Let the (apartment) buyer beware

You've bought an apartment? Congratulations! You've just handed much of the future success of your purchase to a bunch of complete strangers – the executive committee of the owners' corporation. Well, someone has to say it!

The near stampede to apartments by developer-builders and potential owners (part lifestyle, part necessity) brings the latter face to face with the real elephant in the room. Not the building regulatory framework (tuskless now as far as you're concerned) nor the developer-builder (rapidly disappearing), but the owners' corporation.

Week after week our papers hail the arrival of hundreds of new apartments, complemented by glamorous weekend advertisements (last weekend, for Barton, Belconnen, Coombs, Franklin, Greenway, Griffith, Lawson, Woden and Wright). Almost monthly, there are cautionary tales from builders' associations, strata managers, and owners (real estate agents only in private), about the quality of builds and the need for improved building practices, supervision and inspections, especially for waterproofing, given Canberra's challenging weather.

Then, perhaps three times a year, we read sobering stories of relatively new complexes riddled with serious, long-term defects, often structural and hidden, and the nightmares faced by their owners, including huge costs for repairs ($1.9 million in last month's Holt case ("Defects in residential complex prove costly", February 22, p6)) and legal advice. And these are owners like you.

The first few years of a new apartment are critical for its future. Let's hope your executive committee has the necessary skill-set, experience, know-how, capacity and courage, to do its best for your investment.

It's not impossible that within 10 years of your purchase, you will have forked out a sum equal to or up to 20-25 per cent of your purchase price – for your share of repairs for substandard initial development.


The New Home Buyers Guide (The Canberra Times, September 4, 2015) contained not the slightest suggestion that there's anything out of the ordinary in purchasing a unit. Yet we could name major apartment blocks in Canberra with million-dollar repair bills and thousands of hours of owner angst.

It's imperative that the EC be on its toes from day one. If you have the opportunity, join it. If you're buying a new apartment, get yourself onto the EC of the owners' corporation as soon as you can.

Insist that every OC and owner's communication with the developer-builder and strata managers, tradesperson, etc, is logged in detail – date, time, subject, and mode (email, phone, SMS, paper, photograph, quotes, receipts, mp3s, etc). Ensure that no mention of a defect is ignored, however trivial it might sound. And if you're buying into a relatively new but established complex, hunt down your EC (yes, your EC) and interrogate them. It can't be overemphasised how important that EC is to your purchase and satisfying lifestyle prospects.

But, as it happens, the cards are usually stacked against you and the EC. For a start, the developer has moved on – you're no longer core business. Then, quite understandably, it takes time to set up an OC, to gather, persuade or arm-twist for suitable members, develop working relationships with the strata manager and developer-builder and others, and start to get a handle on the issues, as you work through the defect schedule. (Yes, there will be one.) It can take three or four years for the EC team to understand its responsibilities and powers, get into its straps and exercise its time-limited muscle.

Most worrying, however, is the "sentimental owner syndrome".

"I've a new apartment. Cool! No worries for years! Executive committee? Boring. Everything looks fine." Wrong. So wrong. The apartment owner's head may wax lyrical, but her feet must be on the ground. Like buying a new car, your unit's value might depreciate fast – dollar-wise and in terms of hassle-free living.

If the OC is thus often flat-footed, developers are rarely so. Sad to say, it seems that, in their rush to market, the business model of some developers, would appear to be to stare down the paper tigers of building regulations and then exploit ("banking on", literally, is not an inaccurate term) the inexperience and sometimes dysfunctionality of fledgling OCs, feigning concern and offering crumbs, all the while keeping a close eye on, if not taking advantage of, the passage of time until warranty periods have expired. So here's a modest proposal for the ACT government in the public interest, to re-dress accountability, as it coolly pockets revenue from land sales and associated apartment approvals.

For every thousand new units, the government puts aside $1000 to co-sponsor with strata managers quarterly seminars for owners' corporations and their executive committees. It's complex territory and OCs need to be fully-briefed, wise as serpents, from day one.

So, let the apartment buyer beware. Potential buyers should be more than ordinarily cautious in their property purchase. And if you're buying off the plan, do a double dose of due diligence on the developer-builder, and if you buy, put your hand up to join the executive committee as soon as you can.

Lewis Rushbrook is a Canberra resident and apartment owner.