Searches – which ones do you need to undertake when buying a unit?
You will have seen our previous blog about which searches you need to undertake when buying a property, both houses and units. We have now written this separate blog which details the searches which are relevant only to units in a community titles scheme.
In this blog, we reiterate our recommendation that if you are purchasing a unit in a community titles scheme, you should have a conversation with your solicitor once you have signed a Contract and give them as much information about the property as possible so that they can order the searches which are going to be most relevant to the unit you are buying.
Below we outline each of the main searches that solicitors will undertake on your behalf for the purchase of a unit, the purpose of each search and the rough cost. It is important to note that solicitors use different search providers, so our costs are an indication only and will vary amongst solicitors.
As outlined in our previous blog, the following searches are still relevant (for the same reasons) for the purchase of a unit and should be considered by you in consultation with your solicitor:
- Title Search
- Registered Plan
- Easements and Encumbrances
- Land Tax Search
- Transport and Main Roads Property Search
- Transport Noise Corridor Search
- Pool Safety Register
- Rates search
- Special Water Meter Reading
- ASIC Search
- Personal Property Securities Register (PPSR) Search
- Bankruptcy Search
- Court Registers – Supreme, District and Federal Court Searches
SEARCHES SPECIFIC TO UNITS
Community Management Statement (CMS)
The Community Management Statement includes information relating to the community titles scheme in which the unit is constructed, such as lot entitlements, by-laws (the rules of the complex), details of progressive development of the scheme (if it is a staged development) and administrative advices. The cost of this search is around $55.00.
Form 13 Information Certificate
This certificate provides you with levy information, the by-laws, lot entitlements and a list of the insurance policies and their values held by the body corporate. It is particularly important because it advises on how much the body corporate levies are each quarter and whether or not the seller is up to date with their levy payments.
It allows you to ensure that the payments are up to date at settlement and allows your solicitor to make an adjustment to the purchase price so that the seller is responsible for body corporate levies up until settlement and you to be responsible for the levies from settlement. For this reason, you will need to order the search when purchasing a unit. The cost of the Form 13 is around $64.00.
Body Corporate Orders Search (Form 3)
A body corporate dispute may go to adjudication if it cannot be resolved by conciliation or self-resolution. To resolve a dispute, an adjudicator makes an order. You can apply to see if any orders (or current adjudication applications) have been made for a particular community titles scheme.
This search will reveal whether there are any Orders which have been made against a particular community title scheme. This search is beneficial so that you can see if you are buying to a potentially unstable body corporate scheme. You may be able to terminate the Contract if an Order requires work to be done or money to be spent on the Lot of Common Property. The cost of this search is around $20.00.
Body Corporate Records Inspection/Purchaser’s Strata Inspection
This search is the most extensive and involves an inspector going through all documentation of the body corporate and highlighting any issues. For example, the inspector will go through minutes of meetings to see if there is any major expenditure that has been agreed upon, any major issues with particular tenants or owners, any claims which have been made on any insurance policies held by the body corporate and so on. We would hate for you to sign a Contract for a unit only to find after settlement that a resolution was passed in a body corporate meeting which requires owners to make payment of a special levies which are outside the ordinary body corporate levies, or to find that the body corporate was going broke.
The cost of this search will vary depending on the cost of the individual inspector, however you can expect to pay around $200.00 for the search.
Certificate of Classification
The Certificate of Classification will inform you as to whether the classification of the building allows you to use the premises for your intended use (for example, if you are purchasing the property as a permanent residence as opposed to temporary letting that this use is permitted under the certificate of classification). The cost of this search is around $75.00.
Building Management Statement
A Building Management Statement is a document which is used to regulate the relationship between different body corporates or other lots in a development. For example, if you are buying in a high rise building which comprises both residential and commercial lots.
The BMS sets out and regulates the use of facilities that might be owned by one of those parties that will be shared with others. It also deals with how costs will be apportioned for the maintenance and management of those areas. Any building management costs are usually paid by the body corporate and are factored into your body corporate levies. Whilst generally, you would not need to order this (given that it is a matter between body corporates and will not affect you), you may wish to order it out of interest. The cost will be around $60.00.
YOUR RIGHTS IF YOU ARE NOT SATISFIED WITH YOUR SEARCH RESULTS
Once your solicitor has undertaken the searches, they will send you a copy of the searches and a report highlighting anything that appears to be an issue. In the event that you are not satisfied with your search results, you may have a right to terminate the Contract or to seek compensation from the seller, depending on what the issue is. Alternatively, you may not have any rights at all and will be stuck buying the property. It is all dependent on the particular search which has revealed unsatisfactory results.
Generally speaking, if the search results do not relate to a specific breach of the Contract, then you will not have a right to terminate the Contract. However, you can protect your interests by having your solicitor insert a special condition into the Contract so that the Contract is subject to you receiving satisfactory search results – this must be inserted prior to signing the Contract.
As we have advised above, every property is different and will require different searches to be done. It is therefore important to have an in-depth discussion about the property with your solicitor so that they can determine which searches will need to be undertaken for your specific property. If you are buying property for the first time, you could also discuss the property with your solicitor prior to signing the Contract so that they can advise you of anything in particular to look out for and to look over the Contract before you sign it.
If you have any questions in relation to a sale, purchase or searches in your Toowong conveyancing matters please contact our experienced conveyancers – (07) 3870 8244 (Toowong) and (07) 3264 7692 (Albany Creek).