Due Diligence on Apartments

[Popoi]

Hello All

We are about to go conditional on a 80m2, 2 bed, 1 car park freehold apartment in Aklnd city. What kind of things would you advise as part of our due diligence process??

Popoi

[Keithw]

Check who is the Body Corp secretary.
Check old Body corp minutes for any signs of leaky issues or high cost maintenance that may be coming up.(painting, building wash etc)
Check who is allowed to supply utilities to the place (power, water etc) some have companies that are related to the developer as the exclusive provider, who then jack up the costs- check these threads for water costs at Zest I think.
If you have a view, are there any new buildings due to be built nearby that may kill the view.
Is the place safe & secure, have there been any apartment breakins or car breakins. Are there plans for security cameras or security patrols
what is the pet policy in the building- they can create a real mess, noise , smell.
Is there a committee - if so get contact numbers(often in the BC minutes) & ring them up & ask if they know of any issues you should be aware of.
Ask the same of the Body Corp Secretary.

Don't expect everything to be perfect, but be sure you are comfortable handling any of the issues you discover.

Good Luck- & well done for buying when the rest of the country is too scared to do so.

[typhoon]

check with a friendly property finder who deals in that market - if they cant do any better they will tell you - if they can you may end up with a better deal - and you get to learn from someone who works that type of property

in the end - you must be clear on the purpose of the purchase

is it an IP or for you to live in

numbers to be very very sure on are:

ACC rates
ARC rates
Ground rent if any - if there is a lease on land - walk away in almost all cases in my view
body corporate fees annual
any UNPAID body corporate fees or rates you may be "buying" off previous owner
same for above on any unit/carpark/locker which is mentioned seperately in titles - they are charged seperately
are the lifts in the building about to blow up (say goodbye to a share in several hundred thousand dollars)

are there any special levys owing?
to agent: "is there anything else you are aware of that i reasonably need to know as a purchaser of the property - especially, have there been any Emergency general meetings of the BC or the BC committee"

read the minutes as above
talk to building manager and body corp manager
talk to occupiers and tradies coming in and out of the building

think of it this way - you are buying shares in an organism potentially costing millions to run each year - if there are 100 apartments you just bought liability for 1% of that cost....

outlook, closeness to CBD, additional parking, cost of same,

are moneys owed to providers like sky, or other telecoms providers, are the datacables operable, what about power water bills etc

if there is scaffolding all over the building - ask why !

in mount street there is a leaker costing 4 million per exterior wall to repair

i could go on for hours

feel free to PM me

all the best of luck to you !

[Popoi]

Thanks for the awesome feedback Keith and Typhoon, its good to here some positive encouragement. Ill let you know how we go and if i have any more questions ill PM you.

Enjoy your weekend

Popoi

[Careynz]

I know this is a slightly old post - but adding to the questions of Due Diligence on apartments what about Builders Report (waste of time for a complex?), and LIM.

For all you experienced apartment buyers in Wellington does the LIM cover earthquake prone issues, mositure/leaky home issues known by the council and hazardous material sites?

We are looking at buying in the Maison Cabriole apartments (60 Courtenay Place) - anyone know of any issues with these apartments?

[CJ]

I know this is a slightly old post - but adding to the questions of Due Diligence on apartments what about Builders Report (waste of time for a complex?),

From what I have been told, they are a waste of time. For one you will probably need a full engineers report (costly) and two, the body corp should probably know about any issues (owners who dont want to sell will want problems remedied before they get worse. Those want to sell quickly would prefer to sweep under carpet).

[Careynz]

Thanks CJ but what about LIM reports for apartments?

[CJ]

Not sure about LIM. Do councils have to note a leaky building on a lim?

[Careynz]

Intersting question CJ. According to the WCC website:

"Land Information Memoranda (LIM) are comprehensive reports containing everything the Council knows about a property or section.
LIM information includes:

• Special land features including potential erosion, avulsion, falling debris, slippage and possible hazardous substances.
• Private and public stormwater and sewerage drains.
• Unpaid rates.
• Consents, certificates, notices, orders or requisitions affecting the land or buildings.
• District Plan classifications that relate to the land or buildings.
• Any information relating to the property supplied by network utility operators in relation to the Building Act 2004.
• Other relevant information."

The interesting bit is that the LIM contains "everything the Council knows about a property". I assume that means leaky homes. I will certainly ask when I apply.

[Aston]

does the LIM cover earthquake prone issues, mositure/leaky home issues known by the council and hazardous material sites?

I don't know about the leaky home issue or hazardous materials etc...

Not sure if the Earthquake issue is included in the LIM but the Council does have info on buildings that meet or don't meet current Earthquake Standards/ requirements.

[Tan]

http://findaleak.co.nz/do-moisture-inspection-results-get-published-on-my-lim-report.html

The council would only find out if someone told them. Who's going to do that?

Unless it leaked before the CCC was issued or during alterations & their inspector spotted it

[CJ]

http://findaleak.co.nz/do-moisture-i...im-report.html

The council would only find out if someone told them. Who's going to do that?

The councils are the only ones with money (developers are all bankrupt or going that way) so the councils get sued for leak home. I would say that the councils (at least someone there) knows about the majority of leaky buildings.

[Green Fish]

Quite right - but the LIM won't say anything on the subject. For apartments, the LIM is usually a waste of $200-300.

Potential buyers seem to have an expectation that they can get whatever information they want before being committed. Not true.

I would ask for the body corp accounts and minutes for the past two years.

The other option is to actually look at the building, take a calculated risk that it does not leak, and make an unconditional offer.

[Careynz]

Interesting approach Green Fish - but what about earthquake issues. In Wellington everyone seems to be "waiting on a letter" from the Council and in some cases Body Corps are doing work without fully knowing whether it will make the building compliant. This seems to be quite an issue. Any comments?

[Green Fish]

Earthquakes are an issue in the whole of the Wellington region, whether it's an apartment, or a house, or a tent on someone's back lawn.

If the apartment building was built according to the submitted plans that were given a building consent, there's no issue. The Council cannot change the rules after the final whistle.