Flat Chat Strata Forum Buying and Selling Current Page

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  • #9785
    Whale
    Flatchatter

      To expand on this topic…….

      In circumstances where a unit is listed for sale and the Owners Corporation (O/C) is aware of related matters about which prospective purchasers should be made aware, what is the most effective means for an O/C to properly disclose those matters?

      As Secretary, I’m personally uncomfortable about Executive Committee Members directly contacting the Selling Agent or approaching prospective purchasers during “open house” inspections, so currently our O/C relies upon the ability of persons conducting Strata Reports to detect those matters, and the inclusion by it of pertinent information at item #18 (“other items”) on Certificates requested under Sect.109 of the NSW Strata Schemes Management Act (1996).

      I’m specifically referring to O/Cs disclosing changes to its common property that it’s aware have arisen from un-consented renovations to the unit and commissioned by the vendor, and other matters which if not rectified at settlement will result in fees to any new owner by the O/C.

      A recent example involved un-consented renovations including several breaches of Building Codes, and a situation where past tenants and Property Managers of the unit had collectively misplaced a number security access cards on issue to the vendor/landlord and which they’ve consistently refused to replace, presumably due to the $350 cost of doing so. 

      The above was as usual disclosed to the person conducting a Strata Report (and it was additionally available from their perusal our Register of Changes to Common Property and from the Minutes of numerous General Meetings), was included on the S109, and STILL the purchaser and now new owner was oblivious, and is with some justification protesting about having to pay $350 to square-away the costs of the missing security access cards before the O/C will permit him to purchase the single replacement now required.

      I’m of the opinion that O/Cs have a moral, if not a legal obligation to disclose matters such as those that I’ve discussed, but clearly the means by which ours is addressing that is not effective, and I’m wondering what is; short of it involving itself with Selling Agents and prospective purchasers.

      As an aside, our new owner was also unaware that the unit they’d purchased was furnished, so I’m wondering if it’s the whole property conveyancing process that’s flawed (?).

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    • #22529
      excathedra
      Flatchatter

        This is a difficult area.  On the one hand, one feels an obligation to ensure that an incoming owner’s decision to purchase is made on a fully-informed basis.  On the other, one fears possible legal action if a disappointed vendor believes that he realised less than he expected because the sales process was undermined by existing owners pointing out undisclosed problems with the apartment.  In one recent sale in my building, the owner (a local entrepreneur who clearly had no intention of living in the property) sought agreement to a plan to open up the kitchen area.  We agreed to this, subject to an engineering report and local council approval.  However, he also stated an intention to paint, generally upgrade and recarpet.

        We were then taken aback when, without further notification to the Owners Corporation, he proceeded to instal wooden flooring.  We asked him what measures were being taken to comply with our standard by-law requiring floors to be covered in a way to avoid causing nuisance to other residents (given that the layout of the building means that the apartment’s main living area is directly above a neighbour’s bedrooms).  The response was the predictable data sheet from the floor’s supplier claiming full compliance with BCA and “strata” requirements.  The latter is of course untrue, since “strata” does not require any numerical measurement of sound levels but, rather, a lack of disturbance to neighbours — something that can be determined only when the floor is in place!

        My reaction to this was to ask that the correspondence be kept on file by our Managing Agent so that there would at least be the potential for a prudent would-be purchaser to be forewarned.

        #22530
        Whale
        Flatchatter
        Chat-starter

          Thanks excathedra – good points, but perhaps I should have made it clearer that I’m not talking about an O/C sticking its collective noses into vendors’ business by disclosing issues such as those with a property’s tenants or (metaphorically) about faults with every little nut, bolt, and washer within it that’s loose or missing.

          Rather, I’m looking for a more effective means to without prejudice, factually disclose strata-related issues of significance that, unlike those around unpaid levies or current “notices” that are both picked-up in the S109 Certificate, aren’t otherwise disclosed overtly or easily discerned by potential purchasers, and in my opinion should be in the interests of both the O/C and those individuals.

          #22535
          excathedra
          Flatchatter

            With all respect to Whale, whose posts I value as a source of information and wisdom, I was talking about something more substantial than “faults with every little nut, bolt, and washer … that’s loose or missing”.  Noise from wooden floors is one of the hottest issues in Strata, as witness the report of the recent NSW review and the frequency with which it is raised in this forum.  My point was a need to warn a potential purchaser, who may have done a careful physical check of the unit before bidding, that he could still find himself unexpectedly in breach of a key by-law.

            #22536
            Whale
            Flatchatter
            Chat-starter

              excathedra – thanks for the rap, although I’m not sure I’m always that informative or wise! However I wasn’t referring to the points that you made, but was rather trying to clarify what I originally posted to avoid subsequent posts (to yours) being side-tracked.

              The flooring issue that you raise is a good example of the “strata-related issues of significance” that I’m pondering how best to disclose, particularly where the unit sale is by private treaty and where our current expectation that a Strata Report will detect those issues prior to the purchaser paying a deposit / exchanging Contracts, or be picked-up from the S109 Certificate that we provided prior to Settlement isn’t working well.

              Back to the forum…

              #22581
              Sir Humphrey
              Strataguru

                Some years ago our (ACT) EC issued a breach notice to a unit owner about a fence that had been erected without permission and enclosing an area of common property well beyond the unit boundary. Some previous ECs had tried to deal with it and got nowhere. [In their defence they were dealing with an earlier version of the Act that had less clear processes for dispute resolutions.] The unit owner ignored the breach notice but soon after put the unit up for sale.

                We wrote to the owner that removing the fence might help to avoid problems that a potential purchaser might have getting a loan because banks would want to know if there were any unapproved alterations. We also wrote to the real estate agent including a copy of the breach notice and asking him to advise any purchasers who seemed seriously interested that the fence would have to be removed and that the unit area was actually smaller than the enclosed area suggested. We put a copy of the correspondence on the records where they could be found. The real estate agent was very good about it. He checked with the EC to make sure he understood exactly where the unit boundaries were, what kinds of fences could be approved and where. The people who bought the unit took down the ugly, wrong-sited fence promptly, enquired about putting up a new fence of an approvable sort in the right place but in the end preferred the view without a fence and landscaped the area very nicely. 

                If you are sure of your position and deal openly with all concerned, I think good outcomes can be achieved, particularly at the time of a unit sale. 

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