Obtaining information as a prospective purchaser
There are particular issues related to buying a community lot. Effectively, you are buying into a corporation and will become a member of the corporation. 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 Land and Business (Sale and Conveyancing) Act 1994 (SA) section 7(1).
As a prospective purchaser, you may apply to the community corporation for a range of information for moderate fees (see Community Corporation: Access to information). Some of the information must be made available as copies, and some must be made available for inspection. Any information requested should be provided within five business days of making the application. The information should enable you to establish the current financial position of the corporation.
There are a number of documents to always consider when purchasing a community title property.
The community (or community strata) plan determines the fundamental nature of what you are buying. It will also show the lot entitlements which determine the proportion of the contributions that you will be required to make.
The by-laws set out the rules of the corporation that you are buying into. The by-laws, along with the scheme description (if any) and the development contract (if any) may impose restrictions on what you or other owners can do with or on your lot. For instance you may not be able to let your property on short term stays if the by-laws prevent leases of less than two months.
These documents should be included in the attachments to the contract of sale. You should also look at the minutes. financial records and insurance policies held by the corporation.
Service infrastructure issues for new developments
Both SA Power Networks and SA Water have requirements for the location of connection points for power, water and sewerage. The location of connection points and meter enclosures that service more than one lot may be shown on the community plan, which is available for a fee from the Land Titles Office. However, these details are often not shown. If service infrastructure is not shown on the community plan, agreement must be reached among the lot owners as to the location of the services [Community Titles Act 1996 (SA) s 24(4)(b)], subject to the requirements of the relevant agencies. Even if there is an existing house on one of the lots with connections in place, it may be necessary for new connection points to be established which cater for all lots. To determine requirements for the number and location of connections and meters, contact the relevant utility.
Information to be provided when entering into a contract
If you enter a contract to buy a community lot, along with the information that must be provided in relation to any proposed sale of land, the vendor must provide certain information under the Land and Business (Sale and Conveyancing) Act 1994 (SA) s 7(1) and the Land and Business (Sale and Conveyancing) Regulations 2010 (SA) reg 8. Both general information about community titles and information specific to the community title you are proposing to buy must be provided.
The general information is found in the notice in 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.
Matters to be considered in purchasing a community lot or strata unit
The property you are buying is on strata or community title. There are special obligations and restrictions that go with this kind of title. Make sure you understand these. If unsure, seek legal advice before signing a contract. For example:
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.
If you are buying into a mixed use development (one that includes commercial as well as residential lots), owners of some types of lots may be in a position to outvote owners of other types of lots. Make sure you fully understand your voting rights, see later.
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, 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 might change if the body corporate votes to change them. Also, if you are buying before the community plan is registered, then any by-laws you have been shown are just a draft.
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.
To request this information, write to the secretary or management committee of the body corporate. They may charge a fee for providing these records.
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.
Buying off the plan
If you are buying a property that has not been built yet, then you cannot be certain what the end product will be. If you are buying before a community plan has been deposited, then any proposed development contract, scheme description or by-laws you have been shown could change.
Mixed use developments—voting rights
You may be buying into a group that is run by several different community corporations. This is common in mixed use developments, for example, where a group of apartments is combined with a hotel or a group of shops. Make enquiries so that you understand how many corporations there are and what voting rights you will have. If at least one of the lots in your corporation is residential then there will be one vote per lot [s 87]. If none of the lots are residential then the by-laws may allow a different of votes for each lot.
The Real Estate Institute of South Australia provides an information service for enquiries about real estate transactions, see the Real Estate Institute of South Australia website.
A free telephone Strata and Community Advice Service is operated by the Legal Services Commission of South Australia: call 1300 366 424. Information and a booklet about strata and community titles is available from the Legal Services Commission website
You can also seek advice from a legal practitioner.
Information specific to the community corporation and lot you are proposing to buy must be provided by the vendor under Land and Business (Sale and Conveyancing) Regulations 2010 (SA) sch 1 div 2:
- particulars of contributions payable in relation to the lot, including details of arrears of contributions related to the lot;
- particulars of the assets and liabilities of the community corporation;
- particulars of expenditure that the community corporation has incurred, or has resolved to incur, and to which the owner of the lot must contribute, or is likely to be required to contribute;
- if the lot is a development lot, particulars of the scheme description relating to the development lot and particulars of the obligations of the owner of the development lot under the development contract;
- if the lot is a community lot, particulars of the lot entitlement of the lot.
The following documents should also be provided under the Land and Business (Sale and Conveyancing) Regulations 2010 (SA) sch 1 div 2:
- a copy of the minutes of the general meetings of the community corporation and management committee for the preceding two years or since the deposit of the community plan (whichever is the lesser);
- a copy of the statement of accounts of the community corporation last prepared;
- a copy of current policies of insurance taken out by the community corporation;
- a copy of the scheme description (if any) and the development contract (if any) – these documents may be obtained from the community corporation or the Lands Titles Registration Office;
- a copy of the by-laws of the community scheme - copies of the by-laws may also be obtained from either the corporation or 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 to the community corporation for the information [Land and Business (Sale and Conveyancing) Act 1994 (SA) s 9(2)].
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.