Avoid unexpected costs due to adjustment errors
Settling on a strata unit is an exciting time: maybe this is your first home, a first step into the real estate market or a valuable addition to your investment portfolio. Either way, nothing ruins this moment like finding out that there was an error in adjusting your strata levies and you owe your new owners corporation thousands of dollars.
What is an adjustment error?
An adjustment error is basically any error where outstanding levies, taxes, rates and charges on your property are not calculated correctly at time of settlement, usually leaving you out of pocket to correct the error. Mistakes happen, and even the most diligent and experienced conveyancer or solicitor might overlook something, miscalculate, or have the wrong information during the conveyancing process.
This is particularly relevant for strata properties due to the added complication of strata levies, sinking funds, and other fees payable by owners in a strata scheme. In fact, unpaid strata levies by previous owners are a fairly common issue cropping up after settlement, and new owners are usually the ones saddled with the cost.
For example, one of our customers found that she owed a quarterly strata payment because her conveyancer had only looked at the current quarter during settlement when adjusting for strata levies, thus missing the outstanding payment from a previous quarter.
How much can adjustment errors cost?
Adjustment errors can cost anywhere from a couple of hundred up to a few thousand dollars, as outstanding levies, fees and taxes can add up quickly. In our example above, our client owed over $1,600, which was then covered by First Title. In another case, a client owed $745 in unpaid strata levies, again from a previous owner, which was also paid by First Title as his conveyancer had not been informed of the outstanding payment by strata prior to settlement.
How title insurance can help with adjustment errors
If you have title insurance on your strata property, it’s possible to make a claim for the amount you owe due to the adjustment error. Title insurance covers a range of risks that come up after settlement, including encroachment, fraud, unapproved building works, and adjustment errors, including wrongly calculated strata levies, water rates and land tax.
First Title offers coverage for adjustment errors up to $1.5 million, giving you peace of mind and an easy solution for an annoying and stressful problem. With low premiums that are a one-off cost, title insurance can protect your most important investment in a fast, cost-effective way. Take an easy step towards protecting your next investment now and request coverage.