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Buying without a Body Corporate – Rob Balanda

Property investment is a bittersweet mixture of success and mistakes. As an Investor, you will have misadventures and mishaps. 

Persisting with a strategy therefore to create wealth through property investment over the long term takes courage and the ability to pick yourself up when you trip and fall and have to start again.

What drives us is our desire to be successful investors.  Keep up your desire and your education about what is happening in the market place and you will move forward in the real estate world.  Let me do my bit in continuing your education.

As I have said before, education is your bridge and your safe crossing into the real world of property.

Failure to Operate Body Corporate

There are countless duplexes and triplexes across the country where after registration of the Body Corporate or Strata Scheme the owners let the operation of the Body Corporate lapse. [sam id=32 codes=’true’]

They simply agree amongst themselves about who is responsible for maintaining and mowing the lawns and which insurance company they will jointly appoint to insure the building.

This makes sense from a practical point of view, although the dilemma for you is that once the Body Corporate has been established (which must occur in order to allow separate Title Deeds to issue for the units) then owners of those units and future owners have a legal obligation to maintain the operation of that Body Corporate.

How can you be sure then, as the Purchaser of a duplex or a triplex, that things are as simple as what they appear.

If you purchased a unit in a Strata Title Scheme where the Body Corporate is operational you can protect yourself by making the Contract subject to a search of the Body Corporate records and you being satisfied with the results of this search.

The results of this search will reveal one way or the other whether everything was “good on the home front” or not.  If the Body Corporate however has been inactive for many years carrying out such a search will be pointless.

You can still of course search the Titles Office records to confirm what By-Laws apply to the Body Corporate and the location of any common property and any exclusive use areas, but that will reveal nothing about the operation of the Body Corporate.

The way to “bridge the gap” in these circumstances is to physically meet with your neighbours in the complex to satisfy yourself that there is nothing untoward going on  This is a must.  It is the only real way to obtain the peace of mind you need to be satisfied that the fact the Body Corporate has never conducted Annual General Meetings or struck any levies doesn’t come back to haunt you down the track.

 



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About

Rob is a partner in the Gold Coast based law firm MBA Lawyers. He is a highly regarded educator of property investors and estate agents and the author of the "Made Simple" series of books and CD's.
Visit www.ClausesMadeSimple.com


'Buying without a Body Corporate – Rob Balanda' have 5 comments

  1. Avatar for Property Update

    May 18, 2018 @ 11:49 am Claire

    I own my unit which is one of a duplex. It was sold to me 3 years ago by the real estate people as having ‘no’ body corporate. I put my unit up for sale last year and a different real estate company were advertising it as a unit ‘without’ a body corporate (I took it off the market and decided to stay). All the local real estate companies state that Duplexes don’t need a body corporate.
    The shared house insurance is due in January each year and the bill is always sent to me at unit 2. I have been told by the insurance company that I am responsible for next door paying their half of the bill and if it’s not paid on time, neither property is covered even though I always pay my half in good time. I asked the insurance company if they could send out separate bills as I could not be held responsible for next door paying theirs. I got told that that was the way it was set up, I WAS responsible, and I couldn’t do anything to change it until I’d been to our body corporate which we don’t have! I got on to the real estate company who manage the renting out of the next door unit for the owner who lives interstate and they said that Duplexes DON’T need a body corporate! So who is right and what do I do?

    Reply

    • Avatar for Property Update

      May 18, 2018 @ 4:45 pm Michael Yardney

      Claire
      If there is no common area as often happens with a duplex, then there is no need for a body corporate

      Reply

  2. Avatar for Property Update

    February 5, 2016 @ 10:12 am robert

    Hi,
    i have recently purchased a half duplex , the duplex originally had a body corporate but when i purchased i was told there was no body corporate my question is regarding insurance as the insurance policy is in the name of the original body corporate , i have been told to have the insurance in the name of the body corporate the body corporate must be active can you advise if this is correct.

    Thank You
    Robert.

    Reply

  3. Avatar for Property Update

    October 11, 2015 @ 9:12 am Neil

    If you purchase a strata property with an inactive Body Corporate & take out your own insurance policies for building & public liability for your property, can you be liable for building damage or public liability on the other properties via the body Corporate even though it is registered but never been active?

    Reply

    • Avatar for Property Update

      October 11, 2015 @ 2:55 pm Michael Yardney

      Neil

      The Body Corp MUST take out insurance if there is common property – ensure they do otherwise all sorts of disputes will arise in the future.
      You are repsonsible for your share of the common areas, but not the other owners property. However their floor may be your cieling, or you may share a common wall.

      Reply


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