Details are fairly sketchy but it has been reported that major problems emerged as early as 2011, however many of the apartments have been sold to new buyers – some have been sold to their third buyer.
Problems with the property have now become so dangerous that all residents have been asked to leave, and may spend many months living elsewhere while remediation works are undertaken to resolve the issues which include building cracks and potential 'sinking'. Costs have been estimated at more than $5 million.
As if the situation wasn't bad enough, there's no ability for the owners to obtain compensation from the builders as the builders' warranty only covered six years (and the building is now ten years old). Even worse, insurers no longer offer insurance for buildings that are more than three to five levels in height. This means any repairs must come from the owners directly.
The most quoted comment from recent buyers is that they had no knowledge of the issues. Err . . . so what did they check before they purchased their apartment?? There's a number of scenarios that may have played out :
The capital works fund (often referred to as the sinking fund, ironically) is the amount each owner is required to contribute each year to ensure the building is maintained to a good standard.
Reports can be compiled by specialist strata searchers. In some cases you may require a letter of authority from the vendor's solicitor or selling agent. The turn around time on reports varies from 24 hours through to a few days, so it's important to organise the report as soon as possible. Ideally, add a clause in your purchase contract noting the purchase is subject to a review of the report, although this is extremely difficult and often prohibitive in a hot market.
Relying on the strata report is not too bad an approach, but for optimum care an independent B+P should be conducted. It's also fine to use the reports supplied by vendors as long as you validate the provider of the report (the company that conducted the inspection).
If you're inspecting the property yourself key points to look at are:
In addition to the above points, remember to check the usual points required for any purchase. This includes location of transport, noise levels, future developments (other major unit complexes or infrastructure changes), vacancy rates, sale prices, and other information relevant to your purchase.
Of course, it would be helpful if we could have Australia-wide standards including:
Debra Beck-Mewing is the Founder and CEO of The Property Frontline. She has more than 20 years' experience in buying property Australia-wide, and is skilled in helping buyers use a range of strategies including renovating, granny flats, sub-division and development. Debra is experienced in identifying tailored opportunities, homes and sourcing properties that have multiple uses. She is a Qualified Property Investment Advisor, licensed real estate agent and also holds a Bachelor of Commerce and Master of Business. As a passionate advocate for increasing transparency in the property and wealth industries, Debra is a popular speaker on these topics. She is also an author, podcast host, Editor in Chief of Property Portfolio Magazine and participates on numerous committees including the Property Owners' Association.
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Disclaimer – This information is of a general nature only and does not constitute professional advice. We strongly recommend you seek your own professional advice in relation to your particular circumstances.