Is this Body Corporate Management's Responsiblity

[Toon]

I've had an IP on the market for almost two years & am getting more keen to sell as I'm building another IP and the higher interest rates are starting to worry me a little. I first listed it for sale at $169K on the RE's advice, but a couple of months ago the RE suggested I should drop the price to $140,000, which I rejected and was a bit perplexed by.

Today I had another real estate agent do a valuation for me. Interestingly, he confirmed that back when I first listed, unit 6 in the same complex had recently sold for $167,000, but then in 2007 unit 4 sold for $145,000 and unit 5 for $149,000.

I am very concerned about the huge drop in value over the period and his reading of this is that the Body Corporate Management is not ensuring that this complex is well maintained. In fact, he described the complex as looking like a 'war zone', with unmaintained gardens and dogs running around unrestrained. He said that my unit wasn't too bad, but that the complex is clearly being allowed to deteriorate and that I should get onto the Body Corporate Managers about it ASAP.

Given that the same RE both manages the Body Corporate as well as having this property listed for sale, I would have thought it would be in their own interest to make sure this complex was maintained well enough to at least maintain property values.

Is this the BC's responsibility? What should I do? Is telling them of my concerns and asking them what they can do about it the right place to start?
What if they want to wipe their hands of it?

 

[The Y-man]

If you are the owner you are part of the body corporate. It is therefore up to you to initiate actions to improve the property etc. Getting the other owners to agree (and pay!) would be the main challenge.



Cheers,

The Y-man

 

[marg4000]

The body corporate is simply a committee run by the owners of units. If you don't become involved, you cannot complain that there is nothing being done.

You will be advised of any meetings, make sure you attend. Bring your concerns to the attention of the committee, and ask for any improvements you deem necessary. Read the minutes, you may find that issues are languishing because of lack of interest by owners.

Buildings can very quickly become run down. When owners don't become involved, then the few people who attend often cannot get the majority of owners to agree to improvements.

You must decide if you want to sell. If you do, then the only chance is to ask market rates, which would appear to be around the mid $140s. The unit that sold for $167K may have been renovated, or in a prime location in the block and may have attracted a premium price.
Marg

 

[Toon]

Thanks Marg and The Y-man.

The lack of interest sounds about right. There’s still a couple of owner occupiers there who outright refuse to join the body corporate and they handle their own building and public liability insurance. I didn’t even think that was legal. I am always working when the BC meetings are held, but I always sign a proxy form for the BC manager to vote on my behalf. Looks like I will have to take annual leave next time so I can attend and raise some issues.

The deterioration is mainly of the gardens, which is probably due to the stage 4 water restrictions we’ve been on for the last couple of years. I don’t really expect tenants to maintain gardens in their best state when they are not even allowed to water them. Dying lawns and plants hardly give much incentive to get out in the garden. The unrestrained dogs will have to be addressed though.

I think the ‘war zone’ analogy was a bit of an exaggeration by the RE given that he still said he thought he could get $155-160K for my unit.

I’m going to hang onto it and get more involved in the BC instead.

Now, back to looking for that second job


Toon

 

[dave99]

There’s still a couple of owner occupiers there who outright refuse to join the body corporate and they handle their own building and public liability insurance. I didn’t even think that was legal.

Every unit holder is a member of the body corporate whether they like it or not. They can choose not to vote or attend meetings but they must pay the contributions. You should check that they are doing this.

They can't handle their own building insurance, because they don't own the whole building. Only the body corp, as representative of ALL the owners of the building, can arrange building insurance.

Sounds a bit dodgy, I would get onto it right away to ensure the insurance and finances are OK. If you ring the manager, the accounts can be sent to you at any time, which will detail all the contributions (including any outstanding) and the expenses.

On the bright side, most owners are very apathetic. So if you're on the committee, chances are most won't turn up to meetings, and you can run the show to your liking.

 

[The Y-man]

They can't handle their own building insurance, because they don't own the whole building. Only the body corp, as representative of ALL the owners of the building, can arrange building insurance..

Might be a block of townhouses/villa units with some common property (eg central driveway). Trying to form a BC for a block of 4 at the moment, but other owners not too keen (a water leak just developed in the middle of the common driveway)

Cheers,

The Y-man

 

[dave99]

Ahh yeah good point. I was assuming apartments since the values were quite low.

 

[Joe D]

On the other hand ……..

Let the BC mismanage and let the property run itself down whilst you quietly buy up units in the complex at bargain prices. Once you have a sizable holding and can influence decisions in terms of strata levy entitlements, sack the BC, vote to make the improvements that all unitholders will be obliged to contribute to and realize your capital gains.

Whilst not something that I personally do, this happens and I have seen it first hand.

Good luck.

Joe D

 

[Dazz]

Noice thinking Joe.