Buying an apartment is about much more than finding the right kitchen, balcony or view. Before you sign a contract, you need to understand the building, the corporation and the financial commitments that come with apartment ownership.
Buying an apartment can be an exciting step.
For many people, an apartment offers an attractive lifestyle – a convenient location, less exterior maintenance, access to shared facilities and the opportunity to live close to Adelaide’s CBD, restaurants, shops, entertainment and public transport.
But there is something every prospective apartment buyer should understand:
You are not simply buying an apartment. You are buying into a community, a building and a shared financial and management structure.
That means the condition and management of the wider building can be just as important as the condition of the apartment you are buying.
Look Beyond the Apartment
When inspecting an apartment, it is natural to concentrate on the things you can see.
Is the apartment spacious?
Does it have a good outlook?
Is the kitchen modern?
Does it have good natural light?
Is there a balcony?
These things are important.
But they are only part of the picture.
Before purchasing, you should also investigate what is happening within the building and the strata corporation.
A beautifully renovated apartment in a poorly managed building can present very different risks from a modest apartment in a well-maintained and financially well-managed building.
Look beyond the front door.
Understand What Type of Title You Are Buying
Before purchasing an apartment, make sure you understand the type of title applying to the property.
South Australia has different forms of property ownership, including Torrens Title, Strata Title and Community Title.
Strata title commonly applies to apartments and units. A strata plan divides the land into individual units together with common areas that are jointly owned and shared.
Community title is a different form of ownership with its own legal structure.
The type of title affects how the property is managed, what constitutes common property, how costs are shared and what rules apply.
If you are unsure about the title structure, obtain independent legal or conveyancing advice before committing to the purchase.
Understand the Strata Corporation
If you are buying a strata apartment, you will become a member of the strata corporation.
The corporation is responsible for matters including the management of common property and enforcement of the corporation’s articles. Owners also contribute towards the costs associated with the property.
This is an important part of apartment ownership.
You are not purchasing a completely independent property where everything begins and ends at your front door.
You are becoming one of the owners collectively responsible for the wider building.
Find Out What You Will Be Paying
Before purchasing, find out exactly what contributions or levies you will be required to pay.
Don’t simply ask:
“How much are the strata fees?”
Ask what those contributions actually cover.
They may contribute towards:
- Building insurance
- Maintenance and repairs
- Cleaning
- Gardening
- Common electricity and services
- Professional fees
- Management costs
- Building projects
- Other common property expenses
South Australian guidance specifically recommends that prospective purchasers understand how much is required for the upkeep, maintenance and management of the common areas, including any arrears associated with the unit.
Don’t Assume Low Levies Are a Good Thing
A low levy can look attractive when comparing apartments.
But low levies aren’t necessarily an indication of good management.
Buildings need money for ongoing maintenance and future capital expenditure.
If important work has been deferred or insufficient funds have been set aside, owners may eventually face significant additional costs.
Ask yourself:
Is the building adequately funded for the work it is likely to need?
This is often much more important than simply asking whether the current levy is high or low.
Investigate the Corporation’s Finances
This is one of the most important things a prospective apartment buyer can do.
The Legal Services Commission of South Australia recommends that people considering buying a strata or community title property understand the operations and finances of the corporation before signing a contract.
Information available to prospective purchasers can include:
- Contributions payable
- Any arrears relating to the unit
- Assets and liabilities of the corporation
- Expenses already incurred
- Expenses the corporation has resolved to incur
- Statements of accounts
- Financial records
- Meeting minutes
- Current articles or rules
- Current insurance policies
The corporation may charge fees for providing some documents.
Do not skip this step.
The financial health of the corporation is part of the investment you are buying into.
Read the Meeting Minutes
Meeting minutes can tell you things that you won’t necessarily discover during an inspection.
They may reveal discussions about:
- Building defects
- Water leaks
- Roof problems
- Waterproofing
- Major repairs
- Insurance claims
- Disputes
- Proposed building works
- Increasing levies
- Contracts
- Management issues
- Future expenditure
South Australian guidance indicates that prospective purchasers should receive copies of general meeting and management committee minutes for the preceding two years.
Don’t just glance at them.
Read them carefully.
Look for recurring issues and matters that appear to remain unresolved.
Look for Major Upcoming Expenditure
A building can look perfectly maintained while significant expenditure is approaching.
Perhaps the external areas need painting.
The roof may be approaching the end of its useful life.
Waterproofing may need attention.
Lifts may require major refurbishment.
Fire safety systems may need upgrading.
Other building infrastructure may require substantial expenditure.
South Australian guidance specifically refers to expenses already incurred or about to be incurred, such as painting or gutter replacement, when considering the financial position of a strata corporation.
Ask:
What major work is planned or being discussed?
And:
How will it be paid for?
Check the Building’s Insurance
Find out what insurance the corporation has in place.
South Australian information available to prospective purchasers includes the current insurance policies taken out by the corporation.
Understanding the corporation’s insurance is important because building insurance and your own personal contents or other insurance needs are not necessarily the same thing.
If you are unsure what is covered, seek advice from an appropriately qualified insurance professional.
Read the Rules Before You Buy
Every apartment building has rules governing how the property is used.
These can affect everyday life.
For example, rules can deal with matters such as:
- Pets
- Use of common areas
- Noise
- Maintaining your apartment
- Obstructing common areas
- Certain uses of the property
South Australian strata articles include requirements relating to matters such as keeping pets, maintaining units, common areas and permitted uses. Articles can also be changed by special resolution.
