Buying A Title
The Sun Herald
Saturday June 29, 1991
THE great Australian dream of owning your own home usually means owning a house. In most people's eyes it has always seemed preferable to living in a home unit or flat.
As a house owner you can determine how your dwelling will look, what colour it should be, whether you can have pets or not.
Unit owners don't have that freedom; their choice is governed by the wishes of the body corporate, the fellow owners of the unit block.
There are of course many advantages to living in a home unit, especially for couples at either end of the age scale who don't have pets and who want to give up the daily chore of gardening.
But remember that buying a unit can also be more complicated than buying a house because of the question of "title".
There are two basic titles covering units and flats-strata or company-and it is important to know the difference. The most common is strata title but in the older type of development, the company title system is often found.
Both involve units or flats in either multi-storey buildings or attached townhouses. Each individual unit is a home but you share with your neighbours such areas as entrances, elevators, the grounds, parking and recreational facilities.
When you purchase through strata title you receive a deed to the property. You own the unit you live in and if it is a townhouse, the land its on.
With the other residents you jointly own the common areas and pay a monthly maintenance fee, set by the body corporate, for the upkeep.
All the unit owners make up the body corporate or strata corporation which is responsible for the management and upkeep of the building.
The basic rules which govern their activities are normally set by the Government but can be changed by 75 per cent of the owners passing a special resolution.
Before 1961 those who didn't want the problems of gardening and maintenance had to rent a flat or buy one through a company.
The "company title" is registered to a proprietary company, under the Companies Act, and it owns the apartment block.
Like other companies it has articles and a memorandum of association and its activities are regulated by the Act.
Residents own shares in a proportion of the facilities they use and not the market value of them.
The "company rules" which govern the running of the block may be quite severe. Leasing or selling the unit can often depend on the approval of the company and it can be difficult to get finance so prices for these units are generally lower.
The number of shares depends on the size of your apartment, and your monthly maintenance charge depends on the number of shares you have.
The board of directors-shareholders elected to run the company building-has the right to approve any prospective purchaser.
It also sets by-laws and rules to operate the building.
To get over these limitations the Strata Titles Act was introduced in 1961, which means that each building has personally-owned units with rights over portions of land for garages or gardens and common property which is maintained by the body corporate.
It is possible to change from company to strata title if all the owners agree and are prepared to pay for it.
There are solicitor's fees, a fee to the surveyor who draws up the strata plan, a fee to wind up the company and a fee to the Land Titles Office.
Before buying a unit you should investigate its location and make sure it suits your needs. If you have any doubts about the structural viability of the building hire a licensed building inspector or engineer. It is obviously far better to know the problems beforehand than to face a hefty bill for repairing structural problems some years later.
Talk to other owners in the building and find out if they have had any problems, check the financial background of the builder and you could also check with consumer affairs and see if there were any complaints made against him.
Once you have made the big decision to buy then there are a number of things to be checked and you should consult your solicitor.
They include:
* The strata roll, which should detail the owner and any mortgagee or tenant.
* Records of notices or orders served on the body corporate.
* Maintenance levies.
* Books of accounts.
* Minutes of the meetings of the body corporate.
* The rules or by-laws of the body corporate.
* Insurance of the building.
You should also get information on the state of the plumbing or electrical wiring; whether there has been any water penetration or problems with the lifts, the number of lots in the strata plan and the number of units occupied by tenants.
For company title units you should check the articles for such things as the right to sell the unit. The balance sheet will have to be looked at as well as details about insurance cover, workers' compensation, public risk insurance, rates, taxes and levies checked.
© 1991 The Sun Herald