Conveyancing – Commmunity Title / Body Corporate / Strata title property comes with significant inherent risks (and costs) that investors must factor into their return calculations

by Andrew Lind on 16 July, 09

If you are intending to purchase Queensland Community Title real estate these risks and the extra costs associated with them need to be considered as part of your Conveyancing due diligence

For Queensland Conveyancing, I generally recommend an additional special condition in Purchase contracts to allow say 14 days for an inspection of the Body Corporate Records which goes on to provide that if that the results of that inspection are not to your absolute satisfaction that you may terminate the contract and obtain a full refund of the deposit.

These costs are in addition to the budgeted administrative and sinking fund levies. For example:

  • In Queensland at least, the possibility of a “contribution lot entitlement” adjustment application to seek to equalise these.
  • Owners dragging their feet with payment of levies leading to frustration of maintenance or improvements and costly and time consuming body corporate debt recovery steps.
  • Disputes within the Body Corporate over issues such as use of common property and pets resulting increases in levies.
  • Does the Body Corporate have a Sinking Fund forecast and is it complying with it?

It makes good sense to speak with our Conveyancing Team before you sign a contract. Our Conveyancing Team deals with property right accross Queensland. We have offices in Brisbane and on the Gold Coast and so Brisbane Conveyancing and Gold Coast Conveyancing is particulalrly convienient if you want to come to our office. However, you do not need to come to our office and so whereever you are based, we can look after you.

{ 15 comments… read them below or add one }

Jeff July 18, 2009 at 6:08 pm

Hi,

I am a landlord of a unit and have the Building manager as the rental agent. I have been continuously frustrated with his inaction such as getting monthly statements and copies of the tenants leases to me. Due to his poor performance, I have been forced to give the required 90 days notice to terminate the agreement and place the unit with a Real Estate Agent.

Unfortunately he has the tenants on a periodic lease so they are able to leave with 2 weeks notice. He is in the process of selling the building management business and I feel he will not really be concerned about getting me tenants for the remaining time for the 90 days to be completed. I cannot get somebody externally to find tenants until the 90 days are up. This will potentially leave me out of pocket for 2 months.

My questions are, Is the agent legally bound to supply me with copies of signed tenants leases and can he go and allow tenants to complete a 3 month contract and allow them to continue on a periodic lease without my approval ??

Can I do anything legally about his poor performance, for e.g. I have only just got a statement from November last year last week (7 months later).

If anybody can help it would be appreciated

Jeff

Andrew Lind July 24, 2009 at 1:17 pm

My first suggestion is that you contact your local Residential Tenancies Authority to see what assistance and guidance they may be able to provide.

One of the keys of going to be the closely look carefully at the Letting Agreement that you have in place with the onsite manager (and related legislation).

There may be a way of terminating that Agreement without the 90 days notice.

Doug July 30, 2009 at 9:28 pm

Hi

I have purchased a property over 6 years ago that forms part of a community titles scheme with each of the ten lot owners owning their own lot of varying size (e.g. 900m2). The common property is then made up of 28 acres. There are a number of properties that have built their sheds and placed water tanks on parts of the common property that adjoin their own lots. Since our ownership, we have raised our concerns at body corporate meetings and the need to tidy up these unwritten approvals. The committee has finally come back with the proposal to present a motion for an extraordinary meeting to lease some of the common property to the lot owners. Although no formal proposal has been forthcoming yet, we are hearing that they are looking at a 3 year lease because they only need to get 70% of votes (special resolution) compared to 100% (without dissent).
I have several concerns with the proposal (and expect that the 21day notice of meeting and motion will follow shortly). Some of these include:
* In an email received from the Secretary today, the committee has stated that “As part of any dealing in settling, say, a lease or license, it is the view of the committee that there be an annual fee calculated on an arm’s length basis. To that end, the committee believes that a reasonable fee, which would be fair and equitable to all members (whether or not they are making use of common property), would be equivalent to the annual rates levied by a Regional Council on a lot when pro rated for the area in private use”. Is this a reasonable fee? Are they saying that all lot owners would be required to pay a fee or just those wishing to have the lease?
*I am aware that utilities run directly through the land that they are proposing to lease. I understand from the regulations that this cannot occur. Have I interpreted this correctly?
*They are saying that these leases would not need to be surveyed or approved by our Regional Council and would only require a passed motion at the meeting. Are there legal requirements for a lease on common property, outside those determined by our group?
With only 10 lot owners I can’t help thinking there again could be decisions being made outside of the community title laws.

