With more and more Queenslanders opting for lower maintenance and often more affordable units and apartments instead of the traditional detached home, body corporate and strata title are increasingly relevant concepts for Queensland home buyers. If you’re considering purchasing into a body corporate and/or strata title complex, it’s important that you understand exactly what that means and what due diligence you need to do before signing a contract.
The difference between strata title and body corporate is reasonably straightforward, and you will likely encounter both as you begin to look at purchasing an apartment, townhouse, or duplex in Queensland. In very simple terms, strata title refers to ownership, while body corporate refers to legal responsibility. Read on to learn more about how these structures work and the impact they will have on you as a prospective strata owner.
Understanding Body Corporate and Strata in Queensland
Buying body corporate Queensland
In Queensland, a body corporate is a legal entity established under the Body Corporate and Community Management Act 1997 (BCCM Act). It applies to homes with shared land, like unit complexes, townhouses, and even duplexes. The body corporate is a legal entity with the responsibility to look after the maintenance and management of common areas in the building. This means overseeing gardens, boundary fences, driveways, stairwells, and any communal recreational facilities.
Each property owner, referred to as a “lot owner,” will become a member of the body corporate upon purchasing a property within the shared development. This means that you, once you complete your purchase and become the property owner, will also join the body corporate and be able to have a say in many of the important decisions that will impact your property and the common spaces. It also means that the body corporate entity is made up of your neighbours and other property owners within the complex.
Buying strata title Queensland
The term “strata” refers to the legal structure for ownership and management of properties with shared areas. While the term is often used interchangeably with “body corporate” colloquially in Queensland, it describes the overarching concept of strata title ownership.
When you buy a home with strata in Queensland, it means that you are also buying a certain percentage of the whole complex, including the shared amenities. The strata title is what gives owners their shared ownership and lays out the shared responsibilities of this ownership. Those responsibilities are then handled, in Queensland, by a Body Corporate.
What to Look Out for When Buying Common Property Queensland
One of the most important pieces of strata property purchase advice is to ensure you understand the additional costs that these structures impose on owners.
Strata fees Queensland
Buying into a strata title means that you have to pay strata fees. Most often these are paid quarterly but you may find strata titles with a monthly or biannual payment cycle. These fees go towards paying for the maintenance of the building and its common areas. They will also contribute towards insurance, utilities, management, safety inspections, and any large capital expenses.
The amount you will pay in strata fees will depend on the property size and the amenities included. Features like swimming pools and elevators which require a higher level of upkeep will increase the costs.
Information about the strata fees being charged will be available from the selling real estate agent, and it is important to request and consider these numbers carefully. Not only will you need to ensure that these costs will fit into your budget in addition to mortgage payments, but there’s also valuable information about the health of the building to be gained from these figures. If the strata fees seem unreasonably high compared to comparable buildings might signal underlying issues with the building or poor management.
Another critical point that anyone considering Queensland property ownership with strata fees should understand is that strata fees are not fixed. They can and do get raised, but not without the agreement of the owners. Any potential fee increases will be discussed at the annual general meeting (AGM), which you will have the opportunity to attend and contribute to. Most often fees are raised to cover increased costs such as rising insurance costs, repairs, or simply inflation.
Sinking fund review Queensland
A sinking fund is a pool of money set aside for larger repairs or upgrades of the building and common areas. In Queensland, most structures of body corporates are legally required to maintain a Queensland sinking fund.
When you are considering a property purchase, you will have access to the sinking fund budgets and should review these carefully as part of your decision as they can tell you a lot about the health of the body corporate entity and the building. If the sinking fund is too high, it could indicate that work is being overlooked or delayed which speaks to poor management and the potential for larger repair costs later. If the sinking fund is too low, then you may be at risk of being charged a special levy for emergency repairs when they cannot be covered within the sinking fund.
Historic Meeting Minutes
Reviewing the historic meeting minutes will give you valuable insight into how healthy the body corporate is and will give you a breakdown of the property’s maintenance history. If you can see money has been spent on routine upgrades, then that is a good sign of a well-run body corporate and a robust building.
Reviewing the meeting minutes can also reveal red flags that could help you dodge a property purchase that could become a major headache. If you can see funds being spent on significant structural issues like repairing concrete damage, you should investigate that further to ensure it doesn’t signal other major issues to come. You can also commission a building inspection as part of your due diligence, and if that report uncovers issues that have not been addressed by repairs, that may signal neglect or financial troubles that are worth digging into deeper before you purchase the property.
Strata Community Rules Queensland – What to Know Before You Buy
Buying a home with a strata title means that you are agreeing to abide by the rules set out under the strata title. It is important to review the strata plan carefully when considering a purchase because the rules might clash with your plans or wishes for your new home.
Common by-laws to be aware of:
- Pets: Many strata properties have rules regarding the size, type, and number of pets allowed.
- Alterations to Property: Some buildings prohibit modifications like enclosing balconies to maintain uniform aesthetics.
- Short-Term Rentals: Certain buildings ban Airbnb and other short-term rental arrangements. This restriction could affect investment plans, such as turning the property into a rental after living in it.
Each strata plan is different with different rules and restrictions for its owners. The conveyancer’s role in strata purchase is crucial in helping buyers review and understand strata plans. A conveyancer examines the strata plan to clarify ownership boundaries, identifies the shared common property, and highlights any restrictions or obligations tied to the property. This guidance ensures that as a potential buyer, you are fully informed and protected throughout the purchase process.
Strata Conveyancing Queensland – How conveyancers Help
Queensland Conveyancers are essential in helping buyers navigate the complexities of Queensland’s body corporate and strata systems.
Queensland’s real estate system is set up to provide potential buyers with a high level of transparency, and this is true for strata and body corporate purchases as well. What this transparency means in practice, however, is that you are often given a large amount of real estate and legal information that might not make sense without context or expertise.
Strata conveyancer services Queensland will include:
- Explaining Legal Nuances: Conveyancers will help you understand the distinctions and relationship between body corporate and strata schemes for each property you consider purchasing, ensuring you as a buyer are confident with your rights and responsibilities under the BCCM Act.
- Reviewing Disclosure Statements: Queensland law requires sellers to provide a disclosure statement for properties under a body corporate. This document outlines critical details like your financial obligations, by-laws, and the body corporate’s insurance coverage. A conveyancer will review this statement to identify potential risks or concerns and then discuss them in detail with you to help inform your next steps.
- Assessing Financial and Legal Compliance: Conveyancers examine documents like body corporate meeting minutes, budgets, and sinking fund forecasts. These documents can provide valuable insight into the health of the property and the body corporate, and your conveyancer will have the expertise to know exactly what to look for.
- This ensures the property is compliant with the BCCM Act and that you go into any purchase or negotiation fully informed about any financial liabilities or disputes.
- Advising on Contracts: Conveyancers ensure that the terms of the sales contract align with body corporate legislation. They also negotiate contract terms to protect your interests if any concerns arise during the review of body corporate records.
When considering a body corporate/strata property purchase, engaging a conveyancer early in the process will ensure that you have the legal support to traverse Queensland strata laws, understand the information provided to you by the body corporate, and make a fully informed purchase decision.
