3 units, no Bodycorp ?

[TheCamel]

I'm looking at a property in NSW.
There are 3 units on the block, they all appear to be conjoined.
Currently one unit owned by one OO, and 2 by an Investor.
The investor is selling both his units, and the OO is maintaining their.

The REA tells me there is NO body corporate, but the council and water rates are levied on the whole block, and they have their own insurance.

One of the units has been contracted by another OO, and i'm looking at the third.

I'm confused as to how they can be no body corporate structure in place.

can anyone advise on this ? THe way I see it, if I buy the unit, the land title is potentially NOT in my name, and therefore I wouldn't be able to be forced to pay land or water rates, and if no body corp, i can't be forced to contribute to the ongoing maintenance etc of the common property ?

 

[GoAnna!]

From what you are telling me basically there are three strata'ed units and no active body corporate. Or is its company title?

Not sure how it is in NSW but I would have thought that as soon as they are strata'ed the body corporate exists in a legal sense whether meetings are held or not.

I do not understand the rates being leived on the whole lot. Surely if they are separetly titled and separately owned the council would rate them as such? I would suggest a call to council to cloarify this. Be warned though that separate rates are usually higher.

Some banks will also insist that the building in insured under the body corporate before they will settle. The bill will usually be lower than if each of you insured individaully.

In terms of your future plans for the property do you really want to be the only non OO is a block of three? Will your plans for the property conflict with theris? If so good luck!

 

[TheCamel]

I don't know if they are strata'd at all, thats my problem. REA seems to think it's not, in which case, they must all be on their own title, and the block must be subdivided ?

 

[GoAnna!]

Sounds like a company title then. This means that you would hold a title to a unit but rather a share in a company that owns the whole block. If this were the case I would think you would want it to be seriously discounted.

Somersoft brokers will correct me if I am wrong but I would have thought that finance would be more difficult and perhaps a geat deposit required?

If it is in fact a company title then your rights are far less than if you owned your share outright. You may want to check what rules and regulations are in place.

What documents if any have been supplied by the agent?

 

[GoAnna!]

Company Title
With Company Title unit owners are actually shareholders in a private company. Buying a certain number of shares entitles the shareholder to exclusive possession of a particular unit and a car space.

The shareholders in the company vote to decide company rules governing occupation, including rights to lease, sell or transfer shareholdings.

Warning! You normally have to have the company's approval to alter the occupancy of a Company Title unit and Lending institutions are more reluctant to lend for this sort of property.

Strata Title
Strata Title is the most common title in unit ownership. Briefly, strata acts in each state make possible the subdivision of the airspace above the surface of the land, a Certificate of Title to part or parts of a building. This enables the purchaser to buy the actual space enclosed by the unit and then deal with the unit as a normal owner of property.

The individual owners in a block of Strata Title units must form an owners’ corporation which controls the general administration and any funding of common property. An executive committee of the owners’ corporation is elected annually from the current unit owners. The owners’ corporation has the duty to establish two funds - an Administrative and a Sinking Fund - made up of the owners’ contributions.

As a unit owner you must contribute towards the costs associated with common areas e.g. lighting of entrances and hallways, gardening, maintenance, etc. Your costs will increase considerably if your units house facilities such as lifts, swimming pools and saunas.

A prospective buyer should read the standard by-laws and any alterations and additions that may have been made by the owners’ corporation (i.e. keeping pets).

Getting information from the owners’ corporation records
It is important that you inspect the books and records of the owners’ corporation before buying. Sometimes your solicitor will arrange this for you. There are companies that specialise in inspecting the books and they know what to look for.

If you are a buyer you can ask the owner to give you written permission to write to the Secretary of the owners’ corporation and ask the Secretary to let you look at the records. The owners’ corporation must let you look at all the records and should make arrangements with you to do this for a fee.

The inspection will show the history of maintenance on the building and provide an insight into complaints lodged by other owners. More importantly it may show plans for future spending.

You can also gain access to the owners’ corporation records in NSW by using a Section 109 certificate. Other states have different names for these certificates.

Normally these certificates will give information about the strata scheme including:

The names and addresses of the Executive members and the managing agent (if there is one)
Levies paid by the owners
Any outstanding levies
The address where you can view the records and financial statements
Any special by-laws made by the owners’ corporation in the past 2 years.
If a levy is outstanding before the certificate is given and it is not shown on the certificate, you are not responsible for the payment. Make sure you keep your documentation.

 

[TheCamel]

no documents provided yet. I'm hoping to inspect on the weekend and discuss with the agent more.

 

[sailor]

What a slack REA! He should know the legal status of the property he is trying to sell. This is very poor on his part.

 

[TheCamel]

it's a she

it's strata'd but there is no body corporate in place.
can i make them start a body corporate ?

i would assume a special motion to do away with body corp, as there are only 3 owners, then vote "no" on that motion, which would then force it to be required ?

 

[myla]

hello,

friend just gone through this whole scenario

just because it has been "strata titled" doesnt mean a BC is in place and/or one has to be in place

quite often a "strata title" no. is "used" as a pseudo BC no., but this is not the case, it seems to be a catch with 3-unit sites

I think by law a sign must be in place near letterboxes if BC is in place, and who the manager/person is.

if you want a BC it has to be formed or units may give a manager permission to do certain things ie. insurance, garden etc for the good of the block

now tricky stuff, any special rules or works require a 75% vote (quorom?), so with 3-unit you can only ever have 66% or 100%, 2 owners against 1 or all 3 agree

pretty much only someone with large pockets could stop you for instance changing the color of the external windows, you could paint them bright pink and your neighbour could paint them bright yellow

you may get just as much as you give

thankyou

myla

 

[MichaelW]

A quick question for you knowledgable folk...