If you have a dog, plan to renovate, want to use the apartment for a particular purpose or have another requirement that is important to your lifestyle, check the rules before you buy.
Don’t assume that something is permitted simply because you have seen another resident doing it.
Understand Common Property
It is also important to understand what belongs to your individual apartment and what forms part of the common property.
This can affect who is responsible for maintenance and repairs.
The boundaries of strata property are not necessarily as straightforward as simply looking at where a wall or door appears to be.
If you are buying an apartment and are uncertain about the boundaries or responsibilities, obtain appropriate advice and examine the relevant strata documentation.
Investigate the Building’s History
A building’s history can be extremely revealing.
Ask whether there have been:
- Significant building defects
- Major water ingress
- Waterproofing problems
- Structural issues
- Insurance claims
- Significant disputes
- Major special contributions
- Large maintenance projects
- Ongoing legal matters
You don’t necessarily need a building with a completely uneventful history.
Older buildings, like houses, will naturally have maintenance requirements.
What matters is whether problems are being identified, managed and appropriately addressed.
Consider the Quality of Building Management
Who manages the building?
Is there a professional strata manager?
How long have they been appointed?
What services are included?
Are owners generally satisfied with the way the corporation is managed?
How responsive is the management?
Good management can make a significant difference to the ownership experience.
But remember that the strata manager does not own your building.
The owners collectively form the corporation, and owners remain an important part of the governance of their property.
Talk to People Who Live There
A conversation with an existing resident can sometimes tell you things that won’t appear in a glossy property advertisement.
Ask about life in the building.
Are there ongoing problems?
Is the building generally quiet?
How responsive is management?
Are there recurring issues?
Do owners generally work well together?
Of course, one person’s experience is only one person’s experience.
But it can provide useful additional context.
Think About Noise and Apartment Living
Apartment living means living in close proximity to other people.
You may share walls, ceilings, floors, corridors, lifts and other facilities.
Consider how comfortable you are with that style of living.
Visit the apartment at different times if possible.
Listen.
Consider traffic noise, neighbouring apartments, common areas and other potential sources of disturbance.
An apartment that seems wonderfully peaceful during a Saturday inspection may feel very different at 7.30am on a weekday.
Consider Parking and Storage
If parking is important to you, make sure you understand exactly what you are buying.
Is the car park part of your title?
Is it separately allocated?
Is it common property?
What about storage?
Do not rely solely on what an agent tells you verbally.
Check the relevant title and documentation.
Think About Future Resale
Even if you intend to live in the apartment for many years, consider what might matter to a future buyer.
Location will obviously be important.
But so will the condition of the building, the level of levies, the quality of management, upcoming expenditure and the overall reputation of the development.
A well-managed building can be an attractive proposition for future purchasers.
Ask Questions Before You Sign
A good apartment purchase should involve questions.
Lots of them.
Before signing a contract, consider asking:
About the building
- How old is the building?
- What major maintenance has recently been undertaken?
- What major work is planned?
- Are there known building defects?
- Have there been significant insurance claims?
About the corporation
- What are the current levies?
- Are there any arrears?
- What are the corporation’s assets and liabilities?
- Are there proposed increases?
- Are there any significant upcoming expenses?
About the rules
- What are the current articles or rules?
- Are pets permitted?
- Are renovations restricted?
- Are there restrictions affecting the use of the apartment?
- Are there restrictions concerning common areas?
About management
- Who manages the corporation?
- What contracts are currently in place?
- When do important contracts expire?
- What issues are currently being discussed?
About the future
- Are major works being considered?
- Is additional funding likely to be required?
- Are there unresolved disputes?
- Are there any significant decisions pending?
Get Independent Advice
Buying an apartment is a significant financial decision.
A real estate agent can provide information about the property, but they are not a substitute for independent legal, conveyancing, financial, building or other professional advice.
If you are uncertain about the title, contract, corporation, finances, building condition or your obligations as an owner, seek advice from the appropriate qualified professional before proceeding.
It is much better to ask questions before you buy than to discover the answers afterwards.
Your Apartment Is Only Part of What You Are Buying
The most important message for prospective apartment owners is simple:
Look beyond the apartment.
The kitchen can be renovated.
The paint can be changed.
The furniture can be replaced.
But you are also buying into a building, a corporation, a set of rules and a shared financial responsibility with other owners.
Take the time to understand all of those things.
The Legal Services Commission of South Australia specifically advises prospective purchasers to understand the operations and finances of the corporation before signing a contract.
The Adelaide Apartment Owners Association
The Adelaide Apartment Owners Association believes informed apartment owners are better equipped to protect their homes, their investments and their communities.
AAOA provides a collective voice for apartment owners in Adelaide, with a focus on the issues that affect apartment living, including building management, strata governance, council policies, legislation and other matters affecting apartment owners.
Whether you already own an apartment or are considering buying one, understanding your rights and responsibilities is an important first step.
Buy with your eyes open. Ask the questions. Read the documents. Understand the building.
And remember:
You’re not just buying an apartment. You’re buying into a community.
Join the Adelaide Apartment Owners Association and become part of the collective voice for apartment owners in Adelaide.
This article provides general information only and is not intended to constitute legal advice. Strata arrangements and individual circumstances can vary. Owners should refer to the legislation, their corporation’s rules and meeting documentation and obtain independent professional advice where appropriate.