6 Things to Check Before Buying a Sectional Title Property
Buying a sectional title property is VERY different to buying a conventional title house. Don’t wait until after the transfer has gone through to find out that certain things are not what they seemed… Do your homework beforehand and you are far more likely to make the right choice. After all, buying a sectional title property is a big financial investment.
Make sure you do it right by looking at the following before you buy:
1) The sectional plan
Make sure you know exactly what forms part of your section and what areas are common property.
You might think thegarden outside the apartment will be yours, but actually it is common property and unless you have exclusive use rights over it then every other owner is entitled to use it. Check if the balcony is included in your section or if it is common property, this will determine who arranges and pays for expenses related to it. Check if the parking bay ‘attached’ to your section is actually allocated to your section on the sectional plan or if there are rules which link it to your section.
2) The participation quota
The PQ of your section will be found on the last page of the sectional plan and determines the size of your levy contributions, your voting value and your share of ownership of the common property.
3) The scheme rules
Check that there is nothing in the rules that you can’t live with and especially check for any rules which change the amount of levies you will be responsible to pay for and/or altering the value of your vote.
4) The financial statements
Get a copy of the body corporate’s most recent financial statements, check to see if there is a healthy bank balance, any reserve funds and find out what the current monthly levies are.
If you can, chat to the trustees or managing agent, and find out if there are any special levies coming up in the foreseeable future.
Ask the trustees and managing agent about the scheme’s insurance. Make sure that the building is adequately insured. If it’s not and it burns down you will only get paid out the amount your section was insured for.
6) The Minutes of the last Annual General Meeting
The AGM is where the scheme’s important business is transacted each year. The minutes of the most recent AGM should tell you who the current trustees are, what maintenance and repairs projects are coming up, if there are any problematic disputes going on and generally give you a good indication of what is going on in the scheme.
Do you wished you’d looked at some of the above before buying your sectional title property? Share your story with us in the comments below.