What you need to know about apartments with OPEX
An OPEX is instead of a Body Corporate fee, this means that the building doesn’t come under the Unit Titles Act. It also means the rules are slightly different and you need to ensure that properties are run like a Body Corporate with meetings, minutes recorded, long term maintenance plans and so on. If it is run well you generally won’t have any problems at all.
Good day, Andrew Murray here from the Apartment Specialists talking about Auckland apartments for sale.
There are a few buildings in the Auckland CBD area in greater Auckland which don't have body corporate fees. You're probably thinking, What do you mean, all apartments have body corporate fees? Well, some of them are run under a different system and they don't come under the Unit Titles Act and so they have what's called OPEXs.
So, people ask me on these few buildings - there's about 300 buildings in the Auckland CBD and so out of these 300 buildings approximately there's five or six that do not fall under the Unit Titles Act. What that means is, they don't charge a body corporate fee, there is no fee contract for disclosure, there are no compulsory minutes and they will have what's called an OPEX. An OPEX means, the first two letters - OP, and the second two letters - EX, that stand for operating expenses. So, essentially it's the same thing.
But what you want to be wary of when you're dealing with an apartment complex that has an OPEX so it doesn't fall under the Unit Titles Act is, do you have the visibility? Is there an owner's committee meeting? Are there AGM minutes - as in minutes on what happens in a meeting every year? And do you have the same visibility into what's happening in that building?
If you do, and you're comfortable with that, you've got a Chairman and all that kind of thing - it's run pretty much the same - the risk isn't really that much, it just means as long as you've got trust in the governing body. If you don't, that puts out a few alarm bells because it means, how are you supposed to know what's happening in your building? How are you supposed to know what's happening in regards to your body corporate fees?
How are they being kept low, how are they being kept at-- How do you know the best job's being done? Because if you don't have visibility you don't have control and you'll pay for that. You'll pay for that when you go to sell it, and you'll pay for that where things may... It just leaves the door open for things to be mismanaged.
I'm not saying that ones with OPEXs that don't supply visibility are, but I'm saying it leaves the door open. So, just be always aware, when you're dealing with OPEX - looking at OPEX rather than a body corporate - when you do, just make sure that they do have AGM minutes, there is an owner's committee that's overseeing the whole thing and you generally should be fine, in my opinion. If not, you want to really look further and see if that governing body provides you the visibility you need and your lawyer's happy with it as well.
Hope that helps. Talk to you soon.