High Body Corporate fees but I can't see where money went before purchase.

[ThomasAJ]

Many holiday rental units in QLD have seemingly high BC fees for ordinary units (I am not implying they are cheaper in other states).

Say $8k (not including council rates) on say $350k asking prices.
Many of the blocks (or 'estates') look in very average repair.

When I ask "where has the money gone over the last ?? years" the reply is something like "show us you're a real buyer and your solicitor can ask for the books".

I got similar responses from properties at both ends of the $ spectrum.

Anyone have experience in finding out where the money has gone *before* getting real serious about the purchase.

eg I received the followingfrom an agent when inquiring about a flash villa.

************

As part of your due diligence your Solicitor should research that type of query with the Body Corporate.

However, no Body Corporate is going to provide information unless they know the prospect already has a Contract under his nose ready to sign should he be satisfied with his due diligence. They are not going to provide information to anybody who is simply expressing an interest.

 

[Aaron_C]

Well I don't know about QLD - but a body corporate fee of 8k per year is excessive for a unit of such a low sum of money. I would expect to pay a $8,000 body corp fee in a decent building in a sub-penthouse.

 

[ThomasAJ]

The $s are not important - what it is is what it is - the viewing process is the key.

What happens/ed to the money!

 

[Aaron_C]

Of course the $ is important. If the body corp fees are really high and you can't see how it is justified - then don't buy it...

 

[russellpeter]

it’s crazy what they charge for and how much

I just get a report after questioning their fees on postage as we got charged $1700 for 8 months 11 units.

there are charging us $15 per email they send. and as we have been complaining a lot lately there are sending us emails every couple of days.

It’s a service based business and this kind of fees are getting out of hand and because it’s not regulated by the Office of fair trade it’s not going to get any better.

Pure Body Corp Coming soon to Brisbane

 

[sanj]

As part of your due diligence your Solicitor should research that type of query with the Body Corporate.

However, no Body Corporate is going to provide information unless they know the prospect already has a Contract under his nose ready to sign should he be satisfied with his due diligence. They are not going to provide information to anybody who is simply expressing an interest.

my response would be to tell the agent to get stuffed

how can you make a decision without knowing all the facts?? you'd have to be mad

 

[sammmeee]

Have had the same issues when I request info from body corp. Agents are aholes..I have gone direct to body corp and they wont give any info out unless allowed by seller...I walked away from a few because of it...what are they hiding?

 

[vbplease]

Pure Body Corp Coming soon to Brisbane

Hi Russell,
I remember you mentioning before bringing in a new body corp - is this a new corp you're setting up yourself? Was it difficult getting approval from the committee?

I've heard that small apartment buildings (say 6units or less) often use a local real estate agency to run the Body corp - which i guess would be good for keeping the overheads down?

 

[russellpeter]

Hi Russell,
I remember you mentioning before bringing in a new body corp - is this a new corp you're setting up yourself? Was it difficult getting approval from the committee?

I've heard that small apartment buildings (say 6units or less) often use a local real estate agency to run the Body corp - which i guess would be good for keeping the overheads down?

I am looking into the costs of running a BC now and what license is needed

but i have regested the name Pure body corporate just in case its an area i think would be worth investing in.

 

[KarenMcGlinchey]

Plum Property Buyers Agents

Holiday rentals often have very high body corp fees because the body corp has entered into very costly agreements with managers (sometimes live in- so there is a wage to be paid), booking services, cleaners, gardeners, pool and lift maintenance firms, security firms etc. The list can be very long.

Fixing anything major in a large block eg lifts, pools, cracked walls is hugely expensive.

In the large complexes the fees for professional strata management are very high supporting a small army of other profesionls such as accountants, auditiors, consultants preparing projections for sinking funds etc.

I have acted (I am a solicitor) for buyers in Sydney where the Body Corp is pursuing the builder for building defects. This is very problematic and expensive. Legal costs can run to millions and someone has to pay.

.

 

[cu@thetop]

Find out who the Body Corporate manager is (look on s206 statement attached to the contract) and before signing book with them to review the books (approx $30 fee payable- anyone in the public can ask to do it). Otherwise put a clause in the contract - try this for size but no liability accepted:
This contract is subject and conditional upon the Buyer obtaining an inspection of the Body Corporate records the results of which are entirely to the Buyer’s satisfaction. In the event that the Buyer is not completely satisfied with the results of the inspection of the Body Corporate records the Buyer may terminate this contract by notice in writing to the Seller or the Seller’s agents upon within twenty-one (21) days from the date of this contract upon which the deposit shall be refunded in full to the Buyer and the contract shall be at an end.
As for the agent lying to you- a word of advice- if their lips are moving there is a 93% chance they are lying.

eg I received the followingfrom an agent when inquiring about a flash villa.

************

As part of your due diligence your Solicitor should research that type of query with the Body Corporate.

However, no Body Corporate is going to provide information unless they know the prospect already has a Contract under his nose ready to sign should he be satisfied with his due diligence. They are not going to provide information to anybody who is simply expressing an interest.

 

[Mick C]

This reminds me for the famous " 317 Castlereagh St- Sydney" ---> in 2004 strata went up 300% in that one year.

