When buying a residential home, the reasons supporting you obtaining a pre purchase building inspection are compelling, but does the same apply when buying an apartment in WA within in a strata title complex? Not always.
In Western Australia, strata title properties are governed by the Strata Titles Act. Compelling reading for anybody contemplating buying a strata property in WA. Even more important reading is the strata plan and by laws for the actual strata property you are looking to purchase. These documents are critical and you should never purchase a strata property without reading and understanding these documents as it essentially describes what you are buying, the boundaries thereof and what special rules may apply. Caution: Reading some strata plans and by-laws are not as straight forward as they may appear and it is important that you understand exactly what the documents are telling you. Consider getting independent advice where appropriate.
Within the majority of strata properties you are essentially buying a Lot (i.e. the apartment) and a share of the residual common property of the strata complex. Simple really – not!
So the Lot (and potentially additional Part Lots associated with your Lot) will generally relate to the physical unit and may or may not include things like balconies, courtyards, carparks, and storerooms (Caution: Part Lots and exclusive use rights are very different things). The first thing that you need to consider is where is the boundary between your lot and common property and or a neighbouring Lot. In many old schemes, the boundary is often the inner surface of floors, walls and ceilings. Alternatively, in newer schemes the boundary is often the external surface of walls and ceilings. Sometimes, it is the midpoint between the walls! What is the difference? Who maintains the walls, floors, ceiling and roof covers is the key difference!
Typically, where units are all single storey and completely independent with no common walls, the Lot boundaries will be the external surfaces so the Lot owner will be responsible for all floors, walls, ceilings and roofs. Conversely, where an apartment lot is in a multi storey apartment complex with neighbours, on each side, below and above, the Lot boundaries will often be the internal surfaces of the unit/Lot so the strata company will maintain the floors, walls, ceilings and roofs beyond the surface level. But there are a myriad of alternatives beside the two described.
So from the above it can be seen it is critical to understand where the boundaries of the strata lot are so that you can determine what you will be personally responsible for maintaining and managing as opposed to what the strata company will be responsible for maintaining and managing. Hence, when you are buying a unit the condition of these key components can be a very important consideration.
When undertaking a pre purchase building inspection under Australian Standards, building inspectors are required to inspect not only the individual strata Lot but also the external areas immediately adjacent to the Lot. So in essence a building inspector may be inspecting a part of the strata complex outside of the Lot boundaries being purchased by the buyer. This can open up several important issues. A building inspection may identify significant or structural defects in the common property of the strata complex adjacent but which are outside of the boundaries of the strata Lot. How this will impact the often used REIWA pre purchase building inspection clause needs careful consideration. If there are significant or structural defects within the common property, it will be important to determine if the strata company has the financial resources to address the issue. For example, a fixing concrete cancer issue in common property that is actually an exclusive use balcony, may only cost $4,000. But if there are 100 units, each with a balcony with the same issue, the strata company may not have the $400,000 required to address the issue for the entire complex. Hence, an appropriate due diligence on the strata company can be as important as a building inspection on the actual unit.
Important to note in the above that, while the building inspector will inspect the immediate external areas of a strata Lot, they will not be inspecting the entire common property of a strata complex, under a unit pre purchase building inspection. Building Inspectors are often requested by strata companies to inspect the entire common property of a strata complex, but these full strata inspections will often cost several thousands of dollars, depending on the specifics of the strata complex.
So what the above demonstrates, is that a building inspection can provide valuable information about a strata Lot, but a thorough due diligence of the strata company can be just as important if not more so. To take the example further, a strata company may have a significant building defect in a part of the strata common property which is a considerable distance away from a strata unit that you are looking to purchase. But remember, when you purchase a strata property, you purchase a specific Lot as well as a portion of the total common property. You share in the total upside and downside of all of the common property so if there is a problem elsewhere in the complex, you will share in the costs of that problem. Minutes and details from the strata company meetings may reveal the existence of broader issues within the strata complex that you many need to be aware.
Many strata units are sold off the plan whereby the buyer only gets to undertake a single practical completion construction inspection prior to handover. During these inspections we are looking to identify incomplete or defective construction works. These are not the same as a pre purchase inspection, but both can be equally important.
So are Pre Purchase Building Inspections necessary on strata unit purchases? Ask yourself the following:
1. Where are my Lot and Part Lot Boundaries? Are there any defects associated on or around any these boundaries?
a. Make sure you review your strata plan and by laws
b. Have a building inspection done on the Lot and adjacent boundaries where the Lot boundaries are beyond the internal surfaces
2. Do I need to be aware of any issues if those issues are within my areas of responsibility?
a. Have a building inspection done on the Lot and adjacent boundaries, especially where Lot boundaries extend to external surfaces
3. If there are issues but they relate to common property, how do I know if the Strata Company has the resources to resolve them?
a. Undertake a due diligence on the Strata Company
4. How do I find out about known issues in the broader strata company?
a. Undertake a due diligence on the Strata Company
If you are buying an apartment in a strata complex and your Lot boundaries are the internal surfaces of floors, walls and ceilings there may be limited value in undertaking a pre purchase building inspection, especially a pre purchase structural inspection. However, where the Lot boundaries extend to the external surfaces of the floors, walls and ceilings obtaining a pre purchase building inspection on the Lot may reveal some important information.
In any regard, due diligence on the strata plan, bylaws and strata company will always be critically important.
Need more information– Contact Houspect Building Inspections WA Ph 9240 8855 or https://www.houspect.com.au/wa/