As you might be aware, I'm developing a 3-unit block site in Mona Vale in NSW. I intend to hold all three and rent them all out. As a sole owner, I was wondering whether I should bother Strata-ing the site or just leave it as is with torrens over the lot.

Are there any pros / cons that would influence my decision in this regard?

Many thanks in advance and my apologies for my ignorance...

Cheers,
Michael. <-- Still a NooB at heart.

 

[handyandy]

A quick question for you knowledgable folk...

As you might be aware, I'm developing a 3-unit block site in Mona Vale in NSW. I intend to hold all three and rent them all out. As a sole owner, I was wondering whether I should bother Strata-ing the site or just leave it as is with torrens over the lot.

Are there any pros / cons that would influence my decision in this regard?

Many thanks in advance and my apologies for my ignorance...

Cheers,
Michael. <-- Still a NooB at heart.

Hi Micheal

My feeling is that you should strata as soon as possible.

-Without strata the property is viewed as a commercial loan as the mortgagee would need to sell as a total package if they foreclose.

-Strata rules may change in future and sundenly you can't strata anymore.

-There is really no overhead with having a fully strata'd property in comparison to having a multi property on one title. I have both no problems I don't have a BC's for the strate'd blocks I simply have the PM look after the lot.

-Another advantage to strata is that at anytime you can sell of just one with the minimum of fuss, can't if there on one tittle.

Cheers

 

[Meisterin]

A quick question for you knowledgable folk...

As you might be aware, I'm developing a 3-unit block site in Mona Vale in NSW. I intend to hold all three and rent them all out. As a sole owner, I was wondering whether I should bother Strata-ing the site or just leave it as is with torrens over the lot.

Are there any pros / cons that would influence my decision in this regard?

Many thanks in advance and my apologies for my ignorance...

Cheers,
Michael. <-- Still a NooB at heart.

I would only strata them just before selling as it will attract high maintenance costs ie higher insurance, higher council fees due to separate assessment, higher water due to separate assessment etc...Also having it strata'd means that you would need to appoint strata manager and abide by strata laws which is complex. The more complex, the more money it requires and the paper work.

So if you plan to sell even one, then you would have no choice but to sell. But if you want to keep all I'd not strata them.

Just my two cents worth

 

[handyandy]

I would only strata them just before selling as it will attract high maintenance costs ie higher insurance, higher council fees due to separate assessment, higher water due to separate assessment etc...Also having it strata'd means that you would need to appoint strata manager and abide by strata laws which is complex. The more complex, the more money it requires and the paper work.

So if you plan to sell even one, then you would have no choice but to sell. But if you want to keep all I'd not strata them.

Just my two cents worth

Sorry to disagree.

In my case the insurance is the same the council rates are the same, the water rates are the same and as already mentioned just because you have a BC does not mean that you have to have a strata manager.

This is based on real life experience.

Cheers

 

[geoffw]

Check with your local council. Rating changes. Queanbeyan used to charge MUCH lower rates for something in a single block than separately.

And before you go too far down a path, check that you can strata title. Sometimes building regulations may make it too expensive to strata.

 

[AndyB]

And before you go too far down a path, check that you can strata title. Sometimes building regulations may make it too expensive to strata.

Hi Geoff,

Any idea where you can find out what building regulations are required when considering strata titling a new development?

Thanks in advance
Andrew

 

[AndyB]

As a sole owner, I was wondering whether I should bother Strata-ing the site or just leave it as is with torrens over the lot.

Michael,

Have you looked to see if it is possible to create 3 individual torrens titles ie Torrens Title subdivision?

You may find the end valuations to be higher if you can achieve this.

Andrew

 

[geoffw]

Any idea where you can find out what building regulations are required when considering strata titling a new development?

Andrew

I'd be suspecting the town council can help you.

But I'd also be suspecting that a new development (sorry, I forgot this was new) would probably have building regs which would allow strata.

I had a problem on an older block which would have required fire rating between the units- not cheap.

 

[GoAnna!]

My experience has been that strata'ed they will be valued MUCH higher by banks

Rates will be higher

Building insurance about the same

If you value the equity then strata it.

 

[suzieq]

I own a new villa unit in a complex of 3 with no BC as such. The builder of the 3 units has retained one unit himself as an IP, I have one as an IP and there is an Owner Occupier in the other.

We pay public liability insurance for the common areas and any other incidentals are split by three (each of us are given copy of the policy and receipts of payment of incidentals by the builder).....at present this is working......if builder sells his unit then we will probably need to organise a BC.

I am happy to go along with this arrangement at the moment as its working for me.

sq

 

[Wake]

Michael

If you decide to strata the units, but not sell any at this time, there is very little you have to do re an owners corporation. As the original owner, you remain responsible for all matters until one third of the unit entitlements have been sold (so if all units of equal value then one unit must sell) at which time the owners corporation comes into effect and you must hold the 1st AGM, prepare a budget, set levies etc.Prior to that, as the original owner you just hold an inaugural meeting with yourself and provide a written undertaking to pay all costs associated with the property ie insurance (must be strata insurance though) maintenance, utilities etc.

Wake