Signing over body corp rights to seller

From: David H


Hi Forum,
I am just looking at my first off-the-plan IP. I have just received the contracts and they have an interesting condition that I was wondering if anyone had come across before.
This is a large multi-story, multi-unit dwelling. There will be an on-site caretaker, who will also act as an on-site letting agent if any owner wishes to use their services.
The seller of the property requires that buyers sign over their rights on the Body Corp to the seller for the first year. This will enable the seller to set up the letting agreement and agent. There are also clauses that give the seller the right to grant exclusive use of common areas to the owner of any unit - and the caretaker will own the caretakers unit.
This is not meant to be a set of serviced apartments, but I feel it may be being set up to potentially be that way.
I am really naive in off-the-plan, so I would appreciate advice from anyone who has come across this before.
Thanks,
David
 
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Reply: 1
From: Joanna K


I would be cautious if I were you. Signing your voting rights to the vendor will allow the vendor to set any budget for strata levies that he feels is satisfactory. This could mean that he under-budgets so that the investment looks more attractive.

It could also mean that he could actually sell the management rights to the building, and you would have basically no say in it at all.

Generally, the developer will "nominate" a strata manager for the development. It is then up to the newly formed owners corporation to officially appoint the nominated strata company at the first Annual General Meeting. Bear in mind that most developers receive kickbacks from the strata management company for the "referral".

Personally, I wouldn't sign over my rights.

I actually had a client that did this once because he built such a pathetic building that if he held the voting rights, he wasn't going to sue himself and the defect period was limited to 3 months.

Be careful


Kind regards

JOANNA
 
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