Buying a unit or a townhouse

Considerations when buying a unit or townhouse

Buying a unit or a townhouse in a conveyance is different to buying a house, as you take on a relationship with the other owners in the complex as a member of the body corporate. As a consequence, you will:

  • Share ownership of the common areas (i.e. driveways, lifts, stairs, etc.)
  • Automatically become a member of the body corporate which is regulated by the Body Corporate and Community Management Act 1997 (Qld) (BCCM Act)
  • Become jointly and severally liable for the body corporate’s debts
  • Contribute money to the body corporate for the day to day ongoing expenses (into a fund called the administrative fund) and anticipated long term costs (into a fund called the sinking fund)

The body corporate for a community titles scheme (sometimes referred to as a strata) is composed of all the owners in the scheme. The body corporate deals with a number of matters including:

  • Issues about the common property
  • Concerns of owners
  • Maintenance of the complex

The standard REIQ contract for lots in a community titles scheme differs in a number in a number of important ways from the contract for a house. It discloses the following important information which should be carefully considered as part of the conveyancing process when buying a unit or townhouse:

  • The interest schedule and contribution schedule lot entitlements for the property you are purchasing. Contributions to the administrative and sinking funds are divided amongst the owners in the same proportion as the contribution schedule lot entitlements. Contributions towards insurance for the complex are divided amongst the owners in the same proportion as the interest schedule lot entitlements
  • Details of the body corporate insurance policies which should be current
  • Information about any defects in common property, actual or contingent or expected liabilities of the body corporate, etc. It is implied that the buildings on scheme property and body corporate assets are free from defects other than fair wear and tear and anything that has been disclosed by the seller in the contract. If defects and liabilities are not disclosed in the contract you may be entitled to terminate the contract and recover any money paid

The seller is also required to give a buyer a disclosure statement under the BCCM Act. This disclosure statement contains detailed information about the body corporate including:

  • the current administrative and sinking fund amounts that are payable for the unit
  • the full levies payable for the current financial year
  • whether there is a body corporate manager
  • what assets are owned by the body corporate

This disclosure statement must be provided before a buyer enters into the contract.

When purchasing a unit or townhouse, we would also recommend that you obtain the following additional information:

  • A copy of the by-laws (which form part of the community management statement) for the scheme. The by-laws regulate various matters including whether pets are allowed, noise and parking on common property. The BCCM Act allows a body corporate to adopt standard by-laws set out in the BCCM Act, or to create by-laws that best suit the body corporate’s individual circumstances. We will search for and provide you with a copy of the community management statement when you appoint us as your solicitor if you are purchasing a unit or townhouse
  • A search of the body corporate records. The body corporate records can provide important information such as whether any improvements to the unit you are purchasing were properly approved, whether there are proposed special levies being considered (which can have significant financial consequences), whether there are significant works to be carried out on common property which may require the passing of a special levy, whether the body corporate has entered into any agreements for maintenance or caretaking agreements etc.

Buying a unit or townhouse is more complex than buying a house. The additional considerations that arise are many and most can have serious financial consequences. By engaging an expert conveyancing lawyer, you will receive the right advice and the complete picture to enable you to make an informed decision.

If you have any questions arising from this post, please contact one of our expert conveyancing lawyers by calling us on 07 3106 3016 or contacting us using the form on this page.

This article does not give legal advice and should not be relied upon as such. It is intended to provide general and summary information on legal topics, current at the time of first publication. You should seek professional legal advice before acting or relying on any of the content contained herein.

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