Buying a Unit Advertised "NO BODY CORP" & Possibly No Public Liability Insurance

L88mph on 13/11/2017 - 13:45

I am not a member on propertychat, hence thought I’d get some eternal wisdom from a forum where I am a member, hopefully via your experiences.

I am planning to (specifically) buy a 70’s two bedroom unit with a decent sized backyard in the outer south-eastern suburbs of Melbourne (before anyone asks, I like older units from that era, more land in the back and solid build).

I have noticed many properties being openly advertised NO BODY CORP! SAVE ON BODY CORP FEES!, etc. I checked sold stats, and noticed many units have successfully been sold with the same description too, so it’s happening openly. Agents claim this is common in blocks of 3-4 units from the 70’s era. They claim each unit owner insures their unit for building and contents, but no one takes out public liability on the common area anymore.

  • I thought this was illegal in VIC?

  • All of them have a common driveway, and some of them a frontal small lawn – so who covers that in case a tradie or random person has a slip?

  • Anyone living in a no body corp unit, and if so how do you cover the common area/public liability insurance?

Thanking you kindly, in advance…

Home & Garden

Comments

  • QW3RTY on 13/11/2017 - 13:51

    Have you performed or has the agent provided you with title information? Does the property form part of a strata plan?

    • 88mph on 13/11/2017 - 14:05

      Yes, only started my search hence seen two S32s, on the title page both are looking very much like strata plans (i.e 1/SP12345 or 3/SP98765)

  • try2bhelpful on 13/11/2017 - 14:04

    These are two articles that talk about the Body Corporate. I think they exist if there is common areas.

    https://www.consumer.vic.gov.au/housing/owners-corporations/…

    https://www.stratadata.com.au/news/difference-between-body-c…

    What they might be saying is that, as these are a small number of blocks, they don't have a professional Body Corporate manager and rely on the people involved to manage their own affairs. Probably worth ringing up a couple of these people and finding out.

  • 88mph on 13/11/2017 - 14:15

    Thanks for the tips…

    I read thru but unfortunately nothing mentioned about units with no common area insurance.

    In the two inspections I have been so far, I am very confident the common driveway and frontal lawn is common property, but agent claims none of the other unit owners care, only buy their own building n contents insurance.

    • try2bhelpful on 13/11/2017 - 14:33

      That sounds like a lawsuit waiting to happen, doesn't it? I would be having a chat to Consumer Affairs Victoria about what the legal stance is. If they don't manage handle it then they can probably tell you who does. Would be interested to know the outcome of that. If the body corporate is mandatory then I would report these instances back to them.

      • outlander on 13/11/2017 - 14:35

        lawsuit waiting to happen

        Lawsuit for what? What exactly is likely to happen?

        • try2bhelpful on 13/11/2017 - 14:36

          If someone is injured on the common property then who's insurance will cover it?

        • outlander on 13/11/2017 - 15:47

          Injured how?

        • John Kimble on 13/11/2017 - 16:31

          @outlander: Almost anything. Falling/tripping over for example.

        • outlander on 13/11/2017 - 16:57

          @John Kimble:

          Whats the likehood of that happening, and in the case that it does what is the estimated payout to the injured party?

        • John Kimble on 13/11/2017 - 17:04

          @outlander: No idea. Assume pretty slim, but if it does happen could be stupid amounts (going off the ones you see in the news when someone slips over at Coles/Woolies).

          Our common entry has three steps…we are supposed to have a handrail and non slip things on each step to be up to standard or whatever…so lame…but we don't.

        • 88mph on 13/11/2017 - 17:34

          @John Kimble: agreed, if someone who knows how to flaunt the system falls or trips, maybe even someone who lives in the complex, imagine the complications. Example, 4 unit block, no public liability insurance only individual owners having building n contents, unit 3 tenant slips and breaks a leg or worse outside unit 1 on the concrete driveway, I'm the unlucky sod in unit 1…

        • outlander on 13/11/2017 - 18:45

          @John Kimble:

          but if it does happen could be stupid amounts (going off the ones you see in the news when someone slips over at Coles/Woolies)

          Apparently thats mostly urban legends, helped along by corporate interest groups and the media. Remember the whole thing about the lady in the US who spilt Mcdonalds coffee on herself and sued for a million bucks? Yeah, it didn't happen that way. Mcdonalds beat the story up in the press because they wanted to avoid the bad press. By making her seem greedy, they made themselves look like the victim. Almost all of the time court cases are judged pretty reasonably, and the judge is not going to give someone your house just because they tripped in your driveway. Most of the time when you hear someone sueing for an outrageous amount, its a tactic to attract attention.

          The only time you really have to worry about that kind of thing is when there was a hazard you knew might hurt somebody, and you did nothing.

        • Emli on 14/11/2017 - 09:34
          +1

          @outlander:
          If that is the McDonald’s story from some time ago, we were in the US soo after the finding was handed down. We listened to an interview about it. McDonald’s had been sued repeatedly about the temperature of the coffee causing burns after accidental spillages. They just kept paying out the small amounts. The lawyers pushed for the higher amount as McDonald’s was not making changes to the water temperature. Because the financial penalty was high, they made the changes.
          When we got back to Australia we read about the same lawsuit. Australian press only told part of the story and omitted the parts about the previous two files full of lawsuits.

        • John Kimble on 14/11/2017 - 10:22

          @outlander: I was thinking stories like this: http://www.smh.com.au/business/retail/the-300000-coles-slip-…

        • outlander on 14/11/2017 - 17:33

          @John Kimble:

          Yeah, stories like that are a bit out there, but I think the fact coles is a multibillion dollar company has a lot to do with it. I'm not sure it would have been the same if the defendant was a person.

