What to look for when buying into a Sectional Title Scheme

What to look for when buying into a Sectional Title Scheme

Many people these days don’t really know what to look for when buying into a Sectional Title scheme. It’s important these days to know exactly what you’re buying into and with who.

One of the first things to look at is who the Managing Agents are. The harsh reality is, Managing Agents obtain a reputation for being any or all of either helpful, trustworthy and knowledgeable or unhelpful, untrustworthy and stupid.

One of the other and arguably most important aspects is the latest set of audited financial statements. Audited financial statements are drawn up annually to reflect an independent and analytical view of the Body Corporate and its finances. These should be scrutinised carefully to ensure the solvency and liquidity of a Body Corporate.

Nobody wants to buy into a financially volatile Body Corporate. Reserves are important as they reflect the ability to do improvements and repairs as the years go by without having to call for Special Levies which can take anyone by surprise.

The levy amount is also of paramount importance. Experience has taught us that levies are usually one of the last payments on the list. This causes severe strain on any Body Corporate and makes it impossible to function at an optimal level.

Rates have also caused a great deal of confusion as, since 2007 they have been payable by the individual owners and not by the Body Corporate. Given that rates are issued by the relevant municipality, it can often take a few months before your first statement gets issued. This can cause a great deal of financial uncertainty. Don’t ever think that you’re getting a free ride because the municipality will slap you with a statement when you least expect it.

If possible try meet the Managing Agents, the chairperson and the Trustees to make sure they know what’s going on.