe to say, that buying an apartment requires far more aspects than just
comparing prices and locations or which place is closer to which café, or which
one is aesthetically pleasing.
Understanding
these aspects helps you avoid any unexpected cost that may slither into your
statements before you even have the time to buy curtains. Before signing a
contract in Melbourne, arrange independent legal advice and carefully review
the apartment\'s financial, legal and maintenance records.
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