    • ESEMCE on 13/11/2017 - 14:47

      Then steer clear.
      The other owners sound like assholes..
      Break a tile on their roof and they just swap it for one of your good ones and leave you with the leaky roof.
      There's more to common property than the garden and driveway!

      • 88mph on 13/11/2017 - 14:55

        Yes, I agree.
        I'm more foxed that this practice is happening quite openly (going by sold stats)

  • HighAndDry on 13/11/2017 - 14:55
    +1

    You can still get together with the other owners and buy common property building insurance and public liability insurance - you don't need a body corp to do that. You ARE likely saving on body corp management fees, so that's not a lie either.

    Of course, you'll want to get to know the neighbours beforehand, because in a block of 4 units, you'll have to make most if not all decisions unanimously if you want to get anything done.

    • 88mph on 13/11/2017 - 15:02

      Aha, I see, that could be an option. I didn't know I could directly get public liability for a complex of units, hopefully dependant on cooperative neighbours. Do you feel that's possible online or via a broker?

      But could turn sour if I'm the only owner occupier and tenants in the rest…

      • HighAndDry on 13/11/2017 - 15:03

        Yeah you'll want to find out who the other owners are and talk to them. Hell, they might even prefer having you living in there as the only owner-occupier who's on site in case anything happens. Best to talk to a broker for the insurance - I've no idea how you'd even start trying to privately get building insurance…

        • 88mph on 13/11/2017 - 15:08
          +1

          Thank you, again. Sounding increasingly complex but looks like a scenario I may have to deal with.

  • 88mph on 13/11/2017 - 15:01

    Duplicate reply - deleted

  • No on 13/11/2017 - 15:37

    They may have one person who is getting insurance for the whole complex.

    My duplex had this, whenever the bill came the dude next door just came over and gave me a copy and I paid half.

    • 88mph on 13/11/2017 - 15:47

      reply below, sorry

  • 88mph on 13/11/2017 - 15:46

    Thank you, mirrors what Oblivion hinted above… I might have to keep an eye out for owner occupied complexes, can't trust agents word, may have to door knock myself maybe on the morning of the auction. Sadly the areas I am looking have a lot of rentals, so looks like potluck at this stage…

  • chrisd262 on 13/11/2017 - 16:09

    Could it be under a Company Title (you own a share) rather than Strata or Torrens title?

    • 88mph on 13/11/2017 - 16:17

      I suspect not, both S32s I have read todate state on the title search page "Unit X on Strata Plan XXXXX and an undivided share in the common property for the time being described on the plan Parent Title Volume XXXXX Folio XXXXX"

  • chrisd262 on 13/11/2017 - 16:24

    I can only suggest that there must be rules on this - eg a rule that says all blocks of units must form part of a strata title if
    units are owned by different owners. If you require a mortgage I suggest lender might not be happy so maybe best to explain situation to lender?

    • 88mph on 13/11/2017 - 17:26

      Exactly, it's those elusive rules I am after, and if they exist how come some unit owners seem to openly ignore them (if you believe the agents opinion above)

      • HighAndDry on 13/11/2017 - 18:08

        Oh, had some spare time, you might want to give this a look:

        https://www.consumer.vic.gov.au/housing/owners-corporations/…

        The minimum insurance required for an owners corporation is:

        reinstatement and replacement insurance of buildings on common property

        public liability insurance for the common property. Insurance for common property protects owners in the case of unexpected damage and injuries.

        This is not the case for two-lot subdivisions.

        Only exemption is for two-lot subdivisions, so NOT your building with 4 units.

        • 88mph on 13/11/2017 - 18:20
          +1

          Thank you again, my point exactly!
          Both complexes I visited were more than 2 units. First was a block of 3, second was a block of 4.
          So the owners may be breaking the rules/law (unless doing what you hinted earlier buying public liability insurance informally as a group)

          It seems the only way to know for sure maybe to door knock a random unit on auction morning, ask if they are the owner, if yes, and ask how they handle the public liability /common area insurance. If no, keep door knocking till I get an owner occupier.

          Sheesh…😵

        • kipps on 13/11/2017 - 21:05

          @88mph: even if they are all buying such a policy now, what are you going to do if one decides not to contribute in future? Sorry seems like a bad idea to me.

        • 88mph on 13/11/2017 - 21:19

          @kipps: yes, it is increasingly seeming so. I may have to avoid such unit complexes, but if my first two hits were both of the same style, and others sold just like them - not getting my hopes up.
          And this is not a decision I'm taking voluntarily, it's a change in life circumstances.

  • theguru1 on 14/11/2017 - 07:28

    If there is Common property then there is a body corporate (owners corporation) registered on title wuth all owners nembers. Only 2 lot subdivisions may opt out.

    The body corporate may not be operational, but it still exists. It is a requirement to have insurance. Obviously you want this. Anything else is optional.

    Individual units in more than 2 lots shouldn't be insured separately. What happens if an owner doesn't pay theirs or is under insured?

    I would steer well clear Of such arrangements

  • 88mph on 14/11/2017 - 07:44

    Thank you, that seems to be the general concensus. Still pissed that it's allowed to happen so openly.

    • outlander on 14/11/2017 - 17:34

      It doesn't sound like they try to hide it, so why are you pissed? If you don't like it go for one with a body corp.

      • 88mph on 14/11/2017 - 18:33

        I think I will.
        But as I mentioned initially, the pocket of suburbs I am looking at (i.e can afford) seem to have possibly half of the units advertised this way.
        Just need to wait for the right one I suppose…

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