What to look out for when reviewing strata records

After spending countless hours trawling through listings and open homes, it’s tempting to hand over your hard-earned deposit and sign on the dotted line quickly when you finally find a home that ticks your boxes.

But before you do, it’s important you do the legwork to understand exactly what you’re buying.

When you purchase a property, or “lot”, in a strata building or complex, you’re not only buying the apartment or townhouse that you’ve fallen in love with, but a share in the common property and responsibility for its upkeep. 

In strata schemes, common areas like driveways and gardens are managed by an owners corporation, made up of all lot owners, with the majority of decisions delegated to a group of elected representatives known as the strata or owners corporation committee.

Owners corporation records offer valuable insights into the scheme, so reviewing these documents prior to purchase is vital.

How to access owners corporation records

Laws dictating how records are managed vary from state to state. The housing section of your state government’s website is a good place to find information relevant to you.

In NSW, it’s common for buyers to commission a report of the records compiled by a specialised strata inspector, known as a strata report. This may be available to purchase from the selling agent, otherwise buyers will need to engage a strata inspection company directly.

In Victoria, basic information is provided in an owners corporation certificate by law, but in-depth strata reports are less common, says conveyancer Mandi Morison from AB Morison Conveyancing in Melbourne.

Similarly, in Queensland, key information is included in a disclosure statement attached to the contract of sale.

What should you look out for?

Owners corporation records include information on fees, special levies, fund balances, building works, insurance, by-laws and the minutes of strata committee meetings. Email correspondence between owners and documents from external contractors are sometimes available too.

Buyers should also consider what information may be missing, says Veronica Morgan from Good Deeds Property Buyers in Sydney. 

“Not all strata managers are very good at keeping records,” she says. “Just because there’s nothing in the strata report, it doesn’t mean the building is fine.”

Morgan advises reviewing records against a list of expected inclusions, and factoring any blank spots into your decision.

Is the building financially healthy?  

Strata properties come with regular fees, which are usually paid by lot owners quarterly and allocated to two different funds – one for administration and one for capital works. 

Any upgrades or repairs to common property are funded by the capital works fund (or sinking fund), so it’s important the fund’s balance is healthy.

To assess whether the balance and levies are sufficient, Morgan says they should be reviewed against the capital works fund forecast – a 10-year forecast of expected works required by law. 

However, the quality of these forecasts can vary, which affects their reliability, says Morgan. “The more detailed forecasts will have an annual schedule and budget.”

If the money in the fund isn’t enough to cover required works, owners may be forced to pay an additional fee, known as a special levy. A tendency to raise special levies could hint at budgeting issues, says Morgan, which means the buyer “cops it” if something goes wrong.

Buyers should also check that insurance is up-to-date and in line with the valuation, which should be no more than five years old.

Are there any major defects or building works planned? 

Major defects and works can have a huge impact on the liveability of a property, so it’s important to be aware of any existing issues before you buy. 

Owners corporation records should include a list of upcoming capital works, some of which raise alarm bells, says Morgan. 

“When the entire building has to have every bathroom waterproofed, that means building work could be going on for years,” she says. “Concrete cancer [otherwise known as spalling] is something that’s quite insidious too.”

“A big issue at the moment is combustible cladding,” adds Morison. 

Looking at past capital works can offer clues as to whether defects are an ongoing issue for the building.

What rules will you be living by?

Owners corporation rules, or by-laws, govern how owners and tenants must behave.

This can include rules related to pets, renovations, smoking, parking, short-term letting and even whether or not you can hang washing on your balcony, so it’s important to review them carefully, says Morison. 

Not all rules are enforceable by law, she adds, so you should seek advice from a solicitor before ruling the property out.

Do residents get along? 

Committee minutes and email correspondence can offer insight into the harmony, or lack thereof, within an apartment building or complex. 

“You see disputes over parking spaces and pets and garbage,” says Morgan. 

The detail of the records provided can also give prospective buyers an idea of how the owners corporation is run.

If you have questions after reviewing the records, the strata manager should be your first port of call, says Morgan, but warns you may hit a “dead end”. 

In that case, she suggests writing a list of specific questions for the agent to pass on for you: “You need to understand the risks of what you’re about to buy.”