The Law Handbook 2024

Chapter 6.2: Buying or selling a house 543 the activities of owners corporations, removed provisions about bodies corporate from the Subdivision Act, and comprehensively provides for the activity and operation of all owners corporations in Victoria. (See Chapter 6.5: Owners corporations.) Owners of a property must abide by any rules of the owners corporation. Note that while there is a model version of these rules, many owners corporations expand the model rules to include specific rules (e.g. rules about noise, pets, the colour of paint on external walls, and maintenance funds). A buyer should investigate the rules of an owners corporation before purchasing a property to see if there are restrictions that do not accord with their lifestyle. Also, remember that the majority of owners govern the owners corporation decision- making process, so discovering as much as possible about your potential future neighbours by reading the minutes of previous annual general meetings can be useful. A common problem in a subdivided development is the mix of owner-occupied units and rented units. An owner-occupier can find themselves dealing with complacent absentee owners about owners corporation issues affecting their occupancy. Doing your research before you sign a contract of sale can often help to alleviate or avoid such problems. Owners corporations and flammable cladding Another common problem currently faced by owners corporations in Melbourne is the existence of flammable cladding on external walls of apart­ ment buildings. As external walls are generally considered to be common property, buyers should be prepared to pay part of the cost to remove the cladding if funding cannot be obtained from a government body. The amount an owner must pay generally depends on the lot’s financial liability. If a building has flammable cladding, this may affect a buyer’s ability to secure finance to buy a lot. If it is unclear whether or not a building has flammable cladding, buyers should – before making an offer on a lot – obtain further information from the owners corporation manager, the local council, or the Victorian Building Authority. The Victorian Government has agreed to provide funding to remove flammable cladding from some high-risk residential apartment buildings, but not all. Inactive owners corporations It is often said that there is no owners corporation, despite there either being common property in a sub-division, or an owners corporation is specifically noted as affecting the title. More likely, the owners corporation is not active or only does the minimum required to insure the common property (note that two-lot subdivisions and ‘services only’ owners corporations are exempt from this requirement). If there are three or more lots on a plan that do not include ‘accessory lots’ (e.g. carpark lots) and there is common property (e.g. a driveway), the vendor’s statement should include a copy of the insurance for the common property and information about how this insurance premium (and any other shared expenses) is split between the owners. If an owners corporation has not, in the past 15 months, held an annual general meeting, nor fixed any fees, nor held an insurance policy, then it may state in the vendor’s statement that it is inactive. However, it is technically not possible for a three-plus lot subdivision with common property to be inactive as the common property must be insured. Off-the-plan properties Off-the-plan properties do not yet have a title because the plan of subdivision creating the title that is being purchased is not yet registered. Before agreeing to purchase an off-the-plan property, you should seek independent legal advice, especially about stamp duty savings and the potential risks associated with such purchases. Selling an off-the-plan property involves the vendor and buyer signing a complex contract of sale often well before the actual construction of the building or subdivision of vacant land. The contract contains all the plans and specifications of the property being purchased. Usually, the contract is not a building contract as the building agreement is between the developer and a builder. The contract is usually weighted in the vendor’s favour to allow flexibility in the timeframes, building design, and changes to the plan of subdivision. Off-the-plan property contracts generally contain substantial detail about the proposed development and the vendor’s rights to make changes. This includes the rights of the vendor to vary the planning and building permits, the common property areas, the plan of subdivision (including the boundaries

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