Body corporate arrears

Residential building, small low cost lots. I need somewhere to move to short term, will renovate and rent out once better settled in the area. The yield is yummy.

DD is showing what is regarded as substantial arrears. 6k arrears of 19k sinking fund. Building is old but low maintenance. It is well placed and would benefit from some upgrades. There are 4 other members but if more than one is in arrears it's clearly an even bigger problem. Has anyone else had the fortitude and tenacity to take this type of property on? I love the slum houses but this could be a step too far for me. It won't be a short term hold but will tie up capital.

ETA fees are stupidly low so I'm unclear as to how arrears got go be so high. Clearly poorly managed but I'm thinking I can step that up.

Any thoughts for me?

 

Body corporate has to bite the bullet and bring in the debt collectors.
Marg

 

On a slightly different question, I am also looking at an apartment where strata levies are in substantial arrears- but with the seller! Do these
a) come out of the purchase price (eg so he will pay them- eg purchase price $100k, arrears, $5k, owner gets $95k and $5k goes to strata),
b) debts get transferred to the new owner (I wouldn't have thought this was the case in Australia although I know it is the case in the US; or
c) they stay with old owner and they continue to actively chase?

 

I believe the outstanding levies will be paid out of the money the vendor receives for the sale.

Check with your solicitor for accurate information for your state.
Marg

 

@ms sweet, there are a number of red flags waving in my field of vision.

If I was in your shoes, I (and/or your solicitor) would do a full and thorough investigation of the body corporate records, going back at least 5 years. After I had a full understanding of that, I (and/or your solicitor) would demand a face-to-face meeting with the BC Chairperson and BC Manager to confirm your investigations and what are they doing about the issues.

You need to know who isn't meeting their obligations, why and what is being done to bring them up-to-date. If it is one Lot owner then this is a small red flag IMHO as corrective action should be well underway (if no action is underway, then the flag just got bigger). If all Lot owners are behind, then this is a large red flag IMHO as you will taking on all of the ******s (4 vs 1).

Also, you need to find out why the Sinking Fund is so low. Also, have a good look at the Maintenance Schedule. If there is a major breakdown the day after settlement or there is some major maintenance on the horizon, you could be asked to make a serious contribution.

I am not saying you should pull out. You need to ascertain the facts, evaluate the situation, ask for a price reduction, ... before you settle. Otherwise, pull out.