ok guys, back to the size question again.
What I would like to know, is that when you are sold a OTP appartment and it is advertised as “Appartment Size: 100 m sq” – does this mean that the livable space would be (100 m sq) – i.e adding up all the rooms (and probably wardrobe space etc..) or would you assume this would include service shafts and wall cavities?
What would you assume?
How do valuers utilise appartment size in the valuations and how important is it?
(Background is I am buying a Central Equity hightly overvalued flat which seems to have decreased in size by about 20% since the sale – flat size was not mentioned in contract – only on brochure) – given the plan of the flat I cannot find the missing 20% – but I’m being told I haven’t included the wall cavities) – anyway – just tring to get a sensible answer from you guys and what you think – as the answer from CE was obviously not a sensible one)
thanks [confused2]
We sell a number of apartments OTP, but unlike most RE development companies we advertise the “finished” floor area first and foremost.
Finished area is the interior living space – includes closet space; excludes balconies, garage/parking.
Many developers include balconies and parking, etc, in the advertised apartment size [i.e., 100 sqm] which can – and often does, mislead buyers.
It is very important to clarify this aspect prior to signing a purchase agreement due to the impact it can have on re-sale and market valuation.
If you have been advised that “service shafts” and “wall cavities” comprise the advertised apartment area, then I would ask where this is clearly defined in the purchase contract and related sales information.
You can take this to the governing authority which oversees consumer rights/fair trading if not provided with a satisfactory answer.
Furthermore, if anyone is building apartments that represent high-risk and oversupply, it is Central Equity.
Caveat Emptor.
— Michael
Originally posted by jhighlo2001:– does this mean that the livable space would be (100 m sq) – i.e adding up all the rooms (and probably wardrobe space etc..) or would you assume this would include service shafts and wall cavities?
What would you assume?
I assumed it was evrything inside the walls. Eg if
you took out the internal walls and measured it up, also your car space can be included and balcony.Of course sales ppl can give a different perception verbally when pushing the sale.
To expand on my earlier comments, the advertised area typically does not include the space within the wall cavities and/or service shafts.
The area should be calculated as length x width – from wall to wall within the liveable space – plus garage and other space under the certificate of title.
The buyer must be made aware if the advertised area includes, i.e. the balconies and garage [or service shafts, other common areas, etc.]
Whether a sales person is correct or simply pushing the sale, Central Equity is liable for any information that is incorrectly provided or misleading.
— Michael
Gee, those cavities must be cavernous – I’m thinking the walls must be at least a metre thick. Even if Central Equity were to allocate cavity space to floor area, it could surely only equate to one percent or so.
I’m not sure whether the fact that a size was quoted on a brochure will be enough to help you. There were no doubt disclaimers on some of their material that talk about areas quoted being indicative etc. It’s time to talk to a legal person.
As an aside, anybody taking delivery of something they bought off the plan should bring along a tape measure when they do their pre-settlement inspection.
Hi,
I agree with Depreciator. Time for legal advice. Off the plan contracts should contain floor plans including size in square metres. I know that contracts can say that size is indicative — but 20% difference — that certainly sounds rather fraudalent. I belive unit size can vary up to about 5% and you won’t have legal grounds. But as indicated in your post — a reduction of one fifth the size of the purchased unit. [ohno]Ask your legal advisor to check the contract if wall cavities and air shafts fall within the domain of advertised unit size. This is a new one for me[blink]
You always need to confirm size in writing and you need to qualify by internal living space; balcony; garage; storage space; courtyard etc.
I guess the other thing is — know who you are dealing with. Some developers/builders have better reputations than others.[pimp].
Let us know the outcome.
Regards,
Helenthanks for all your advise. I’m now talking to a legal firm (and also requested the sizes from CE and their method of calculation)
Will let you know the outcome [comp]
I’d say there will be a few people with delivery of CE apartments pending who will be interested in the outcome.
Hi jhighlo2001,
in a recent posting you noted
thanks for all your advise. I’m now talking to a legal firm (and also requested the sizes from CE and their method of calculation)
Will let you know the outcome
Did you take the matter further. It really would be of value to the forum to hear of the outcome. Looking forward to your reply.[biggrin]
Regards,
HelenI will definately keep you all updated… but its in the hands of the soliciters now (and I can tell you that CE are getting really nasty and obstructive). If anyone is in the same situ, then PM me and I can update you – but I’ve been told to keep quite [fear] until the case has gone throught.
