HOW TO DEAL WITH HOA’S WHEN BUYING INTO AN ESTATE
There are many benefits of buying into a sectional title complex, from the additional security to the shared maintenance costs and the greater sense of community. Yet, to enjoy these benefits, you’ll need to abide by the regulations set out by the complex’s body corporate or homeowners association (HOA). Below are a few tips to help you deal with the HOA when buying into an estate:
Understand the HOA’s rules and regulations
While there are many advantages to purchasing a sectional title unit, challenges can arise, and benefits can be dampened if you are not fully aware of the rules and regulations stipulated by the body corporate before you buy. You need to obtain a copy of the rules that govern the scheme before buying a sectional title home and read through them carefully. These rules establish the do’s and don’ts within the complex, as well as the guidelines and ground rules about homeownership within the estate. For example, if you’re a pet owner, it’s best to get written permission from the trustees allowing your pets in the complex to avoid future backlash. The body corporate rules are registered with the deeds office to guarantee that they are enforceable, which is why it’s vital for you to understand all the rules that you agree to by purchasing the property. If anything is unclear, you should address your uncertainties with the trustees before signing on the dotted line.
Obtain approval for renovations before you buy
If you’re hoping to renovate your sectional title unit, it’s highly unlikely that the Body Corporate will give approval to either you or your agent before the transfer is finalised. The best way to ensure approval is for the current owner to obtain approval prior to transfer. If this was a condition of the sale stipulated in the OTP as a special condition, then the seller would have a legal obligation to fulfil such conditions before the transfer. However, if this planning approval was not stipulated in the contract, then the seller has no obligation to obtain such approval prior to transfer.
Look into the financial background of an Estate
To protect yourself from any financial loss, you would need to see a copy of the estate’s financials to ensure that the estate is not running at a loss. Apart from the financial statements, the minutes of the last annual general meeting will also provide some insight regarding any proposed special levies or possible issues that the trustees have dealt with over the last year.
You’ll have to do this through the seller, as body corporates don’t generally provide financials to prospective buyers unless instructed by the seller. You can also expect to run into some delays when it comes to receiving a copy of the most recent financials as it might not be available at the time you show interest. It will all depend on when the complex’s financial year-end is. However, the seller should have a copy of the previous years’ audited financials that they can share with you. In the meanwhile, the body corporate can supply you with a letter confirming that its financials are in good standing and are awaiting the final draft from the auditors. This letter should also confirm the expected date of completion.
You should also bear in mind that most banks will not approve bond finance without a copy of the latest audited financials, so you may need to sit tight before your home loan can be approved.
Reach out to a property professional
Buying a sectional title unit can be overwhelming, especially when having to deal with the HOA. However, if you take the time to do the necessary research, it can be a rather rewarding investment. If after you’ve done all your research, you’re still feeling unsure about the process, you can always consult with your local real estate advisor to ensure that you’re making an informed decision. They will also be able to assist you with your search for properties.