Conveyancing: owner's corp struck levy for replacement of a portion of the fencing

Discussion in 'Legal Issues' started by hoochiscrazy, 19th Aug, 2019.

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  1. hoochiscrazy

    hoochiscrazy Member

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    Hi All,

    I have signed a contract for the purchase of a unit. The cooling-off period and subject to finance date has passed. The settlement is happening in the next couple of months.

    The vendor has advised me recently that Owner's Corporation has requested a special levy for the replacement of a portion of the fencing. The vendor has asked me to pay for this replacement.

    I have already reached my financial limit for the purchase of this unit and did not account for this additional cost. Is there anything I can do? My conveyancer suggested a negotiate a 50/50 of the payment.

    Any advice is appreciated.

    Thank you
     
  2. JDM

    JDM Well-Known Member

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    Does the contract deal with special levies? I know the Qld contract does.
     
  3. hoochiscrazy

    hoochiscrazy Member

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    I'm from Victoria. I don't see any mention of special levies in the Contract (Standard REIV Contract).
     
  4. Peter_Tersteeg

    Peter_Tersteeg Mortgage Broker Business Member

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    It won't be in the contract. I'd expect it to be in the section 32, probably in the minutes of the strata corporation meeting.
     
  5. thatbum

    thatbum Well-Known Member

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    Wouldn't it be clear from the contract who is liable for it?
     
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  6. hoochiscrazy

    hoochiscrazy Member

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    I don't see any conditions for special levys in the owner's corporation rules. It does show that in the last annual meeting, all attendees voted for the portion of fencing to be replaced (The current vendor included).
     
  7. Peter_Tersteeg

    Peter_Tersteeg Mortgage Broker Business Member

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    Here's the problem...

    ** You're purchasing a property based on how it was presented on the date you signed the contract. That is, with the old fence. This is probably fair market value for the property as it is.

    ** The owners corp has approved a new fence, each member is going to have to pay for a portion of this. This will (slightly) improve the value of the property over what you've paid for it.

    ** Even if the fence replacement was being done next year, even if you don't want it at that future date, you're going to have to pay for your portion because the other owners are going to vote against you.

    Unfortunately this is the reality of purchasing a property in an owners corporation. Expenses can come up that you can't afford, but you're expected to pay your share regardless of your circumstances. There's really not much you can do about it.

    The best you can do is try to negotiate with the vendor to cover some of the costs. There might be a case to be made about non-disclosure, but there might now. Your conveyancer is the most likely to be able to advise on this, but I suspect it may be the later.
     
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  8. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    What did your solicitor say? The vendor may be the legal owner at the date of the levy being imposed which means they may receive a lesser sum if this is unpaid at settlement. What settlement adjustment can be applied to make you pay a share of this ?

    This is a matter normally advised on and addressed in the settlement process. Draw your solicitors attention to it and ask them.
     
  9. hoochiscrazy

    hoochiscrazy Member

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    Conveyancer advised me to negotiate it so that the Vendor also pays a portion. What do you mean by receiving a lesser sum because they are the legal owner at the date of the levy being issued?

    I think I would be ok if it was maybe 50/50
     
  10. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    Ah a conveyancer. Not a solicitor. Not legal advice. Interesting contract.
    One or both parties may each have a legal obligation. 50/50 likely not one of them.

    Q : If they choose not to pay council rates do you know what occurs ?
     
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  11. Scott No Mates

    Scott No Mates Well-Known Member

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    Is settlement prior to the payment becoming due?
    When were the special levies invoiced? (before or after your offer was received) Ie at what stage were they aware of the cost? Have they provided a copy of the levy notice?

    I would be seeking legal advice on the matter as to whose liability this becomes.
     
  12. marmot

    marmot Well-Known Member

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    I thought special levies should have come up in a strata search.
    They also have a date when they have to be paid .
    I think whoever owns the property at such time when its due is liable for payment.
    The previous owner paid in our case although the work was not started untill we owned the property.
     
    Last edited: 19th Aug, 2019
  13. thatbum

    thatbum Well-Known Member

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    Honestly there is almost certainly an easy answer to this that a conveyancing solicitor would be able to give in like 30 seconds of their time. And it wouldn't be "call it 50/50".

    Not sure what you want to do here but some legal advice would sort it out pretty quickly.
     
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  14. Joynz

    Joynz Well-Known Member

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    How much is the levy.
     
  15. Scott No Mates

    Scott No Mates Well-Known Member

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    It must be massive if it warrants a special levy to be raised (either that or the sinking fund is in such poor condition that it needs as much help as it can get. Heaven help you if a tap washer on common property wore out).
     
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  16. hoochiscrazy

    hoochiscrazy Member

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    Settlement is after payment being due. Vendor knew their was approval for a new fence but was not sure of when the levy will be imposed. I became aware of the cost 1 month out from settlement.
     
  17. Scott No Mates

    Scott No Mates Well-Known Member

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    Seek legal advice but if the levy was due prior to settlement, I would be telling the vendor that they are their responsibility and if they remain outstanding at settlement, have it deducted from the balance. Of course anything in the contract specific to levies and special levies would prevail.
     
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  18. hoochiscrazy

    hoochiscrazy Member

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    I've asked a conveyancer and a solicitor. They have both told me that these changes are more for the benefit of me since I will be the new owner and the vendor does not derive any benefit from paying for this replacement. They advised me to negotiate; both didn't exactly say 50/50 but to negotiate where I pay a portion and vendor pays a portion.
     
  19. thatbum

    thatbum Well-Known Member

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    I just find it a bit incredible that if you properly instructed a solicitor and asked them, "who is liable to pay it?", then that was the answer they gave you.

    They're not doing their job in that case.
     
  20. Scott No Mates

    Scott No Mates Well-Known Member

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    Who cares who's going to benefit, the wording of the contract of sale is all that counts and you are asking your legal representative what is in the contract, not who is going to benefit, not whether it's fair.

    Unless you are buying from a friend, acquaintance, associated party or family what have you got to lose if you upset the apple cart?
     
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