Strata Loans – would buyers be put off?

peterepete wrote:

major repairs required to Strata building. Weighting up various solutions.

1 Q : This relates to implementation of a Strata Loan.

The O.C agrees to cost of repairs. Not all can stump up there share and propose a Strata loan. Some owners are wealthier and would rather pay up front. How is the matter progressed from here ? Is the solution that some Owners pay their quarterly Levy plus a Loan repayment surcharge ?

This is a vexed question as strata law says that levies have to be charged on the basis of unit entitlements alone. What this means in a case like this is that either everybody pays for the loan or everybody pays a special levy.

Is the belief of a Owner who thinks the sale price of their Lot would be adversely affected whilst a loan is in place, justified?

It depends on the owner and prospective purchasers. What might be more off-putting to prospective purchasers would be knowing that work needed to be done and an unspecified special levy was coming down the track.

Prospective buyers will factor levies into their purchase budgets.  It’s all swings and roundabouts but there are moves in the current review of strata laws to quarantine strata loans from the levies rule to give owners more flexibility and choice.  However, that’s not going to happen overnight.

So if the OC has been keeping minutes as required, then any prospective buyer will see that major repairs are required and mark down the value of all units. Even if a partial fix is made, the prospect of major upcoming repairs that need to be funded will still devalue lots.

It is an obligation of the OC to repair and maintain common property.
If there are grounds to repair and some owners are holding out, any other owner can go to the tribunal and get an order.

As an aside, the argument thst either the OC or an owner does not have the money is not reason for the tribunal to make the order.

Its then a matter to figure out how to pay and when it’s to be done.

Some owners don’t get the major difference between strata and owning a freestanding home, is thst an individual can make all their own decisions and assume all risks in regards to repair and maintenance, whereas in strata you are part of a collective, where one’s interests are subsumed to those of other owners.

Not to contradict the posts above, but there is a product in the market which allows for some lot owner to borrow and others to contribute upfront.  The rules of the forum don’t allow me to identify the product or lender.  But FYI.