Dear Property Investors,
When you buy into a Sectional Title Scheme, you are part of the Body Corporate. The Body Corporate consists of all the owners.
What questions should be asked before buying into any Sectional Title Scheme? Let's take a look...
Who is the Managing Agent?
This is more important than you think, if the complex is a self-managed complex by individuals in the Body Corporate, I would rather make a run for it. The problem with self-managed complexes is that the risk are much higher for mismanagement and that the individuals running the Body Corporate are not informed with regards to the Sectional Title Act as they should be. This can ruin everyone’s investment financially and you don’t want to buy into a complex that will be placed under administration any time soon. It is important to have a registered managing agent that runs the financials of the Body Corporate and ensure that levy statements are sent out promptly in order to recover funds and pay all the creditors accordingly. The managing agent will also guide the trustees on decision making. This will give you peace of mind that your investment will be looked after from a Body Corporate perspective.
When last was the Body Corporate audited?
This will give you an indication if the trustees are involved or not, is the Body Corporate in a negative or positive balance? Remember a Body Corporate is a non-profit organization, if the Body Corporate has an enormous savings account this should be alert and be questioned: Are the trustees planning to do maintenance for the Body Corporate, is a legal dispute on with the developer or is there an outstanding query on the municipality account. (It could really be anything but rather question it, because it will impact you in the long run.)
What is the current levy and are there any plans implimenting a special levy?
If you have calculated what your bond repayment is, long with your monthly consumables you need to put in to your budget Levy (levy is for expenses for the Body Corporate: building insurance, garden services, security, managing agent fees and municipality account etc.) It is important to know what the rand value is of the levy and if you can afford it with all the additional expenses you have to pay monthly.
If a special levy for example R1 300.00 per month will be raised after you are the registered owner for the next 2 years would you be able to afford the additional levy on top of the normal levy as a monthly expense?
Body Corporate current financial position:
What is the current debtors outstanding on the Body Corporate?
Request a copy of the municipal account – is it up to date? Are there interim charges on the account and for how long? (if the electricity is going to be terminated because of arrears it will affect all owners)
What is the current balance in the Body Corporate bank account?
These are the basic question any property investor should ask before investing with Sectional Title. We hope you have found the above informative and should you have any further enquiries please feel free to contact us.