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Hello,
This post is about ‘what information must Owners Corporations and Strata Managers provide to prospective buyers and what can we do if we find out they have withheld critical information from us’.
We saw a property we liked a week before its auction.
Very quickly we got a reputable legal company to check the contract and commissioned a Strata Inspection Report company recommended by our solicitor to do a strata search for us. They came back with a report that stated that “records for this strata plan were poorly kept; therfore we cannot guarantee that all records were made available to us at time of inspection”.
However it did seem that the Strata Committee was functioning well and there was a healthy sinking fund.
Two days before auction someone made an offer on the property, we counteroffered and ultimately were successful in getting the property. To stop the auction going ahead we had to exchange contracts very quickly and waive the cooling off period.
This all happened in big rush during a working week.
While paperwork was travelling back and forward across the city, I had a closer look at the Strata Report and saw that a number of documents weren’t provided to us. While we were provided with a seven year old Ten Year Sinking Fund Plan and the 2016 AGM agenda, we were not provided with the minutes of that meeting, papers that accompanied that agenda, including a paper on Sinking Fund and Works Planned or minutes of the Executive Committee for 2016 (though we were provided with papers from 2015-2011).
I asked for the AGM meeting minutes and was advised they were not yet completed. I asked for the paper on the Sinking Fund and Works Planned that was distributed with the agenda and instead received an email from the Owners Corporation assuring me that they were carefully managing the building.
I don’t doubt that, however I’m concerned they may not be fully disclosing the current financial state of the building, even though they may have very good plans to address it and we are able to cover special levies up to a point.
The Strata Schemes Management Act 2015 states the owners corporation must make the following items available:
(i) if a strata renewal plan has been given to owners for their consideration under Part 10 of the Strata Schemes Development Act 2015 , a copy of the plan,
(j) any other record or document in the custody or under the control of the owners corporation, “
The fact that these have not been provided, and that ‘the records are badly kept’ raises red flags for me. I’ve asked our solicitor to seek the documents again.
Our also solicitor advises that should a special levy be struck before we settle, that is more than 1% of the contract, we can rescind the contract.
Have other Flat-Chat members had similar experiences? What did you do?
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Hi there, your penultimate paragraph regarding a special levy and the rescinding of the contract if the levy is more than 1% of the purchase price is pertinent in my situation.
We had an EGM recently when there were two units in the block that were in the process of being sold, exchange had taken place but settlement was not complete.
As a potential purchaser I received the contracts for both of the properties, each one had in their contracts at clause 23.18 that if an EGM was convened in the intervening time between exchange and settlement that the prospective purchasers must be informed in order to attend the EGM or send a proxy.
This was particularly important for these two purchasers because the EGM was convened solely to vote on whether legal fees should be paid by the raising of an urgent special levy which would cost approximately $3,000 for each unit.
Neither of the two new purchasers or their representatives were present at the EGM and when I questioned the owners present as to whether they had been informed all I received in reply were blank expressions, and the OC’s lawyer stating that the contracts I had in my possession were not the executed contracts, although I doubt that clause 23.18 would have been removed from both contracts on settlement.
I have asked the new purchasers and they say they knew nothing of the meeting except for receiving the minutes after the fact and being receipt of a levy notice from the Strata Manager stating they had to pay the special levy within a few weeks.
It does not seem right that the outgoing owners can vote at an EGM in favour of a motion for the payment of a special levy which will not be paid for by them, especially when the new owners had nothing to do with the reason for the legal fees being payable in the first place.
Also, the holding of the AGM was delayed (by the outgoing EC members, one of whom was a seller) for at least one month past the usual annual date, which in the past has been at the end of June. (I tired to find out when the very first AGM for my strata plan was held, in order to ascertain the anniversary date, but being an older property the records were unavailable).
Having the AGM very late in July meant that the budget for the quarterly levies was not approved by the OC, and therefore no levy notices were sent for payment on 1st July. The notice for the new quarterly levies was sent after the AGM stating that the instalment for the first quarter of the year was payable on 1st October instead of 1st July.
Once again the previous owners got away with not having to pay their quarterly levies because settlement on both properties took place in early September, and both the new purchasers (who happen to be new to strata) told me that they did not have an adjustment on their final sale prices to take this into account.
