Buying Property Off-Plan? Read this...

15 Oct 2013
 

In recent months there have been signs that residential property developers of multi-unit sectional title schemes are once again becoming active, says Tony Clarke, managing director of the Rawson Property Group.

While this is welcome and very necessary, he says, it is likely to lead to a revival in the disputes which have been seen occasionally in this field between the clients (often represented by a body corporate) and the developers.

Many sectional title developers have mastered the art of marketing their units and are extremely proficient at it.

Using models, digital walk-through videos, brochures, well displayed plans and computer graphics they can, if not carefully watched, make developments look a great deal more glamorous and attractive than they will be when actually completed – and this can lead to disappointment, he explains.

Particularly reprehensible is the practice of a small minority of developers who do not specify exactly the materials to be used or, if asked about this, downgrade them and use inferior materials in their place.

“It is therefore vital to insist that all materials, including those in the common areas are specified in the sales documents and are used in the building at the outset,” he says.

Clarke says building skills are in short supply these days and this coupled with a lack of qualified supervision can lead to the building showing signs of deterioration early on in its life.

Paint peeling on balustrades, walls and galvanised iron tanks, flaking plaster and subsidence or structural cracks can and do crop up.

Fire protection and garden sprinkler systems as well as electronic doors frequently perform inadequately and so-called waterproofed areas like roofs and balconies quite frequently can also cause problems from a very early stage in the building’s life, he points out.

The Sectional Title Act allows the body corporate to sue its developers on account of unacceptable quality if these faults become evident in the first three years, but this can only be done if the body corporate has called for a special resolution which is then supported by 75 percent of the owners (measured both by number and by value) participating in a formal voting process.

Clarke says if the developer has held onto a significant percentage of the units for later sale or for renting on his own behalf, such a resolution can be difficult to achieve.

In addition, the developers are sometimes able to hide behind the company or companies set up for the development.

Supposing that the body corporate members do decide to sue, they will then have to raise the legal fees themselves (and may well not be compensated for these in the final judgment). “Legal fees have a nasty habit of mounting up higher than anticipated.”

He says the lessons to be learned from all of this are that it is essential to check the track record and credentials of the developer and the building team. This can be done by visiting their projects.

In general, he says, unless you know the management personally, it probably pays to be wary of new boys on the block - those developers entering the market for the first time.

It should also be borne in mind that on occasion high profile reputable branded estate agencies do find themselves working on behalf of less than competent developers.

“If you can purchase from a developer with an established reputation which has its own construction and sales team and has several nearby recently completed developments to check out, so much the better,” adds Clarke.

Property24.com