And there it is. This is what most likely happened:
The developer, who was probably the builder, did a bodgy job that needed repairs, and rather than do the right thing and fix everything, ran his own body corporate, only spending money where he absolutely had to until the 7 year builders liability period was up, and not putting any money at all into a reserve slush fund. Then he strata titled everything, sold them off, and passed all the problems on to the new buyers who now have to fork money out of their own pockets to do work that rightfully the previous owner/strata should have done.
Looks like there is a good chance that everyone in the complex is going to have to chip in some money towards fixing the problem, either by the strata company going into debt and recouping the money later on with future levies, or with a direct payment.
The department of fair trading obviously prefers for people to sort out their own problems, but if it were me, I would be getting them to mediate directly right away. Worst case scenario, it does get ugly and you have to mediate. Best case scenario, the body corp guy realises that he is under scrutiny and pulls his socks up.
I knew something smelt bad.
Hi Ocean Architect, I am not sure if you work in the field of architecture in real life, but indeed, you are absolutely SPOT ON with this....
Yes, the entire building block was up for sale about 9 months ago, and it was all tenanted before then during the last 7 years and was managed by one single agent whom eventually strata titled and sold the individual lots for the builder. Previous owner indeed was a construction company.
At the time of sale, the units were priced on average $10-20k below the market price, with the agent saying that the owner was interested in selling off the entire block in a timely manner so that proceeds from the sale can be redirected to fund his construction project elsewhere.
As my partner and I were first-time buyers, we were only aware of the importance of getting our finance sorted. So by the time we found this unit, we had only completed our homework on the finance aspect of things. We still didn't have a solicitor appointed to act on our behalf.
As the agent at the time was so helping and friendly (I know this sounds really stupid now...but that was how we really felt at the time as 1st time home buyers) we used the solicitor he recommend (WHICH WAS A COSTLY MISTAKE looking back now), as he said the same solicitor had already acted on behalf of so many other buyers in the block, he would be very experienced and knowledgeable about this building and most of the buyers were very happy with his service.
So as the story goes, we used the solicitor the REA recommended, and trouble began there. TO our horror, the solicitor did not at all go through the contract details with us, only merely warned us that we should get our finance sorted and be ready to settle. We had no copy of the contract to go through, and thereby didn't know much about the terms and conditions enclosed. When asked, the solicitor merely replied it is just one standard contract, when one special condition that, if at the day settlement, our bank was not able to settle, then we are liable for all the relevant charges the vendor incurred, and will also subject to further interest charges at the rate of 10% should we not able to settle 2 weeks after that.
The solicitor recommended no strata search be done, as strata scheme merely came to being and mentioned nothing about unit inspection. He was also against us doing building inspection for purchasing the unit, said he knew about this building from other buyers he served, and one was so confident ended buying 3 units in one go, so there really should be no concern at all. There was no mention of extending the cooling off period so that all the searches can be done in a proper manner.
So trouble came when I insisted on having a strata search done and a unit inspection at least. The solicitor said he only had time to do the strata search and I would have to arrange a unit inspection on my own. He did not wish to see us prior to the ending of the cooling off period, as in his words, there would not be much to talk about as reports would not be ready until the final day.
So on the day cooling off ends, my partner and I went to his office taking the unit inspection report with us. Fortunately, there were just two minor issues with the lot, which when I mentioned to the solicitor, he said fairly quickly he could try to negotiate with the owner, but if the vendor doesn't respond, there's nothing much he could help, as the day is the finishing of cooling off. It's a time for us to make a decision whether to proceed or not.
As for the strata search, there was no written report whatsoever. Merely miscellaneous list of items, for which we were told that even though the strata was in debt of around 30k in utility bills and had no building insurance at the time, they would all be recovered fairly quickly as the builder sells off the rest of the units and in time, the strata manager would arrange for one building policy so that there is nothing much to worry about. However, he was not able to provide break down of the utility debts.
Long story short, my partner and I by that stage was pretty upset by the attitude of the solicitor and felt he was more working in the interest of the seller rather then us, the buyers. By that stage, we had already paid the solicitor $900 dollars for his work.
We then flipped over the contract to another conveyancer, recommended by our colleague to have a more independent view at the contract for us. However the process of doing that was not easy. As expected, the process of transferring the contract was ugly and difficult. The solicitor, even though agreed in principle to hand over the contract, (I said to him he could keep the deposit of $900 we paid) his secretary however kept on saying she had already filed our contract and would take up to one week for her to find it, and demanded us not to return to their office until we were given the notice to do so. Obviously this was an outright excuse, so my partner and I had to take one day off the work, and demand for the return of the contract in person.
Fortunately, by the time the conveyancer had a look at the report, there was not too much unpleasant news. We did not though, recommission for another strata inspection, because in the conveyancer view, since the cooling off period had already finished, there would not be much we could negotiate with the vendor. We would be liable anyway to proceed with the contract.
---So yeah, that was our horrific struggle up to the settlement stage....