BUYING AND SELLING CHECKLIST
August 3, 2023
When you are selling or purchasing a strata property, there are a few additional considerations compared to freehold properties often overlooked. If you miss any of these critical steps, as the seller your sales contract may be terminated, if for instance you don’t have documented approval for additions made to the property. Or as a new owner, you could be lumped with the prior owners’ debts if you don’t seek the current levy information for settlement!
In this article we provide guidance for the additional steps involved with buying and selling in a strata community, starting with preparing your strata property for sale, explain what an information certificate and disclosure statement is, through to notifying the body corporate of owner change and beyond..
Preparing your strata property for sale
Once you have decided to sell your strata property, in addition to preparing to present the property the same way you would for a standalone home, you also need to make sure you have documented approval in place for any improvements you have made. Additionally, if you intend to make an improvement to increase your sales prospects, you will need to consider any approval requirements before proceeding.
More on the owner improvement approval process can be read Here.
Engaging an agent
The choice of professional real estate sales agent is a commercial decision for the property owner. Like any commercial decision, the professional you engage should have experience specific to the service you are seeking. In this instance, the experience needs to be selling strata titled properties. Engaging an experienced agent will ensure the person has some knowledge of what common property and by-laws are, which need to be considered when presenting the property to prospective purchasers.
Expectations for potential purchasers can then be set from the beginning avoiding issues during the sales process, such as advertisement of “Pet Friendly” when there is a by-law that requires compliance with terms of approval or “Renovators Delight” affecting common property also requiring approval which could even require a general meeting!
When selling a property within strata titled communities, there is a requirement for the seller to provide a disclosure statement to the buyer under section 206 of the body corporate and community management act which includes:
- The name of the Secretary and the Strata Manager of the body corporate and their contact details
- The amount of annual contributions currently fixed by the body corporate as payable by the owner of the lot
- Identify improvements on common property for which the owner is responsible
- List the of body corporate assets required to be recorded on a register
- State whether there is a committee for the body corporate or a body corporate manager is engaged to perform the functions of a committee; and
- Include other information prescribed under the regulation module applying to the scheme
The disclosure statement must be signed by the seller and must be substantially complete. If the contract has not already been settled, the buyer may terminate the contract if the seller has not complied with this requirement.
The legislation also states that the seller does not fail to comply with a subsection merely because the disclosure statement, although substantially complete as at the day the contract is entered into, contains inaccuracies.
Requesting a disclosure statement is simple, we provide a form Here.
One of the more contentious items we see when strata properties hit the market is signs erected, usually on common property, either without approval or not within by-law or standard conditions in place. It is the owners responsibility to check the by-laws and seek approval before arranging their agent to erect any signs.
Requesting approval for signs is simple, we provide a form Here.
If intending to hold an auction, you will need to check the by-laws for any approval requirements and if there isn’t a specific by-law in place, you will still need to consider any effect this event will on common property and overall security of the community. Your agent should properly supervise any potential purchasers entering exiting or viewing common property as a minimum.
The same consideration applies to having potential purchasers attend for an auction. Your agent should accompany anyone they wish to show the property and the community facilities. Anyone left to inspect the common property without an authorised person will likely attract attention from security conscious residents.
Residents should be noticing unfamiliar faces within the community in case of unauthorised entry that may require reporting in future due to any incidents. Therefore your agent, who usually has their picture on the for sale sign, is easily identified as the owners authorised person to access the property on their behalf.
All too often we get a call from the sales agent or a potential purchaser who has been given our number asking for information about the body corporate. Questions vary from “is this a pet friendly building?” to “what is happening with repairs to the pool?”
This is a puzzling practice when the decision to buy the property might hinge on the information they are seeking, usually contained within records that cannot be validly provided over the phone. We direct the inquirer to undertake a search of the records as an interested party which can be completed either personally or engage a search agent to do this for them and provide a report on findings.
A search of records will reveal factual records about any decisions being made affecting the lot they are considering purchasing and importantly, potential of increased costs due to major works or projects that are planned in the future.
Requesting a search of records is simple, we provide a form Here.