Hi jhighlo2001.
thanks for the update. Wishing you success in your legal proceedings.
Regards,
HelenJust for info, I have yesterday completed on one of these in Melbourne Tower as I felt the heat from CE solicitors would be too much and my solicitor could not see an inexpensive way out of their contract. Good luck and I hope you get some recompense.
All the best with your legal proceedings. Hope it works out well to your favour.
OK, this is getting really spooky… I’ll just carry on about the flat size thing (no update on the legal side yet).
I emailed CE and asked them how they calculated the flat size (remember they used a plan at the sale that had total appartment size and total balcony size)… at a later date when I did the calcs on the plan the sizes came out 20% smaller!
When I emailed CE to ask how they calculated the measurements they responsed by saying “The apartments/title have been professionally surveyed by a qualified surveyor. The areas are calculated in accordance with the Property Council of Australia method of measurement. “
and were then really rude. The email was signed by a director. They still would not clarify this!I then contacted the propery council of Australia who wrote a lovely reply and said that there are no guidlines of measurement for a residential development! (so CE were lying)
I then contacted my soliciter who was dealing with the sale. She could not see that there was a problem and then warned me about what would happen if I did not complete.
I then emailed the lawyer (who may be brining a case for me agaist CE) and he did not think this was a major point.
I received a valuation back from one of the banks and they put the flat size exactly as the measurements that CE had told them (so I guess they got the figures direct from CE and did not measure it).
I’ve had 4 sets of friends check the plan and they all said its about 20% less.
Now I don’t know if it’s just me, but I think it’s a pretty big issue that the flat seems 20%smaller and no one seems to care?
I would really appreciate some help / advice.
Hi jhighlo2001
If I have understood your post both your solicitor and the solitictor on the other side don’t believe a discrepancy of 20% is a matter of concern[blink].
Just a few thoughts.
1. has your solicitor reviewed the contact — and can she confirm where it states that the unit can be one fifth smaller than originally indicated, without compromising the contract.[sneaky]
2. can you arrange for an estimator to check and confirm in writing the actual size of the unit. I think you need to know exactly the extent of the discrepancy you are looking at.
3. Ask you solicitor to send a letter to CE and get them to detail how they measured the property.[angry2] I am aware that you tried to get them to provide this information before. Perhaps a letter from your solicitor might help. Ask CE to provide a copy of the surveyor’s report. If they have nothing to hide, then they shouldn’t be too concerned giving you a copy of this document[ohno]
4. Can you get another legal opinion. Does your solicitor have previous experience in this type of case. Maybe there are some solicitors on this forum who might be willing to provide an offline response direct to you.
5. I don’t know if this could assist — is your solicitor with a large firm. If she isn’t then maybe referring the matter to one of the major legal firms might give you some clout. Perhaps others on the forum could provide further opinion in this regard.
6. In your post you noted:
I received a valuation back from one of the banks and they put the flat size exactly as the measurements that CE had told them (so I guess they got the figures direct from CE and did not measure it).Contact the bank and ask them how they calculated the size of the unit. If they don’t respond, have a chat with the bank ombudsman. Get them to deal with the bank on your behalf.
7. Contact the property council of australia. Ask them if there is a building ombudsman or some other entity who would be willing to look into this case.
8. Is there a chance of taking this matter to “A Current Affair” or “Today Tonight”. Even if you don’t get anywhere, the publicity would be negative for CE.[fart]
9. Finally, if you don’t have the law on your side, then do the figures. Is it better to lose your deposit, have substantial legal fees — versus completing the sale and then look at ways to make your unit attractive to tenants, to maximise rental income.
If nothing else, then you have been on a sharp learning curve, which should make you a more astute investor in the future.[rambo]
Wishing you all the very best in your battle with CE. Keep us updated.
Regards,[cap]
HelenUpdate for all you lovely Australians out there who are being so helpful.
This may be very useful to others buying OTP.
