Body corporates: can they help you make sure your home or investment property is well cared for, or do they just create huge headaches?
The answer to this question probably depends on your past experience with body corporate properties!
When you buy an apartment or townhouse, you usually buy into a body corporate that manages the building or complex as a whole. The purpose of the body corporate – also known as the owner’s corporation – is to ensure the property is well maintained, now and in the future.
For instance, the body corporate takes care of garden maintenance, pays for the electricity to illuminate hallways and common areas, and ensures adequate insurance is in place.
“There are less maintenance issues to be worried about when you own a unit, as often all externals of the property and building are taken care of and organised by the body corporate,” explains Nicole Marsh, a licenced buyer’s agent with www.eureka-property.com.au
“On the negative side, however, there are the ongoing body corporate fees to build into the equation.”
Body corporate fees can be as little as $15 a week for small buildings with limited shared amenities, or as high as $200 a week for high-end properties with luxurious common facilities, such as pools, spas, gyms and landscaped gardens.
They are reviewed annually, but Marsh warns, “Body corporate fees can be excessive, and can increase from year to year.”
As an apartment owner, the best way to minimise body corporate increases – and to be involved in any financial decisions that impact your property – is to join the committee. Committee members decide how much the quarterly fees will be and work with the strata manager to manage maintenance and repairs. They also vote on issues such as pet ownership.
“Often, there can be hundreds of owners in a complex, and there can sometimes be infighting or differences of opinions with the individual owners that make up the body corporate as a result –and this can lead to headaches for many owners,” Marsh says.
“As an example, we recently purchased a property for a client that was part of a body corporate. This buyer desperately wanted to be allowed to keep a small dog, however the body corporate by-laws did not permit pets. Luckily for the buyer, it was a duplex so there was only one other owner in the body corporate, who luckily agreed to allow them to have a pet. We are now going through the process of having the body corporate by-laws changed to formally reflect that pets are now allowed, to ensure the other owner can’t change their mind down the track.”
As another example, Marsh recently purchased a duplex on behalf a client that was only a couple of years old and was being sold by the original owner.
“The body corporate was in place and set up, however there were no financial contributions being made by the owners to the ongoing maintenance or insurance of the property. There was a 'handshake agreement' made between the two owners that they would pay half of the building’s insurance each and that was all,” she says.
“This was an alarming issue for us when we came to purchase the property for our client – what happens if one party doesn't pay their portion of the insurance? The property would be uninsured until such time as the premium was paid, if at all!”
Marsh suggests that any buyers interested in a unit or townhouse should do their due diligence prior to signing anything, to be sure you don’t get caught out.
“Don’t be afraid to have your solicitor do additional searches into the body corporate records, to ensure you are fully informed regarding proposed works, future increases in fees, past maintenance issues etc," she adds.