Why You Should Always Request a Certain Document When Buying into a Shared Property Even Though You're Not Required to Do So
Have you ever heard the term "caveat emptor?" This is a Latin phrase that essentially means "buyer beware" and it is something that you should always bear in mind if you're in the market to buy some property. Many experts believe that you should be especially careful when you're buying a unit in a shared property, as many different individuals or entities are responsible for the condition of the building and its surroundings. What document in particular should you be looking out for, if you're in this position?
Doing Your Research
As you may know, the property market can sometimes be something of a pressure cooker environment, especially in areas where individual units are in short supply and the development is in a favourable area. However, you should never bow to this type of pressure just because you are particularly keen to move to that "neck of the woods."
You need to make sure that you get a section 108 report, which is also known as a "prepurchase strata" document, as this has a lot of really important information about the general management and financial affairs of the property you are about to buy into.
Be careful here, as you are not required to request or read the strata report in order to go ahead with the transaction, and many people are unaware of its existence unless they use an expert adviser.
This document has a wealth of information and will essentially tell you how well the building is managed and if it is financially secure. You will be able to see records of all the repairs and maintenance, including emergency events, as well as the associated expenditure. You will be able to see how the owner maintenance fees have risen over the years, which will give you a general idea of what you may expect to pay going forward. You will also be able to see records of general meetings, which will undoubtedly uncover any issues related to the management of the property.
How to Request
These reports are very detailed and can sometimes take some time to put together. You will have to make a formal request before you can get one and this has to go through the seller's solicitor or agent. Be prepared to wait for several days in some cases, so make sure that you build this into your property buying decisions.
If you're particularly keen on a certain unit then you can always build a clause into any initial contract to make a purchase subject to you reading the prepurchase inspection report. As you may know, you'll typically get a five-day "cooling off" period when buying any property, but you shouldn't automatically assume that you can use these few days to request, receive and review the report, just in case there are any unforeseen delays.