Ex-Gov unit with structural problems

Discussion in 'Repairs & Maintenance' started by fedex, 28th Jan, 2020.

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Who is liable for work in common area/exterior walls/structural shifting

  1. Body corporate

    5 vote(s)
    100.0%
  2. Me

    0 vote(s)
    0.0%
  3. 50/50

    0 vote(s)
    0.0%
  1. fedex

    fedex Active Member

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    I'm doing some research on a structurally questionable unit that is owned by the Dep. of Housing.

    • The engineering report shows some very serious structural issues mainly due to a damaged sewer pipe caused by tree roots (since cut down).
    • To make matters worse, the body corporate report implied there is a good chance there probably is asbestos in this building too.
    • Works need to be done within 5 years according to structural report or else property won't be habitable.

    My question is:
    Would I be up for all the work as the potential future owner or would the body corporate be liable for the cost considering that most of this is external and in common areas?



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  2. Scott No Mates

    Scott No Mates Well-Known Member

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    It is a strata property, BC would have to pay, you would pay your share of the repair. Possibly through a special levy.

    You may also be required to pay for repainting of your unit where the brickwork and render is to be repaired.
     
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  3. housechopper2

    housechopper2 Well-Known Member

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    Per @Scott No Mates point above, remember that if body corporate pays, technically they are funded from
    your pocket (or at least your share if it’s a repair to the common areas).

    So don’t think that something funded by body corporate will result in $0 cost to you.

    It would be worthwhile checking how much money is in the body corporate account currently.
     
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  4. fedex

    fedex Active Member

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    There isn't much money in the kitty at the moment but they intend on raising money through a levy. If it is an urgent repair, are they obligated to fix it?
     
  5. The Y-man

    The Y-man Moderator Staff Member

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    Well the alternative is that the building is declared unlivable and everyone gets evicted....

    The Y-man
     
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  6. housechopper2

    housechopper2 Well-Known Member

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    Not sure if you are meaning ‘they’ as in body Corp or current owner.

    You are buying the house as it is. Post settlement, any problems are yours to deal with. If there are major structural defects requiring a special levy from body corp that is raised after you take ownership, then your units share comes out of your pocket.

    I suggest you determine exactly what rectification is required within the next 5 years before you make an offer including an estimate of cost.

    if you still want to purchase, consider reducing your offer price by the amount you expect it to cost. - noting this is an estimate only.
     
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  7. qak

    qak Well-Known Member

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    Also think about how long it may take to get the body corporate to agree to do the work, then get quotes, then organise the trades ...
    I hope it's a great price.
     
  8. Paul@PFI

    [email protected] Tax Accounting + SMSF Business Plus Member

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    Does this report cover the whole building or just the areas in proximity to the unit ? Some costs may be shared ie strata. But its unfunded. How many owners will pay ? Delays may mean total loss. But seems the extent of issues could be larger than reported if other areas are also impacted. Is it actually valueless ??

    Run the maths - How many units ? Cost to repair all of it ? . Just to repair and patch it. Not internally renovate either.
     
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  9. bunkai

    bunkai Well-Known Member

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    I guess it would be optimistic that there was a case to agree to sell it to a developer? Like those concrete apartments in the rocks in Sydney :)

    Being more realistic... the challenge here is time and energy - given nothing has happened to date, the OP will likely have to drive the process. Entirely feasible but very tiring!

    Is there enough upside in the deal?
     
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  10. fedex

    fedex Active Member

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    It is probably 60-100k cheaper than other similar units and 100-150k cheaper than normal no ex-gov units.

    The upside is there, the risk however, also there. Can one sue the body corporate for damages for acting too slow?
     
  11. fedex

    fedex Active Member

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    It only covers the area around the specific unit I'm looking at which has a major issue.

    I've run the numbers and I think it is worth the risk and will be making an offer subject to finance shortly.
     
  12. Paul@PFI

    [email protected] Tax Accounting + SMSF Business Plus Member

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    I wouldnt. Not without a whole of property report and strata historical report. The common areas could be a wipe out and your share of this common area(eg stairs, walls, roof, grounds, carparks etc) is part of your levy liability too. They may be even worse than the units.

    You may find lenders wont touch it. Valuers may indicate the condition and poor security and outside lender rules.
     
  13. fedex

    fedex Active Member

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    Do you mean to say that I shouldn't buy it without receiving a report for the entire block of units as there may be damage to other units may add to the future levy increases?

    If I make an offer subject to finance, it alleviates the risk of finance being a problem.
     
  14. Paul@PFI

    [email protected] Tax Accounting + SMSF Business Plus Member

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    Yep. The other units may be the other unit owners problem but in a strata all share in the apportioning. (Damage in common areas + your unit structural + their unit structural) x YOUR ALLOCATION % eg 4.761% as an example. And if the other 95.238% of owners dont have the $$$ then perhaps it just stalls and becomes something like this :

    [​IMG]

    NSW Strata laws allow a majority of owners to force a demolition and land sale on a minority too.
     
  15. fedex

    fedex Active Member

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    There are only 11 units on the block and I'm based in VIC. It would work out like 9% or so. Is there a way to force the other owners to repair the outside of my unit? My basic understanding of body corporate law is that they are legally required to.
     
  16. housechopper2

    housechopper2 Well-Known Member

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    It depends if it’s common area or not. TBH it doesn’t sound like you are getting a large enough discount for the uncertainty associated with this property. Good luck with it.
     
  17. Paul@PFI

    [email protected] Tax Accounting + SMSF Business Plus Member

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    And if they vote and say no ? Or fail to pay levies ? The owners can all vote for the property to remain just as it is today until council pulls its occupancy certificate/s. You can vote yes all you like.

    Dept of Housos may control votes and be keen to vote no until all are sold ?
     
    Last edited: 14th Feb, 2020
  18. bunkai

    bunkai Well-Known Member

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    In NSW you would just take this to NCAT as the owners corporation has the responsibility to "properly maintain common property". This is why this process will be tiring as you are going to have to understand the legislation and how to address inaction. If owners don't pay then they don't get to vote.
     
  19. fedex

    fedex Active Member

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    All of the units have been sold.

    I've decided against making an offer for this property as there are several key issues:
    - damage is due to a council sewer line in the back. Council property adds to complexity/cost to fixing issue
    - engineers report stated that costs may increase within a year (its been a year since) and subsidence may render the unit unlivable within 5 years (4 years left).
    - most unit owners appear extremely poor, leading me to wonder if they would be able to afford such a levy to fix a unit unrelated to theirs.
    - the common property is quite rough and isn't maintained well.

    As it is a first property, I think the risk is quite high and decided not to go ahead.
     
  20. Scott No Mates

    Scott No Mates Well-Known Member

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    @fedex - great example to bring to everyone's attention 'as to what not to buy'. Sounds like you dodged a bullet with this one (& plenty of others will be stopping them with their wallet).
     
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