This WA article is about the things you need to know when buying a strata title property in Perth or throughout WA.
Table of Contents:
- ARTICLE: Does WA want to keep apartment buyers in the dark?
- QUESTION: If you’ve purchased into an over 55s unit, should there be a statement somewhere in the purchase documents or strata agreement, stating that the developer is going to keep some of the units to rent out or would that need to be something you would have to specifically ask about?
- QUESTION: When buying a strata industrial unit, what am I buying? Do I only own the inside of the unit? What will be my responsibility to repair or replace?
- ARTICLE: When you’re buying a strata title property in WA, know what you are buying into
Does WA want to keep apartment buyers in the dark?
Recent WA Strata reform has delivered a raft of changes in the law. Many of these changes are positive and will help apartment owners over time. For example, the introduction of a 10-year maintenance plan and reserve fund will help many strata schemes keep their properties in better condition.
Another feature of the reforms requires property sellers to provide some information about the strata scheme to property buyers. However, in my view, this information is very basic and will usually leave most questions that are important to buyers unanswered. For example, is the scheme’s financial position improving or deteriorating? What are the ongoing issues in the building? Do they have sufficient funds for future maintenance? Have they needed to raise additional funds in recent years?
Serious buyers need to know the answers to these and other questions. The only way to do that is to get access to more strata information by searching the strata records. But it looks to me like the WA government doesn’t really want buyers to search these records.
For some unexplained reason, the WA Parliament has decided it will cost $150 ($165 incl. GST) just to get a look at the records!! That’s $100 to get access to the records and $50 for the first five pages of printing. That’s 480% more than it costs in NSW ($34.10 incl GST).
Just as high taxes on cigarettes have reduced the number of smokers, high fees to search strata records are likely to mean buyers could be forced to make big decisions without proper information.
Does it seem reasonable to charge $10 per page to print the first five pages of information and then $1 per page after that? What if there are 500 pages to print? Sure, most documents are kept electronically these days and don’t usually need to be printed, but there’s also a $50 fee for an email or flash drive. Sounds like a great business for strata managers and an unreasonable cost for everyone else.
In reality, it just creates a barrier for property buyers to get the information they need.
We’ve been inspecting strata records in NSW for over 10 years. We know for sure that property buyers cannot rely solely on the few documents WA sellers are required to provide by law. A buyer needs to know what has been happening in the building in recent years and what the future forecast looks like, not just half the story of what is happening now. And even more importantly, many buyers don’t really understand strata information in the first place. So, what do they do with the information they get from the seller? Ask their lawyer? They often don’t know much about day to day strata issues either.
Buyers need support. They need someone who can explain the information. And they need that support quite quickly.
Luckily, we can help. We are launching a range of products in WA for property buyers and sellers that customers in NSW have been enjoying for years. You can find out more about these products here: Buying or Selling Strata Property in Perth?
But I’m annoyed that our WA services will have to be more expensive than they need to be, simply because the WA Parliament is treating apartment buyers like smokers.
This post appears in Strata News #428.
Question: If you’ve purchased into an over 55s unit, should there be a statement somewhere in the purchase documents or strata agreement, stating that the developer is going to keep some of the units to rent out or would that need to be something you would have to specifically ask about?
Answer: Keeping in mind that it is an over 55’s scheme, only those people who are over 55 would be eligible to rent a unit in the strata scheme.
Keeping in mind that it is an over 55’s scheme, only those people who are over 55 would be eligible to rent a unit in the strata scheme.
The developer is not required to automatically disclose those details but if you want to ask, that is up to you.
This post appears in Strata News #392.
Question: When buying a strata industrial unit, what am I buying? Do I only own the inside of the unit? What will be my responsibility to repair or replace?
When buying a strata industrial unit, what am I buying? Do I only own the inside of the unit? What will be my responsibility to repair or replace? Would the metal roof be my responsibility if it leaks, or a strata expense?
Answer: Not all strata plans are the same and only a careful read of the strata plan will ascertain the maintenance responsibilities.
Irrespective of whether it is an Industrial unit or not, the responsibility for maintenance will be determined by the boundary description on the Floor Plan of the Strata Plan.
Not all strata plans are the same and only a careful read of the strata plan will ascertain the maintenance responsibilities.
In some cases, the registration of subsequent by-laws may also have some impact on maintenance requirements.
Disclaimer: this article should not be relied on as legal advice.
This post appears in Strata News #379.
When you’re buying a strata title property in WA, know what you are buying into
Daniel: If you’re looking to buy a property in the next few weeks or months, there is a good chance you will be buying into a strata title property. If you are buying into strata, it is important you understand the difference between strata and freehold.
To answer this important question, I’ve invited Shane White to talk to us about strata. Shane is Director of Strata Title Consult and describes himself as a solution finder and problem solver with over 30 – 40 years experience in the industry including working for Landgate for about 30 years.
I’m asking Shane questions about strata because it is important that you understand what it is you are buying into.
So Shane, if I am a first-time buyer and I see the property I really like is a strata title property, what do I need to understand and what is different?
Shane: A strata title property is very different from owning a freehold property in that you are governed by a particular act called the Strata Titles Act which has bylaws and a Strata Plan that defines what it is that you own. If you are not familiar with looking at a Strata Plan than get someone who is to explain it to you.
The bylaws determine how meetings are conducted, the election of Council Members, but also the other half of the bylaws are more concerned about the behaviour or conduct of the owners within the strata scheme. You can’t just do anything you feel like doing like changing the appearance of your lot, changing the colour or adding alterations to the building.
Daniel: Can I have a pet if I want to?
