Do you own property on a plan of subdivision with 3 or more lots? Make sure you are complying with your Owners Corporation insurance obligations!
We have seen a high increase of properties that are on a plan of subdivision of 3 or more lots that do not hold insurance in the name for the Owners Corporation.
What are your insurance obligations as a lot owner in a plan of subdivision of 3 or more lots?
As a minimum, the Owners Corporation must have public liability insurance over all common property areas on the land as well as reinstatement and replacement insurance for all buildings on the property. The Owners Corporation can be managed by the lot owners themselves.
What happens when you want to sell your lot?
If you are selling your lot, you must ensure that the Vendor Statement contains details of the Owners Corporation, even if it is self-managed by the lot owners. Details of Owners Corporation Insurance MUST be disclosed also.
What happens if no information is disclosed in the Vendor Statement?
If no details are disclosed OR the Owners Corporation does not hold the required insurance policy, a purchaser of a Contract may be able to end the Contract right up until the day of settlement, without penalty.
What does this mean for you as the Vendor?
As a Vendor this means you lose the sale, you do not get to keep the deposit, and you will most likely still have to pay your selling Agents fees. This one mistake could end up costing you a lot of money.
How do you avoid this situation?
Ensure that the Owner’s Corporation holds a current valid insurance policy for all common property areas as well as replacement insurance for all lots on the block. The Owner’s Corporation information must be disclosed in the Vendor Statement, along with details of the Insurance Policy.
We can assist with preparing the required Owner’s Corporation certificates for your Vendor Statement so that you can be sure you comply with your disclosure obligations. Don’t let lack of proper legal advice cause you to lose thousands of dollars!
For all conveyancing or Owners Corporation needs, we are here to help. Phone our office today on 03 9707 1155 or email admin@wslegal.com.au!