What recourse do the new owners have in order to claw back some of the extra levies, they have had to pay?
Victorian Laws- Help Needed??
I bought a 2 bedroom apartment in March. On 22 Oct I discovered wet carpets in my bedroom, called body corp and they said they would investigate “source” if its my fault I pay their fault they pay. My insurance came out ripped up carpets much to my horror the was mould imbedded in the carpet and cement!! So mould remiation was done and I have been living in a hotel since. My strata comp was trying to blame me saying the water was coming in under the windows as it wasn’t sealed properly therefor my fault as its a maintenance problem. They were told multiple times by the building inspectector that was not the cause. After further investigation the cause was a massive crack up the wall next to the window ceiling to floor and cracks in the columns. I have been told again its building maintenance and I have to pay for it. In the living room my parquetry was damaged but the cause and water source still hasnt been found except that I am on the ground floor and next to the entrance where they took tiles off a swollen wall and water came pouring out.
My biggest question here is, if the Strata damn well knew there are building faults(and there are multiple) and did not declare any of it when I purchased the property. Do I have any legal legs to stand on?? The builders certificate has just ran out but there are multiple owners who habe had similar or different issues all sue to building faults. Strata damn well knows that building is full of faults yet did not declare it in any paperwork or I would not have purchased the property!.
Legally where do I stand with Strata??
ThanksWendyB – Did you undertake a due diligence search of the strata records before you purchased your property – the doctrine of caveat emptor? You stated in your comment that you believed that the strata scheme knew of the building faults …. therefore this should have shown up in the records somewhere e.g. written complaints from other owners etc.
From my understanding, it is not the responsibility of the strata scheme to inform all potential purchasers that the building may have maintenance issues. A record of these faults should be discoverable by the purchaser if they undertook their pre-purchase inspection of the records of the strata scheme.
If you bought your apartment in March and you only discovered the wet carpets in October then perhaps the leak began to occur after your purchase.
Regardless of the above, from your explanation it appears that the issues that you describe are maintenance issues that the strata scheme should rectify. Cracks in common property walls and water ingress from an external wall are generally the responsibility of the strata scheme to rectify.
If your strata scheme is wrongly trying to avoid responsibility for the repair then you could ask for assistance from the Victorian Civil and Administrative Tribunal (VCAT). VCAT helps resolve common property maintenance matters such as yours. See here:
https://www.vcat.vic.gov.au/case-types/owners-corporations
You can speak to an advisor by phone. Their contact details are here:
My conveyencers did all of that work so surely they would have alerted me and I have checked all of the paperwork & I can’t see anything though I will contact them to see what I can do. This Strata is knowing selling apartments with building faults and then turning around and saying to the owners oh well thats your property thats your building maintenance. My apartment is ground floor with a balcony and “court yard” you couldn’t swing a cat in!! So the are arguing my property my problem”
The reason I ask the legal questio in I have had 2 building inspectors strangly ring strata manager in front of me and during the conversation regarding my property and the apartment complex itself which is 7yrs old they both said “if you knew about this and didn’t disclose it at sale or do anything about it she can sue you”. I didn’t think anything of it at the time I was more upset at what was going on and my contents and wet carpet & mould damaged floor boards & everything else. Its only now & I guess after what alot of ppl are saying and how nasty the strata manager has been I am asking the question. I know for a fact he is pushing the builders plumbers to make this unknown leak source look like its my fault and coming from my property but the builder/ plumber just wants to do his job properly, fairly and get it right so it can be fixed so it doesn’t happen again.
I have a strata that is coming after me & I have done nothing. So they fired me up to look into this & where I stand.
There have been multiple apartments with multiple water ingress problems fixed under builders certificates & other ways.
When all of this originaly happened & strata manager was sort of being nice I stupidly mentioned I knew other apartments had been fixed. I was angry and I said “you knew about this?” To which he replied “we treat every case individually”
they damn well know.
The Strata Inspection Report is an additional report that should be conducted prior to signing the Contract or during the Conditional phase of the Purchase Contract. These reports usually cost a couple of hundred dollars and are generally not included in the normal Conveyancing. Did you request this report? Did your Conveyancer carry out this report on your behalf? Unfortunately, not every purchaser does this type of search.
https://www.realestate.com.au/advice/why-strata-inspection-can-save-thousands/
If the strata scheme was not deliberately trying to hide the building faults then they should have been discovered in the Strata Inspection Report. It is probably too late for you to do much about this. You purchased in March and it is now December.
