Hi all,
I saw an apartment which is listed at below average price. It's been rented out to students for many years, so naturally, it's messy and dirty. However, I'm a bit worried that it has a vertical large crack (there may be more cracks which I missed out in my 10 minutes inspection), next to one of the bedroom door.
The building is about 10 years old, so no more building warranty. The agent said that the building has some "history" to it, which is why it's offered at cheap price. He also mentioned that if we want to get a building report done, it'll turn out negative and don't bother buying it. However, it's fetching good rents and the location is fantastic. We're wondering whether it's worth taking a risk.
Just some questions to help us make our decision:
1) If the building warranty is over, I assume that any structural repairs concerning the strata will have to be paid by through the sinking fund and by the owners?
2) How can I find out if there are any structural problems that plague the entire building? Will it come up from the strata search or do I have to do a building inspection?
Any advice is greatly appreciated, thanks.
A strata search should show if there have been problems with the building and whether these problems have been handled through body corporate meetings with the strata manager or simply buried.
The cost of the repairs should be part of the body corporate responsibility especially if this is a supporting wall however you will still be responsible for painting/wall paper/floor coverings.
Scott,
How could I determine if the cracks should be covered by the body corp?
If you have another floor above you then it is very likely, a building inspection should confirm it though.
So, I guess I should still do a building inspection?
things like this can hurt finance too. I had a client with a house with large cracks and the lender wanted an engineers report which cost him around $1000 – and then they declined it anyway. i think he did some wall papering after that
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Hi Terry,
Good point but I would assume that most lenders wouldn't bother with a site inspection?
I was hoping to get some filler to patch the cracks & repaint the unit.
Why assume that? It is usual these days for a full inspection. Some lenders won't inspect if the LVR is low, but policies change constantly and you wouldn't want to find you can get finance but can't get an increase or, if you want to sell, the buyer can't find finance.
I would be getting a building inspection at least, and maybe an engineers report depending on how bad it is.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Thanks for the advice Terry. Should I make an offer first and then get the strata & building inspection done, or the other way around?
Usually the other way around, get the owner on a hook subject to finance & satisfactory building inspection.
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