1. There was no written figure for the appartment size in the contract. There was a plan of the appartment with some measurements (I later calculated this to be 103m). There was also an outline plan of the flat with some measurements (I think this is what they call the strata plan). I later calculated this to be 120m). As I was sold the flat at a seminar, I did not have time to do these (not simple) calculations and therefore relied on the sales laminate that they used which stated in large bold type that the total size of the appartment was 120m).
2. Central Equity will still not give explain the method used to calculate the flat and explain the discrepancy I have regarding the sales literature. They will only quote the total size and say it is irrelevant at this late stage as completion is immenent. This is dispite many letter from me and my soliciter.
3. I sent a Archicentre in today to measure the flat and find out where the discrepancies lie. This was their response (they did not provide me with measurements):
“Apartment area
The legal area of the apartment is as shown on the apartment title which includes the plan of subdivision. You should have a copy of the full title as part of the contract of sale.
The Subdivision Act 1988 outlines the official system of measurement of any strata titled apartment:
Boundaries
Unless the plan otherwise provides, if the whole or part of a boundary of a lot with another lot or with common property on a strata or cluster plan or a strata or cluster redevelopment plan lies along or within a structure that is a wall, fence, floor or ceiling, the boundary is the median of the structure.This legalese translates into the actual legal area of your property shown on the title includes:
the full thickness of the exterior walls of the building
the full thickness of the internal partition walls within the apartment
half the thickness of the walls that adjoin other apartments
half the thickness of the walls that adjoin the common area.The thickness of this additional structural area adds up to a considerable proportion of the apartment. The exterior walls are of the order of 300mm thick. The interior walls are 110mm thick. This is where the discrepancy in building area lies.
In a standard house the area of the house includes the area in the external & internal walls. This is similar except only half of the shared walls are included.
An as-built survey has been undertaken by a licensed surveyor. I have not seen a copy of that survey. The surveyor has determined that the actual area of the apartment using this method of measurement is 101.00m2 rather than 98.2m2 as per the original laminate. This discrepancy of 2.8m2 can be explained by a different wall thickness being used in the construction than had been presumed prior to construction. You have ended up with 2.8m2 of additional area.
The site measurement of a number of the dimensions has confirmed that they are generally slightly larger in the as-built apartment than as was shown on the initial laminate.”
4. I guess this means that the external walls were included in the total appartment size, which is not what one would assume (well, not here in the UK) when a total flat size is quoted.
5. I have reported this to the ACC, that say Central Equity are in breach of Article 52, and 53A and they have noted this on their database (but I think they only take action if there are loads of complaints)
6. As the transaction occured in Westminster (a UK London borough) – I have reported this to Westminster trading standards who might prosecute Central Equity) – I am awaiting a response.
There have been a very similar case which a friend of mine was involved in:
http://www.towerhamlets.gov.uk/templates/news/detail.cfm?newsid=2733
7. I am still deciding whether to go ahead with legal action from Aus soliciters (but will keep you updated)
8. It is interesting to note, that as a consumer, I feel very misled about the flat size (I have also confurred with collegues who seem to agree with me).
It is also interesting that my soliciter, the bank valuers, another large Australian firm of soliciters and another surveryor – did not seem to think there was a discrepancy or it was a problem.
However the ACC, Office of UK fair trading, Trading Standards, and friends who have purchased OTP can feel that there is a problem.
Hope this helps [blink]
A couple of comments in response to points highlighted;
“When I emailed CE to ask how they calculated the measurements they responsed by saying “The apartments/title have been professionally surveyed by a qualified surveyor. The areas are calculated in accordance with the Property Council of Australia method of measurement.“
Contrary to what the Property Council informed you, the above statement would be correct if the CE development is multi-use or outside the realm of a typical residential-class development.
A “quantity surveyor” is required to comply with regulatory methods of measurement for valuation purposes – not structural. This data is used by CE to secure finance by way of an institutional lender [bank].
“She [lawyer] could not see that there was a problem [20% variance]“
If in doubt find another lawyer.
If there is a 20% variance [or 10-15%] in the gross floor area this will have an adverse affect on the apartments valuation and therefore directly compromises your investment.
“I received a valuation back from one of the banks and they put the flat size exactly as the measurements that CE had told them (so I guess they got the figures direct from CE and did not measure it).“
The bank will have used the quantity surveyors report which as noted is the basis of the property’s total valuation.