Andrew Lind August 3, 2009 at 5:22 pm

Hi Doug – These Community Title questions need legal advice in a conference either in person or by phone. Let us know if we can help.

Lisa August 12, 2009 at 10:02 pm

Hi Andrew,

I’m in the process of purchasing a property of which there is an existing tennant on a current lease living in the property. I am not a first home buyer but wanted to claim the discount for stamp duty. I intend to live in the property once the tennant moves out. What are the rules re being able to claim the discount on stamp duty. I have seen on the websites that the tennant must move out within 6 months from the transfer date Is the transfer date the date of settlement or the date that the title is stamped at the titles office ? The tennancy agreement is between the seller and the tennant at the moment and I have not signed a lease with my details. Your advice would be appreciated.

Cheers

Bryan August 15, 2009 at 8:13 am

Hi,

Is it possible to have a strata title removed from properties and then those properties acting as independant dwellings rather than being part of a strata title?

If this is possible what needs to occur for this to take place?

Cheers.

Gary August 18, 2009 at 5:06 am

I have a property for sale.with an agent. I stipulated that I wanted a certain price for the property. The agent submitted a contract for a value which did not meet my stated price which I rejected. I then withdrew in writing the property from that agent and subsequently placed the property on the market as a private sale. The original buyer has now approached me to purchase the property on a private sale basis at an acceptable price. Can I proceed with this sale without the prospect of being sued by the agent for the value of the commission?

Andrew Lind August 21, 2009 at 1:37 pm

This is a question you need specific legal advice on. The answer is going to depend on a number of issues including:

– the basis and terms of the real estate agent’s appointment in the first place
– whether your agreement with the real estate agent was lawfully terminated.

Please let our Property Law and Conveyancing team know if we can be of assistance to you.

Andrew Lind August 21, 2009 at 2:19 pm

Generally the answer is no the configuration of the strata title lots in relation to each other and common property means that subdivision can only be achieved via strata / community title subdivision. However in very limited circumstances what you are taking about may be possible. The starting point for you would be to speak to a surveyor in your area.

If the property is in Queensland, our Property Law team would be able to assist.

Lyn January 21, 2010 at 9:47 am

Hello, I have a duplex being built at the moment and would like to sell them separately. As they have been built on a corner block and each unit faces a different street, have separate water, electricity etc and the only common area is one wall right down the centre, what would I require to be able to sell them separately and how would I go about it. I have spoken to numerous people with conflicting answers like – you will need to subdivide the land?? or you will need strata title the property and set up a body corporate with a bank account, insurance, meetings etc? There is only 2 units with no common area except the wall, surely I could arrange for the wall to be included in the covernants in some way to protect it? Thanks so much for your time, I appreciate your forum. Cheers. Lyn

Andrew Lind January 21, 2010 at 4:24 pm

Hi Lyn
Yes a subdivision will be required. A couple of initial suggestions are these:

1. You engage a surveyor experienced with this type of subdivision to advise you on the best form of subdivision;

2. Usually a Small Scheme under the Body Corporate and Community Management Act is required. A Body Corporate Management company could assist you with the documents required.

Alternatively our Property Law Team could project manage this for you. A short consultation would give you a good idea of the process and value our property lawyers could deliver.

Regards
Andrew Lind

Troy January 23, 2011 at 12:29 pm

Hi my mother in law has a property in miriam vale shire council around 4 to 5 hundred acres. She has 3 children my wife being one of them. She has asked us if we want our third of the the property now if so we just have to pay for the subdivision. I’d just like to know what would be the best way to go about it ie – subdivision, strata titling. Any advice on this would be great.
Troy

Andrew Lind January 24, 2011 at 5:18 pm

The best place to start will be with a local surveyor or town planner who will be able to advise you about whether sub-division would be achievable under the town plan and what the process and costs may be in relation to it.

Anna March 2, 2011 at 7:13 pm

My parents are on retiring and they own 17 acres of rural land outside caboolture queensland. Could we subdivide an acre off this property for myself or other siblings to purchase from them to make their retirement a little more easy and comfortable.
Could you point me in the right direction to go about this if this is obtainable.
Thank you

Andrew Lind March 8, 2011 at 3:54 pm

I suggest that your first phone call is to the Town Planning department of your local council about whether the planning scheme will allow this.

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