Buying an apartment can be an exciting step; whether you’re a first-home buyer, investor, or simply downsizing!
However, apartment purchases come with additional legal considerations that don’t apply to freestanding houses. Understanding what to look out for before you exchange contracts can save you from costly surprises later.
- Understand Strata Living
Most apartments in NSW are part of a strata scheme, meaning you own your individual lot but share ownership of common property (such as hallways, lifts, gardens and roofs) with other owners.
Before buying, you should find out:
- What areas are common property compared to what is solely your own;
- Your rights and obligations as a lot owner;
- The by-laws of the owner’s corporation; and
- Your responsibility to pay ongoing strata levies.
- Review the Strata Records Carefully
One of the most important steps when buying an apartment is obtaining a strata report. This report provides insight into:
- The financial health of the owner’s corporation
- Past, current or proposed special levies
- Building defects or major repair issues
- Ongoing disputes or tribunal proceedings
- Compliance issues or by-law breaches; and
- Upcoming capital works
This report can reveal underlying issues that may not otherwise seem apparent from a building that looks well-maintained on the surface.
- Check Strata Levies and Special Levies
Strata levies are ongoing contributions you must pay, usually on a quarterly basis. These cover maintenance, insurance, repairs and administration.
You should enquire about:
- The current amount of levies;
- Whether levies are likely to increase; and
- Any special levies proposed or recently imposed.
Buildings with more common property and shared facilities (e.g. pool, lifts) are likely to have higher levies so think about how likely you are to use these common facilities that you will pay to maintain.
- Review the By-Laws Carefully
Strata by-laws govern how residents can use their apartment and common areas. Key by-laws to check include:
- Pet restrictions;
- Renovation and alteration rules;
- Short-term letting (such as Airbnb);
- Noise and behaviour requirements; and
- Use of balconies, storage cages and car spaces
By-laws can significantly impact how you live in the apartment, so they should never be overlooked!
- Understand the Building’s Condition and Age
Older buildings may come with higher maintenance costs, while newer buildings may still be subject to defect rectification.
You should consider:
- The age of the building;
- Whether there are known structural defects;
- If defect claims have been made against the developer or builder; and
- Whether building warranties still apply.
- Review the Contract for Sale Before Exchange
In NSW, apartment purchase involves the unconditional exchange of contracts, early in the process. This makes legal review critical before you sign.
A solicitor can review the contract to check:
- Title issues like garage and storage being a different lot to the apartment;
- Inclusions and exclusions of items that will come with the apartment like appliances;
- Settlement timeframes and if there is a need to vary due to personal circumstances;
- Strata plan and strata by-laws;
- Any unusual or unfavourable special conditions added by the seller.
Once contracts are exchanged, your ability to withdraw is limited and likely to result in a loss of the deposit paid and possibly damages.
- Parking, Storage and Exclusive Use Areas
Not all car spaces or storage areas are owned in the same way. You should confirm:
- Whether parking and storage are ‘on title’;
- If they are exclusive-use areas or common property; and
- Whether there is any restrictions on their use or transfer.
- Off-Plan Apartments
Buying a strata apartment ‘off-plan’ carries a whole range of additional risks and issues to consider and investigate. These may include:
- Expected completion and sunset clauses;
- Developer and builder history;
- Inclusion details and variation clauses;
- Price adjustment and escalation clauses that allow the seller to change the price;
- Payment of deposit by cash or bond.
Buying off-plan should only be attempted with the assistance of an experienced solicitor as this type of purchase is very different to buying an existing strata apartment.
- Future Developments and Surroundings
It is recommended to investigate whether:
- There are planned developments nearby;
- Council approvals exist that may impact views, noise or access; and
- The building is subject to heritage or planning restrictions.
What surrounds the apartment today, may change significantly in future!
Get Legal Advice Before You Buy
Buying an apartment is not just about the property itself as there are many factors that should be considered that directly or indirectly affect your investment. Obtaining legal advice before exchanging contracts allows you to make an informed decision and avoid unexpected risks.
If you need any legal advice, please contact us as we can assist with contract reviews, strata advice and the entire conveyancing process to ensure you understand exactly what you are buying before you commit.