However, you still have a way to fix these faults …. If you believe that the water ingress is not your problem and instead believe that it is a building defect then you have every right to demand that the strata scheme pays to rectify the problem.
Has the water ingress problem which is impacting your Lot been fixed? If so, did the strata scheme fix it? Are they now chasing you for money. If they are then you can refuse to pay it until they can prove that they are legally correct and that you are wrong.
Please don’t allow yourself to be bullied or intimidated by the strata manager.
If the water ingress problem has not been fixed then please contact VCAT and they will help you sort it out.
All Strata plans are different but windows in external walls are generally the responsibility of the strata scheme to maintain. The strata scheme insurance policy should pay to repair your flooring. Ask your strata manager to process this claim for you.
Your building is not the only shoddy building in Victoria. https://www.theage.com.au/victoria/melbournes-highrise-nightmares-taking-a-tall-toll-on-residents-and-investors-20160916-gri6l4.html
I had to get the building wall outside the bedroom fixed & sealed as well as under the windows as I was more water was coming in & both my contents insurer & the body corp insurer were threatening me. I was sent an email demanding I send them an invoice proving I had engaged a builder to start fixing the problem & if not they would not fix my apartment. Contents insurer wasn’t as aggressive but I had no choice. The source of the leak in the livingroom still hasn’t been found but strata are being absolute bullies and want nothing to do with it. Manager just tells me to go after original builder.
This only just happened & the damage is around edges of the rooms, even the ppl who have done the inspections said there was no way I could know this was happening unless you know what mould smells like & even then it may not have smelled until I disturbed it when I lifted the carpet.
completely stressed & angry
WendyB – Based on my understanding of your concerns my final suggestion to you is send your invoices to the strata scheme owners corporation (via the strata manager) along with a written explanation of all that you have gone through and an explanation of what you expect from them. It will then be on the record.
Based on my understanding of the timeline of your problems my suggestion would be that in your letter to the owners corporation that you remind the owners corporation of the following:
(1) That if the leak was coming from a common property wall or a window in a common property wall that it should be the responsibility of the owners corporation to repair.
(2) The owners corporation was not willing to accept responsibility for the defects in the common property and you were forced to undertake emergency repairs yourself. Therefore the owners corporation should repay you the cost of these repair invoices.
(3) That the common property faults and defects of the original builder are the responsibility of the owners corporation to chase up. They are not the responsibility of the individual lot owner.
(4) If your own insurance scheme does not pay for the floor replacement then you should be able to submit these invoices to the owners corporation too.
(5) That you will take this matter to VCAT if the owners corporation do not come to a satisfactory arrangement with you.
That’s all I have to offer you. I hope it helps.
Thank you,
both insurance companies, body corp & my contents are now agreeing to fix my apartment once we find the source of the other leak but have flat out refused to cover source of damage & so has strata based on the fact I am ground floor apartment with a balcony & tiny courtyard therefore building is on my prperty & fbuilding “maintenance & cracks” are my responsibility. I haven’t yet been invoiced, even the guys who did the work sent out by strata do not agree I should be billed.
still waiting to find where the other leak is coming from as that definately has a common wall & 3 balconies above me involved. Complex.
It is good news that your problems are being resolved.
Unless Victoria is radically different from NSW and Qld then it could still be a strata issue if the problems stemmed from a structural issue. Usually the strata scheme is responsible for the structure of the building regardless of where the structural problem is located.
The whole building may have foundation issues which may have caused the cracks in the walls. …and these foundation issues may have cracked some pipes.
You could still apply to VCAT to ask for their opinion if you believe that you have been treated unreasonably.
See here for a document that you might to be useful:
According to the builder who is attending my apartment has now been ruled out as source of the second leak so they are working from roof down. Won’t be surprised if they accidently fix a few other owners long standing problems along the way. There are lots of building defects so I am finding out from other owners who have been fighting strata & original builders since discovered. I did not authorise any of this major work, strata did so I am hoping they don’t send me the bill. I know I can’t be charged, I didn’t know until a couple of days after they started. They have the nerve to do things like that though & argue it was done to fix the leak in my apartmenf. Will see what happens.
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