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PRESS RELEASE:
The Owners Corporation Network (OCN) has announced a special half-day seminar to inform prospective apartment buyers of the features and common traps of buying an apartment off the plan.
OCN is the peak body representing apartment owners in NSW and Executive Officer, Karen Stiles, says that apartment living can be a wonderful lifestyle, but not all buildings and developers are the same.
“Apartment living is great, but there are some tricks and traps to buying into a new building or one that you’re purchasing off the plan,” Ms Stiles said.
“People need to be aware of the varying reputations of developers, the reality of display apartments and their rights as an occupant of a new building.”
On Saturday 27 October, OCN will host a seminar to provide advice to prospective apartment buyers about making an informed decision when choosing a property.
“The seminars will be presented by experts in the strata field, legal professionals, building consultants and experienced apartment owners,” Ms Stiles said.
“So there’ll be advice on what to look out for in legal terms, the physical state of the building and the management of the building.”
The seminar will be held at the Kirribilli Club in Milsons Point.
The first session on Saturday 27 October will focus on buying a new apartment (off the plan or completed).
There is a second session on Saturday 24 November looking at buying into an older building.
Cost is $40 per session or $65 for both.
Bookings essential. See http://www.ocn.org.au
The opinions offered in these Forum posts and replies are not intended to be taken as legal advice. Readers with serious issues should consult experienced strata lawyers.
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Sounds like a great idea…..You have to be on your guard. You’re spending more money than you ever have in your life.
Pay a couple of dollars for something in the supermarket and you’ve at least got a brand name to rely on.
Spend a few hundred thousand on an apartment, there’s no brand name , just “trust me I’m a developer” to rely on.
$40 spent on a seminar could save you a fortune.
Everyone buying a new home needs to really look into it. Especially those first home buyers as that government handout is not much use if you then have to fork out as much or more in order for your new home to be “perfect”. I have bought off the plan. I had that deer in the headlights look when I thought of how fantastic it would be to live in a home that no one else had ever lived in and that would not need anything done to it for years and years. And though it is great to have a home that has no one else’s stamp upon it, I realize that there is no such thing as perfect in a new built and that there is always something that needs attention.
My experience pales into insignificance compared with some off the plan purchases. In my complex the amount we had to fork out for our new homes to meet building codes and Australian standards was minimal, though annoying that we had to pay anything at all. After my own experience and read about many more, I would never buy off the plan again. And not just in strata, but new house either. Same problems can appear there. Sure a 1950s block of units or that 50 year old house will need money put into it, but you expect that. You don’t expect something new needing a cash input to fix it. And if those involved in the build are never found to be responsible, why should they ensure a good job is done?
I would however buy a new car again. That experience has been very pleasant. I get that feeling that no one else has driven it, and when something goes wrong it is fixed, within the warranty period, no question and without cost! And if the manufacturer has numerous cars with a fault, they are obliged to recall and check each and every vehicle for the fault. If only we could be as safe when we sleep in our own homes as we are when we drive away from them.
Hi Jimmy,
I came across your article about building defects in the SMH, the article states it is in favour of a 1% levy to be added to the purchase price of a unit. This money is to be used to cover the repair of hidden defects left by the developer.
From our remediation experience 1% would not be enough, and I will give you two examples:
- Rose Bay Remedial in and around 7 Units – $1.8 million
- Just tendering for a Vero reinsurance job Cronulla figure is up to $1.4 million today.
Education and more stringent inspections of the various construction trades would be more beneficial too the consumer. The art of building a fit for purpose construction has been lost, it went down the tube around the late 1970’s.
I am involved with a group of professional trades people in writing and publishing methods that have worked over 100’s of years.
Please see attached “GUIDES”
Regards
I have heard of people who have had to pay considerably more than 1% of their unit price to fix things. If this comes to be then why would builders even try to do the right thing? They may take the she’ll be right attitude – they will have the funds to fix it anyway!
How about the builders/developers have to fork out 1% of each unit price if they are found to not have complied with building codes or Australian standards? Then the only issues that would have to be dealt with would be settling cracks (can’t help that) perhaps a leak here, an adjustment there. And all done under the warranty. Next we will have to pay more for a new car! An extra thousand in case the auto windows play up in the first few years, or the engine goes.
I read of a tradie who operated without a licence was hit with heavy fine of $22,000 for putting up a fence. But have also read of builder/developer building a multi story residential block and inot follow BCA and then walk away with the owners having to foot the bill? An extra 1% for a self funded retiree or a first home buyer is a lot. In some cases the difference between buying and not. I have said it before and will say it again -when you buy something new you expect it to be faultless and you expect it to be repaired within a time frame if not. If that is so for a toaster from Kmart, why not for the biggest purchase you will make in your life?
With Developers there are the unscrupulous operators, they form a company xyz developments, this company purchases property has plans approved for units and starts construction.
They watch the dollar outlay with eagle eyes, once the construction reaches just below 65% they declare liquidation.
The unfinished project is then sold to family members with a registered company, the purchase is GST free because it is an uncompleted project. Construction continues until the project is finished.
The project is marketed and sold off; the Developers dissolve their company and move on to do the same thing with a new identity.
It is corruption at the highest level, I have seen copies of council documents on development applications, home warranty insurance values on units at $143,000.00 per unit, and the first owners paying $450,000.00.
So, who is being ripped off?
Yes you do need an incentive, and I agree that you need to short-circuit the current situation which entails long-running cases between owners and developers, and of course insurers. The only winners there are lawyers, but to be fair, the lawyers are only winning because the developers didn’t do the right thing in the first place. And the truth is, there will always be rogues in any industry, we may wish that every building meets BCA and is free of defects, but that will never happen.
One of the most common things that happens is where a developer is faced with a claim, and/or owners succeed in a claim against the developer, the developer goes into liquidation/is wound up. So the owners get nothing. There are numerous ways of doing that to avoid liability. Then the developer appears again in another corporate entity, i.e. the phoenix company scenario. Bear in mind owners would be unsecured creditors and way back in the line of parties to be paid in the event of insolvency.
Developers don’t care if they are suspended, they will find another way to get back into business.
The only way to make it work is to lock up a certain amount of money, however much is determined to be appropriate, at the outset. So if a developer wants to put up an apartment block and sell to the public, they lodge a form of bond at that time. If it is a large development, it will be a large amount of money, and that will put the price of the properties up, but personally I would be willing to pay that for peace of mind.
There are numerous models in other contexts that you can look at, for example the National Guarantee Fund which is for the purposes of compensating people who suffer a loss from the default or certain other misdeeds of stockbrokers. This was originally funded by the stockbrokers, and that cost is reflected in every fee paid for a trade. Funds like this (fidelity funds) are administered by separate entities. There are lots of other examples.
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