“I’ve had 4 sets of friends check the plan and they all said its about 20% less.“
Your investigation should be impartial and conducted by professionals from day one if the information is used for litigation purposes.
“3. Ask you solicitor to send a letter to CE and get them to detail how they measured the property.“
Based on the information provided, CE have met this request.
“There was no written figure for the appartment size in the contract. There was a plan of the appartment with some measurements“
If the plan accompanied the sales material, then on legal grounds, it can be considered part of the contract of sale.
Although, a plan detailing gross and net floor areas should always accompany a purchase agreement.
“They will only quote the total size and say it is irrelevant at this late stage as completion is immenent.“
If the above statement is accurate, and there was no underlying information provided by CE, then the fact that completion is imminent is quite irrelevant if there is a large discrepancy in the floor area.
“The legal area of the apartment is as shown on the apartment title which includes the plan of subdivision. You should have a copy of the full title as part of the contract of sale.“
The above is correct IF the purchase is not subject to title being issued, which can be the case when buying OTP.
If the purchase is subject to issuance of title an associated provision should be clearly outlined in the contract.
“The Subdivision Act 1988 outlines the official system of measurement of any strata titled apartment:“
There is a considerable difference between variations associated with the System of Measurement and a 20% discrepancy.
“6. As the transaction occured in Westminster (a UK London borough) – I have reported this to Westminster trading standards who might prosecute Central Equity) – I am awaiting a response.“
It is unlikely a foreign entity will pursue legal action due to the property and development company being outside their legal jurisdication.
“as a consumer, I feel very misled about the flat size“
Although it is quite possible CE have breached their legal obligation, you may find this situation is a direct result of your following comment;
“As I was sold the flat at a seminar, I did not have time to do these (not simple) calculations and therefore relied on the sales laminate“
Never commit to a property under contract until the agreement and all relevant information has been reviewed by a qualified lawyer.
Because several authoritive parties in Australia have informed you there is no discrepancy, then it is quite possible you have simply made a mistake. The apparent feedback from the regulatory entities in the UK is quite irrelevant.
In saying this, if you feel there clearly is a discrepancy which is not being addressed by CE in a fair or professional manner, then you should pursue the issue. Or as noted, forfeit your deposit.
Note, the above comments should not be construed as legal advice. They are based on my experience as a real estate developer/investor, primarily in the US, but also Australia, and my direct involvement in all contractural issues.
— Michael
Michael, thanks for taking your time in writing such a comprehensive reply. There were a few things that I don’t undertands.
1. What does it mean if a purchase is subject to a title being issues? (what is a title?)
2. What does it mean if an appartment is strata titled? (I don’t really understand the meaning of strata)
My inspector has just told me that “All strata titled apartments in Victoria include the thickness of the external walls and half the thickness of shared walls. I agree that this is a bit deceptive”
I guess as a buyer used to UK flat messurements I did not expect 15% of the flat to be within and including the walls.
Thanks again
1. What does it mean if a purchase is subject to a title being issues? (what is a title?)
A certificate of title, issued by the local land titles office, defines the property you have purchased and any encumbrances or mortgages over the property.
Apartments are at times sold off-the-plans “subject to title” when the developer has not had titles issued prior to sale. Settlement cannot take place until the title is issued.
Often this provision allows the purchaser to receive a full refund of any deposit, plus interest, if the title is not issued on or before a specific date.
2. What does it mean if an appartment is strata titled?
Strata Title is the system of title/ownership that applies to apartments/units, and at times, townhouses.
The title is based on the horizontal and vertical subdivision of “air space” rather than land.
The title represents your right to part ownership of the building, i.e. an apartment, and a proportionate share of the land.
In Australia strata title apartments are typically managed by a “Body Corporate”. Strata title law is regulated by the Strata Schemes Act, 1973.
“All strata titled apartments in Victoria include the thickness of the external walls and half the thickness of shared walls. I agree that this is a bit deceptive“
It is not necessarily deceptive because the apartments future valuation must conform with this same stipulation. Therefore you are not losing money unless the market takes a dive.
Either way, the thickness of external walls and half thickness of shared walls should not have a significant impact on the net floor area – and would typically not come close to 20%, or 15% as you have now noted.
— Michael
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