In this video, Simon Bennett, Partner & Accredited Property Law Specialist discusses the many things that you need to know when buying a duplex in Queensland.
TRANSCRIPT
I’m Simon Bennett from OMB Solicitors Accredited Property Law Specialist.
Today, I wanted to have a chat to you about buying a duplex. A transaction, which seems fairly simple and straightforward and is very common, quite frankly.
So we’re buying a duplex. That’s a unit and it’s in a body corporate. That’s right. It’s always in a body corporate. And that’s one of the common problems that we face with clients buying a duplex where they’ll come to us and say there’s no body corporate.
Well, there is and there is every single time. So when the title to each side of the duplex is created, so when in basic terms it’s subdivided from one lot into two, a community management statement is lodged which creates the body corporate. Now with a duplex, it may not be what you would consider an active body corporate. That is, it may not hold regular meetings and issue notices regularly because it can be exempt from those things. So the parties may not even know that they’ve got a body corporate.
The reason for this and the reason there’s not strict compliance with all the other rules and regulations applying to the body corporate for a duplex is that it falls under the Body Corporate Community Management Act. And this allows a bit more flexibility and a bit less formality around the running of the body corporate. So, for example, the two owners can effectively have a meeting over the back fence and make a decision on something concerning the body corporate. But we would always recommend those decisions be reduced to writing so that there’s evidence and avoiding a later dispute as to what had been agreed or resolved by the body corporate.
The reason this is really relevant is that the body corporate still owns in most cases, and I’ll go through the one exception, but it still owns the buildings. And what I like to generally say is that if you’re looking at a room that you’re sitting in at the moment, have a look around you. And from the paint inwards is generally what is owned by the lot owner. And the structures outside of that are generally owned by the body corporate.
So this has real ramifications when we’re talking about insurance. Because the insurance for the building has to be in the name of the body corporate, and one of the really common problems that I see on a day to day basis is duplex owners that has owner “A” ensuring their law and owner “B” insuring their lot. At a challenge, an insurance company, we believe, could say that the insured is not the registered owner of the property, which they are insuring, and there might be problems.
So the right way to deal with that is that jointly the two parties controlling the body corporate, take out an insurance policy in the name of the body corporate, and then the levies or the contribution of each lot owner is split to pay those levees. So a lot of these duplexes, the only really active ingredient is the insurance and they can just be split. That is really relevant when we’re looking at buying a duplex to make sure that the insurance is in the name of the body corporate and not the individual owners.
Now, I talked earlier about an exception to that, and that is where on creation, the body corporate and the two lot titles were created under a GTP or group titles plan. And if there’s no common wall, that is, the two duplexes don’t have a middle wall. So they’re completely separate. Then if it’s registered under a GTP, each of the individual owners could separately insure their lots or it could again be insured through the body, corporate or otherwise.
As I said, always needs to be insured through the body corporate. So we’ve got past that issue. We’ve definitely got a body corporate when buying a unit in a duplex and now we go to contract. We should just use the standard RACQ Queensland Law Society approved lot in a community title scheme contract. Make sure it’s the latest version. Make sure it’s checked by an expert and you’re comfortable with the commercial terms. And the remainder of the transaction should just follow a normal conveyance.
But again, make sure you’ve got an expert so that any problems or issues that arise along the way, I dealt with quickly and efficiently. And good luck with your purchase.