The property owner also has access to the records which includes minutes and by-laws at no costs via their owners portal login which we provide Here.
Seeking approval of pets or improvements as conditions to purchase
All too often we receive a request on the day of the contract going unconditional seeking urgent approval from the real estate agent. This is usually because the purchasers solicitor has checked the terms of the sale contract and the records search report reveals that there is no evidence that approval is in place for Fido and his new Patio, the new owners intend to build. Everyone is then expected to stop what they are doing and arrange approval of the request for terms of a contract entered into 30 days prior!
Don’t leave conditions of contracts to chance and hope someone else will submit the request for you. Always gather the required details for your request early and submit your application so the volunteer committee made up of fellow owners has reasonable time to review what you are requesting and make an informed decision.
To assist with this process, we have made available all the different application forms you will likely need on our website Here.
A BCCM Form 13 information certificate sets out the amounts payable in the body corporate’s current financial year, which is another item we often get calls about, usually on the day of settlement from the conveyancing agent. The call is usually asking for over the phone confirmation of levies paid for settlement they are about to complete that day! These fund amounts are to be relied upon to settle funds between the parties and need to be sufficiently evidenced.
To have evidenced information of amounts payable on the day of settlement, the conveyancing agent will need to seek an updated information certificate with instructions on how to order this stated on the first page of the original certificate they have purchased. This is what an information certificate is specifically for and provides certainty of levies and any associated debts such as legal fees for collection of levy arrears which can occur when a property is being sold.
Levy arrears can often occur when the outgoing owner decides to leave payment of their share of overdue levies from settlement purchase funds. Owners or their authorised agent can also access their levy information from their online owners portal login and prepare the original or updated certificate themselves if they don’t want to pay for the service to be provided by their body corporate manager.
Moving out and in
Consideration is needed to any impact your move will have on common property and associated facilities. The most common facility that usually needs to be booked is the lift if your building has one. This booking often occurs via the building manager, when in place and can include placement of curtains to protect the walls. Any damage which can occur from furniture being moved will need to be paid for so you should engage professional and reputable movers that are appropriately insured for such instances.
Parking of moving vehicles also needs to be coordinated and there may be a by-law specific to moving in and out. Otherwise the parking by-laws in place will apply and requires approval to park on common property. To avoid additional stress during this time, consideration to residents that may need to get in and out should be made so that you are not impeding anyone in the same way you would not want to be impeded by them.
Notification of Ownership Change
Once you have settled, the body corporate needs to be formally notified of the change of ownership which is in addition to registration of the title in the new owners name. This notification is by submitting a prescribed Form 8 Change of Ownership notice normally completed by your conveyancing agent.
Until this form is submitted, you will not be added to the body corporate roll and receive any notices or recognition of rights as a body corporate member. Remember this is your responsibility (or the agent you engage) to arrange and not the body corporate or body corporate manager who are the recipients of the notice.
Welcome to your Body Corporate
Once you have submitted the form 8, the body corporate will add your details entered in the form to the body corporate roll which includes your address for service of notices exactly as it has been received.
We then provide a welcome notice which outlines the roles of all parties, access to records and how you can get further information. A roll details confirmation form is also included in case you would like to add any further details to the roll, and is required to be submitted in writing before any change can be made.
Requests by telephone do not have a record from the owner that can be relied upon as evidence of the request and therefore cannot be acted upon until submitted in writing. Alternatively, you can submit your roll details update request online using one of our many forms found Here.
As part of the welcome pack we provide, there is a link to a free course to learn more about the committee and a summary of responsibilities. As a property owner with a vested interest in your strata community, you are encouraged to participate with decision making. You can get involved either by joining the committee after nominating to be elected at the AGM when invitations are issued approximately 6 weeks prior to the body corporate financial year end. Alternatively, you can simply participate by voting at your Annual General Meeting once your notice has been received, by reading and following the instructions.
If you made it this far, well done! It demonstrates you have taken the time to get educated about your strata property so you can make informed decisions when buying or selling and beyond.
Congratulations on your sale or purchase and I hope you found this information assisted you with your transaction.
This article was contributed by Grant Mifsud – Partner, Archers the Strata Professionals