There was a mad rush to sell sell sell; client pick up a 2 + study bedroom for a bargain price of $475,000, strata at that time was $2900 Pq- crazy yes? but i found out later there was some some logic behind it ...the reason why strata went up was because of some poor building design in regards to fire escape etc, Strata over budgeted for legal cost + cost of re-deign... a risk he was willing to take...

2011- The strata is now back to normal and he got himself a investment worth over $700,000, rent for $850pw.

A risk? yes...

Regards
Michael

 

[Tony3008]

My building was built by a Queensland developer who pre-settlement entered into what is effectively a 25-year management agreement with another company at a price that is probably twice the value of services actually rendered. I'll say no more than trying to unscramble such agreements is not easy.

Google on 'Arrow case' or check out http://pivotalpoint.info/Conduct_Unbecoming [PDF] for more.

 

[Aaron_C]

My building was built by a Queensland developer who pre-settlement entered into what is effectively a 25-year management agreement with another company at a price that is probably twice the value of services actually rendered. I'll say no more than trying to unscramble such agreements is not easy.

Google on 'Arrow case' or check out http://pivotalpoint.info/Conduct_Unbecoming [PDF] for more.

Most developers don't even bother trying to screw their purchasers with high body corporate fees...i'm surprised they even did that

 

[cadence]

yeah I've been noticing how expensive strata fees have been for even small units with no lifts etc .... as I was venting the other day, an agent told me that apparently there has been new legislation introduced recently (I'm assuming in NSW only rather than federal) that all body corporates now have to have a 10 year business plan and they are expected to forecast what potential repairs/maintenance may be required over that period. apparently, this has emboldened body corporates to increase the levies.

i guess it's all a balancing act .... but the rates quoted in the first post sound excessive unless there are substantial structural rectifications required (in which case i wouldnt touch the property)

 

[twobobsworth]

yeah I've been noticing how expensive strata fees have been for even small units with no lifts etc .... as I was venting the other day, an agent told me that apparently there has been new legislation introduced recently (I'm assuming in NSW only rather than federal) that all body corporates now have to have a 10 year business plan and they are expected to forecast what potential repairs/maintenance may be required over that period. apparently, this has emboldened body corporates to increase the levies.

i guess it's all a balancing act .... but the rates quoted in the first post sound excessive unless there are substantial structural rectifications required (in which case i wouldnt touch the property)

July 2009. There are no penalities for non compliance but strata managers have been pushing pretty hard to get all their complexes assessed. Makes their job easier if there's money in the can. Had a unit that saw the fees move from $460 to $800 pq after the sinking fund plan was completed.

 

[stevie_sloth]

I think my apartment's body corp fees are too high.

I'm on the Gold Coast, NOT in a holiday apartment block. There are 15 units in the 3 storey walk-up block. There are nice, but in no way extensive gardens, a simple pool with no spa, sauna, gym, etc. There are 2 measly chairs around the pool. There are 2 stairwells / 2 security glass doors (per group of 7 / 8 units), and a communal underground car park / garage.

We paid $42 per week when we moved in in September 2008. Now, 3 years later, we are paying over $60 a week. Yet we have gotten nothing more for that extra payment. There's been no maintenance done on the building, nothing to add any value...in fact, there are several things that NEED maintenance. The pool is looking a bit tired. The security glass door on our side of the building has had a big crack in the glass since before we moved in, one of the round dome lights on the brick wall bordering the property when you enter it has been broken for over 2 years, the Fire Exit light in the stairwell has been flickering for 6 months...

Not sure where this money goes to...

And on the property we WANT to buy, which is set amongst gorgeous extensive manicured gardens, with a beautiful lagoon-style pool, a little bridge going over to the pool, views over the water (canal / river)...21 units...individual lock up garages and separate individual lockable storage rooms...the body corporate is $40 a week.

My only concern in buying this place is that the body corporate might suddenly go up to $60+ without warning, like our own building did. Then we can't afford to pay it and it'd suck to have to move again because of that...

 

[Aaron_C]

Well Stevie you have to do the numbers. 15 units, $3,000 pa body corp fees each. That's only $45,000 for the body corporate to contribute to both a) the sinking fund and b) general maintenance. How the hell are you going to do all that for $45,000?

 

[stevie_sloth]

Yeah, but...some blocks that have between 6-20 units only charge $20-$30 per week body corporate!

It seems to me, that properties in our area (Surfers Paradise) charge around $60 for our type of building, as a rule. And yet properties where you get a lot MORE for your money, in other suburbs about 10 minutes away (Mermaid Waters, Broadbeach Waters), charge about half the price.

Our building's sinking fund is about $25,000 I think. Or it was when we purchased. It SHOULD be higher than this now, as nothing of any great expense has been done since we moved in.

 

[kiwipaul]

By law your BC manager has to send you every year financial details for the sinking fund and the admin fund showing all income and expenditure. This should also show the balance of both the sinking fund and the admin fund. They also must include a copy of the sinking fund forecast so you can see what the money is being accumulated for.

BC managers cannot just decide to charge $x amount the budgets have to be approved and voted on (and YOU have a vote) at the AGM. If they cannot show you what the sinking fund is being collected for I consider you are within your rights to withhold sinking fund contributions until you are informed what it is for.