Gated Communities

31 January 2007

What should you be aware of before buying a property in a gated community?

Gated communities are increasingly popular as developers seek to create high quality residential communities, each with a distinctive character. Facilities, exclusive to residents, may range from swimming pools, to golf courses, parks and reserves.

When you buy a property in a gated community you will generally purchase the freehold or unit title to the property. In that sense, there is nothing special about the way in which you will own the property. You are generally freely able to mortgage it and have a separate Certificate of Title for the property you buy.

What sets gated communities apart from other traditional forms of ownership, though, is a structure that binds together the owners of all properties within the community. This often takes the form of a Residents' Association, which you must usually join when you buy a property within the gated community.

As a member of the Residents' Association, you must comply with its constitution and rules. These can cover anything from the design of buildings and landscaping within the community, to the payment of levies to the Residents' Association, and the behaviour and activities of residents within the community.

It is important to remember that the rules of the Residents' Association have been drafted for the benefit of all owners within the community and that every owner will be bound to comply with them.

If you are thinking of buying a property within a gated community, make sure you seek legal advice at an early stage. Complicated legal issues surround the requirement of owners to become members of a Residents' Association.

Some things to be keep in mind when looking to buy a property within a gated community are:

Make sure you get a copy of the Constitution and Rules of the Residents' Association. What are your rights and obligations as a member of the Residents' Association?
Are there rules, which limit what you can build on your property? If so, have a chat to the developer or manager of the Residents' Association to ensure that your plans for the property are achievable.
What levies must you pay as a member of the Residents' Association? Ask for a complete list of what amounts you will have to pay in relation to your property. Have the current owners complied with their obligations in this regard? Make sure that you will not become liable for a previous owner's debts.
What penalty is there for owners who do not comply with their obligations under the Constitution and Rules of the Residents' Association?
The rules of gated communities are there to ensure that that their residents enjoy their own property, while being part of a safe community with its own special character. Know your rights and obligations before buying and enjoy your new home!

By Paul Dorrance, a partner and Rebecca Jefferies, a senior solicitor, both specialising in property, at national and trans-Tasman law firm Duncan Cotterill.

Location http://www.duncancotterill.com/index.cfm/1,159,332,0,html