Recently I looked at a strata property for a client in a small complex of five villas. Inside the layout and condition was pretty simple and functional and suited his needs well. But the feature that most appealed to our buyer was a private north-facing courtyard with an established garden.
After the second inspection our client confirmed that he could see himself living there and decided to make an offer. So the first thing we did was to advise the selling agent of our interest and request a copy of the contract of sale.
I always look at the strata plan to confirm the square meters on title and on the first glance I noticed that the courtyard was not marked on the plan. What does this mean? Well in this case it meant that the courtyard is common property and not owned by the vendor of this villa.
This in itself is not that unusual, there are many instances of strata properties where an area of common property is used by one unit holder. Usually this stems from an oversight in the original design, such as a roof cavity that could be used for storage or a “dead” space that could be used as an outdoor area, such as in this case.
But there needs to be evidence that the Owners Corporation have approved this use and the best way for this to be done is in a by-law.
So, flicking through the contract of sale I look for the by-laws and see that there is indeed one that gives Exclusive Use Rights to this unit for a section of common property. BUT, this permission is only for part of the space. Only the deck is referred to, meaning that the garden and fence are not included.
Now I am not a solicitor and cannot advise on a contract, and I can certainly see that we need to get advice in this instance. We need to know the risks associated with purchasing this property without this approval in place.
The legal eagles came back with some options that we will pursue – the most favourable being to try to get the vendor to agree to make permission a condition of the contract. Now this may work as a strategy in a flat market but in a booming market the vendor may not be so willing.
In fact, the current owner of this property only bought it 2 years earlier, when the market was quite a bit stronger. And it appears that the deck had been built around 5 years ago. Which begs the question, didn’t her solicitor pick this up at the time when she was buying?
At first I thought this may be a case of negligence, but when I thought about it further I realised that this could quite easily happen. You see, unless the solicitor or conveyancer actually inspected the property themselves or at the very least looked at the advertising, they could easily overlook the fact that the courtyard was not covered in its entirety by the contract. And while a proactive property law specialist may routinely ask their client questions that could unearth the issue, the thought may not occur to many generalist solicitors.
So, what is the upshot? Firstly, by engaging our services, our client has had somebody on his side that identified the issue and was able to negotiate a suitable outcome through his solicitor. So he did not fall into the trap of paying for something he was not getting. However, if that does not convince you of the merit of using an experienced buyer’s agent, it is up to you to communicate as much as possible to your legal representative. Perhaps you could provide them with the advertising material for the property and be very specific about what it is that you think you will be buying.
Now please take note that this example is with a strata title property. A smart property lawyer will recommend that you get a survey if you are buying a torrens title property to ensure that everything you expect is there – and nothing you don’t expect.
Published:- 5 March, 2012
Please note: Good Deeds buyers tips are intended to be of a general nature. Please contact us for advice that is specific to your individual circumstances. You may also need to get advice from other professionals such as an accountant, mortgage broker, financial planner or solicitor.