Matters to be considered in purchasing a strata unit
There are particular issues related to buying a strata unit. Effectively, you are buying into a strata corporation and will become a member of the strata corporation. As well as being responsible for maintaining your own unit, you will share the responsibility for maintaining the common property (the external structure and foundations of the buildings and pipes, cables, wires, ducts and drains). It is therefore essential that you have as much information as possible about the corporation before you decide to purchase.
You may obtain information before you enter into a contract. Alternatively, if you have entered into a contract, you must be provided with certain information at least 10 clear days before the date of settlement under s 7(1) of the Land and Business (Sale and Conveyancing) Act 1994 (SA) (see below).
As a prospective purchaser, you may apply to the strata corporation for a range of information for moderate fees. See The Strata Corporation, Access to information. Some of the information must be available as copies, and some must be made available for inspection. Any information requested should be provided within 5 business days of making the application. The information should enable you to establish the current financial position of the corporation.
Information to be provided when entering into a contract
If you enter a contract to buy a strata unit, along with the information that must be provided in relation to any proposed sale of land, the vendor must provide certain information under s 7(1) of the Land and Business (Sale and Conveyancing) Act 1994 (SA) and reg 8 Land and Business (Sale and Conveyancing) Regulations 2010 (SA). Both general information about strata titles, and information specific to the strata corporation and unit you are proposing to buy must be provided.
The general information is found in the notice in the Land and Business (Sale and Conveyancing) Regulations 2010 (SA) sch 1 div 3, which sets out a range of issues to consider when buying into a strata corporation, as follows.
You will automatically become a member of the body corporate, which includes all owners and has the job of maintaining the common property and enforcing the rules. Decisions, such as the amount you must pay in levies, will be made by vote of the body corporate. You will need to take part in meetings if you wish to have a say. If outvoted, you will have to live with decisions that you might not agree with.
Use of your property
You, and anyone who visits or occupies your property, will be bound by rules in the form of articles or by-laws. These can restrict the use of the property, for example, they can deal with keeping pets, car parking, noise, rubbish disposal, short-term letting, upkeep of buildings and so on. Make sure that you have read the articles or by-laws before you decide whether this property will suit you.
Depending on the rules, you might not be permitted to make changes to the exterior of your unit, such as installing a television aerial or an air-conditioner, building a pergola, attaching external blinds etc. without the permission of the body corporate. A meeting may be needed before permission can be granted. Permission may be refused.
Note that the articles or by-laws could change between now and when you become the owner: the body corporate might vote to change them.
Are you buying a debt?
If there are unpaid contributions owing on this property, you can be made to pay them. You are entitled to know the financial state of the body corporate and you should make sure you see its records before deciding whether to buy. As a prospective owner, you can write to the body corporate requiring to see the records, including minutes of meetings, details of assets and liabilities, contributions payable, outstanding or planned expenses and insurance policies.
There is a fee. To make a request, write to the secretary or management committee of the body corporate.
The body corporate can require you to maintain your property, even if you do not agree, or can carry out maintenance and bill you for it. The body corporate can require you to contribute to the cost of upkeep of the common property, even if you do not agree. Consider what future maintenance or repairs might be needed on the property in the long term.
As an owner, you are a guarantor of the liabilities of the body corporate. If it does not pay its debts, you can be called on to do so. Make sure you know what the liabilities are before you decide to buy. Ask the body corporate for copies of the financial records.
The body corporate can make contracts. For example, it may engage a body corporate manager to do some or all of its work. It may contract with traders for maintenance work. It might engage a caretaker to look after the property. It might make any other kind of contract to buy services or products for the body corporate. Find out what contracts the body corporate is committed to and the cost. The body corporate will have to raise funds from the owners to pay the money due under these contracts. As a guarantor, you could be liable if the body corporate owes money under a contract.
Information specific to the strata corporation and unit you are proposing to buy must be provided by the vendor under the Land and Business (Sale and Conveyancing) Regulations 2010 (SA) [sch 1 div 2]:
- particulars of contributions payable in relation to the unit, including details of arrears of contributions related to the unit;
- particulars of the assets and liabilities of the strata corporation;
- particulars of expenditure that the strata corporation has incurred, or has resolved to incur, and to which the unit holder of the unit must contribute, or is likely to be required to contribute; and
- particulars of the unit entitlement of the unit.
The following documents should also be provided:
- a copy of the minutes of the general meetings of the strata corporation and management committee for the preceding 2 years;
- a copy of the statement of accounts of the strata corporation last prepared;
- a copy of current policies of insurance taken out by the strata corporation; and
- a copy of the articles of the strata corporation (copies of the articles may also be obtained from the Lands Titles Registration Office).
Note that, if the vendor has no agent but the purchaser has an agent, the purchaser’s agent must apply for the information [Land and Business (Sale and Conveyancing) Act 1994 (SA) s 9(2)].
In addition to the information that must be provided by the vendor, you may apply to the corporation to inspect the following documents [Strata Titles Act 1988 (SA) s 41(1); Strata Titles Regulations 2018 (SA) reg 31]:
- a copy of the accounting records of the corporation (fee: $8);
- the minute books of the corporation (fee: $8);
- any documents received by the strata corporation from the original registered proprietor under s 38(3) (fee: $8);
- a copy of any contract with a strata manager (no fee); and
- the register of unit holders (no fee).
The documents must be made available within 5 business days of the application. See The Strata Corporation, Access to information.
The content of the Law Handbook is made available as a public service for information purposes only and should not be relied upon as a substitute for legal advice. See Disclaimer for details. For free and confidential legal advice in South Australia call 1300 366 424.