Shane: It is very important that you find out if there is a No Pets Bylaw. Unless you come under one of the exemptions for guide dogs or assistance animals, you would not be permitted to have a pet so it’s best to find that out first.
Daniel: So if I’m looking at buying into a strata property, I need to be aware of what the bylaws are. And basically, bylaws are a set of rules. In strata, there are restrictions because one of the biggest difference with a strata title property is that you live among other people in close proximity. This means you need to be mindful and respectful of other people. These rules are put into writing, and these are called the bylaws.
Now, if I’m buying into a strata title property are there any documents that I should be provided if I’m looking to make an offer?
Shane: It’s most important that you receive a copy of the strata plan because that will determine what the boundaries are for the buildings on the strata scheme. Those buildings may be the responsibility of the Strata Company to repair or otherwise, they may be your responsibility to repair. Now, if the obligation to repair is within the strata company’s responsibility, they will incorporate that repair cost into the levies for the strata scheme.
Daniel: So levies are obviously something else I need to be aware of. So what is a levy?
Shane: A levy is an amount of money that is raised at an annual general meeting through a budget that allocates money for certain expenses that are the day to day expenses during the year for the administration fund and there may be an allocation of additional money to a reserve fund for future contingency expenses.
Daniel: So that is something I, as an owner, need to pay? Is that usually on a quarterly basis? Known as strata fees or levies?
Shane: The Act refers to these as a strata levy.
Daniel: I deal with lots of first home buyers and I see them going through home opens and the question is always “what are the strata fees?” Is there a risk in associating lower strata fees with a better buy?
Shane: If you were comparing different strata schemes and worked out how the fees compare, you can get an idea of how much per quarter it costs to run strata schemes of the same size and quality. If a scheme has abnormally low levies, it may be an indication they are not accumulating enough funds for future repairs to the strata scheme or they haven’t allocated any money for repairs that are required through that year.
Daniel: So what happens if they don’t have enough money to pay for the repairs we are talking about?
Shane: It means, as a purchaser, you are walking into a possible increase in levies through special levies.
Daniel: So it means, I will need to more? My share of whatever it costs to do that?
Shane: The share will be determined by the unit entitlement values and if you’ve got a bigger unit, you might pay a lot more than someone with a smaller unit.
Daniel: So you really need to go into a strata title property with both your eyes open. You need to understand the difference. There are great opportunities, but you need to be aware.
OK, so the agent should provide copies of the bylaws, the strata plan and what else?
Shane: The minutes from the last Annual General Meeting, or any other Extraordinary General Meetings that have transpired since the last AGM because that will give you an indication of the topics that have been discussed during the general meeting and if those items of business have been addressed and if they have raised funds to fund any items of a repair or maintenance nature.
There may be ongoing problems in the building that they are trying to resolve but they haven’t got sufficient funds to fix them. There may be an indication that a special levy may be invoked at a later time during the year, and you need to be aware of this.
You are buying into any existing problems which are in the strata scheme that you may have to fund the repairs to.
Daniel: So when you buy a property and you engage a Settlement Agent, their job is to transfer the title from the seller to the buyer, but it is also to look at any other fees that the seller has occurred that go past the settlement time. Is an extra levy something that the new buyer would be liable for?
Shane: Generally, whatever the levies are due to say a quarterly levy was payable then if the current owner has paid it up front they would be entitled to be reimbursed the unused portion and they would be refunded that amount in settlement. If a special levy was due and payable during the period of that quarter than the existing owner may be responsible to pay prior, although it would come out of the settlement fee. Any ongoing continual payments would be payable by the new owner when they become due.
Daniel: Now, few buyers would-be lawyers and most people fall asleep after the first sentence of a legal document but if I realise I need to be aware of what I am buying into and what my responsibilities are, what my level of ownership and my regulations are, where do I get help?
Shane: You can contact any number of strata consultants that are around. I’m available to provide information on interpreting the strata plan and your responsibilities under the bylaws. It’s important that you understand what you are buying into and those bylaws will determine how you act and conduct yourself whilst you are an owner in a strata scheme.
Daniel: Would a settlement agent be able to help with that as well?
Shane: A settlement agent can provide you with a copy of the bylaws. Whether they have a good understanding of interpreting a strata plan? Some do and some don’t.
If levies are low, that is a good indication that either the building is not being maintained properly there is no allocation of funds for future repairs. If you do a comparison of that scheme to another of equivalent size and their levies are $500 more per quarter, it may be that they are working to save money for future repairs and are actively involved in maintaining the strata scheme as a whole. That would include the painting of the scheme, the roofs, the driveways, the gardens, and any other works they may need particular to that strata scheme. It is an indication that they are putting money away.
Your copy of the General Meeting minutes will indicate that a certain amount of money is being put away for a reserve fund and that’s why the levies are higher.
Daniel: As a buyer, I can ask those questions: Why is it high? Why is it low? I just need to know which questions to ask.
When the agent provides you with the documents we’ve discussed, make sure you have a look at them and make sure you ask the questions.
We are looking to provide you with information about what’s involved in buying a strata property. The likelihood of you buying strata is increasing. Local Government has big plans for strata title property and it is pretty much the way of the future. You need to know what you are buying into.
Shane: Definitely! Your financial obligations and your behavioural obligations.
This post appears in Strata News #248.
Have a question about the things you need to know when buying a strata title property in WA or something to add to the article? Leave a comment below.
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Please note this advice was provided prior to the proclamation of the new strata title amendments and will be updated in due course.
- Seller’s Duties of Disclosure under WA’s Strata Title Reforms
- How bad can things go with buying strata property
Looking for strata information concerning your state? For state-specific strata information, try here.