All Topics / Help Needed! / Large crack in building, still worth the gamble?

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  • Profile photo of xyaxya
    Member
    @xya
    Join Date: 2008
    Post Count: 62

    Hi all,

    I saw an apartment which is listed at below average price. It's been rented out to students for many years, so naturally, it's messy and dirty. However, I'm a bit worried that it has a vertical large crack (there may be more cracks which I missed out in my 10 minutes inspection), next to one of the bedroom door.

    The building is about 10 years old, so no more building warranty. The agent said that the building has some "history" to it, which is why it's offered at cheap price. He also mentioned that if we want to get a building report done, it'll turn out negative and don't bother buying it. However, it's fetching good rents and the location is fantastic. We're wondering whether it's worth taking a risk.

    Just some questions to help us make our decision:

    1) If the building warranty is over, I assume that any structural repairs concerning the strata will have to be paid by through the sinking fund and by the owners?

    2) How can I find out if there are any structural problems that plague the entire building? Will it come up from the strata search or do I have to do a building inspection?

    Any advice is greatly appreciated, thanks.

    Profile photo of Scott No MatesScott No Mates
    Participant
    @scott-no-mates
    Join Date: 2005
    Post Count: 3,856

    A strata search should show if there have been problems with the building and whether these problems have been handled through body corporate meetings with the strata manager or simply buried.

    The cost of the repairs should be part of the body corporate responsibility especially if this is a supporting wall however you will still be responsible for painting/wall paper/floor coverings.

    Profile photo of xyaxya
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    @xya
    Join Date: 2008
    Post Count: 62

    Scott,

    How could I determine if the cracks should be covered by the body corp?

    Profile photo of Scott No MatesScott No Mates
    Participant
    @scott-no-mates
    Join Date: 2005
    Post Count: 3,856

    If you have another floor above you then it is very likely, a building inspection should confirm it though.

    Profile photo of xyaxya
    Member
    @xya
    Join Date: 2008
    Post Count: 62

    So, I guess I should still do a building inspection?

    Profile photo of TerrywTerryw
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    @terryw
    Join Date: 2001
    Post Count: 16,213

    things like this can hurt finance too. I had a client with a house with large cracks and the lender wanted an engineers report which cost him around $1000 – and then they declined it anyway. i think he did some wall papering after that

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://www.Structuring.com.au
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au

    Profile photo of xyaxya
    Member
    @xya
    Join Date: 2008
    Post Count: 62

    Hi Terry,

    Good point but I would assume that most lenders wouldn't bother with a site inspection?

    I was hoping to get some filler to patch the cracks & repaint the unit.

    Profile photo of TerrywTerryw
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    @terryw
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    Why assume that? It is usual these days for a full inspection. Some lenders won't inspect if the LVR is low, but policies change constantly and you wouldn't want to find you can get finance but can't get an increase or, if you want to sell, the buyer can't find finance.

    I would be getting a building inspection at least, and maybe an engineers report depending on how bad it is.

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://www.Structuring.com.au
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au

    Profile photo of xyaxya
    Member
    @xya
    Join Date: 2008
    Post Count: 62

    Thanks for the advice Terry. Should I make an offer first and then get the strata & building inspection done, or the other way around?

    Profile photo of Scott No MatesScott No Mates
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    @scott-no-mates
    Join Date: 2005
    Post Count: 3,856

    Usually the other way around, get the owner on a hook subject to finance & satisfactory building inspection.

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