Lot 6 of 6 · Apartments and townhouses
Strata reports before you bid
A strata search report draws on the scheme’s strata roll and gives details of its finances, insurance, building defects and planned works, legal matters and meeting notes. NSW Fair Trading lists a strata report and a building inspection among the things to have done before buying a strata property.
What a strata lot is
A strata scheme is a building or group of buildings divided into lots, such as apartments, townhouses or villas. Buying a lot also means sharing ownership of common property with the other owners: gardens, external walls, roofs, driveways and stairwells, for example. Every buyer automatically joins the owners corporation, which manages the buildings and common property.
Each lot has a unit entitlement, shown on the strata plan, which sets its share of common property, how much it pays to maintain it, and its voting power. The seller has to include the strata plan in the contract of sale, and the by-laws must be attached too.
Before an auction, the order matters. Fair Trading’s auction guide lists reviewing any strata report among the checks to have done before bidding, because a successful bidder signs on the spot with no cooling-off period.
Reading the report, item by item
Fair Trading names six things a strata search report gives details on. Drawn as a report’s contents, with what each one bears on:
- The scheme’s financesThe levies owners pay fund the scheme’s running costs and its major works.
- InsuranceIs the scheme’s cover good, and on what date was it last checked?
- Defects in the building, and works plannedPlanned works tie to the scheme’s 10-year capital works plan, below.
- Safety requirementsListed by Fair Trading as part of the report.
- Existing or pending legal mattersAny legal matters the scheme is part of.
- Meeting notesHow the scheme is run, and any evidence of disputes.
There are two ways to get one. Most people hire a professional strata searcher or a conveyancer; Fair Trading suggests comparing quotes on cost, delivery time, what is included, whether the searcher will go through it with the buyer, and their experience. Or a buyer can inspect the strata records themselves, through the selling agent: that needs the seller’s permission and a fee paid to the owners corporation.
Examining a strata inspection report is also one of the steps Fair Trading lists in conveyancing. When a buyer asks for a contract of sale, the agent must say whether earlier inspection reports have been commissioned. Fair Trading’s strata page adds that reusing one can save money, but that a report of one’s own is best for getting the detail needed.
Levies and the two funds
Every owner pays levies to the owners corporation. Each scheme decides how often, and they are usually paid quarterly.
| Fund | Pays for | What Fair Trading flags |
|---|---|---|
| Administrative fund | Day-to-day costs, such as gardens, maintenance and strata management fees. | Whether current levies are reasonable for the scheme. |
| Capital works fund | Major building work, such as replacing roofing, lifts or fencing. | Each scheme must have a 10-year capital works plan. Low levies could mean a steep rise later, and special levies may be needed if the money runs short. |
The section 184 certificate
A section 184 certificate from the owners corporation gives a view of the scheme’s financial health. It is issued under the owners corporation’s seal by a strata committee member or the strata managing agent, and a fee is payable. Among other things, it shows:
- Levies
- The levies owners pay, and any outstanding on the lot in question.
- Capital works
- The proposals for funding what the 10-year capital works plan sets out.
- People
- Names and addresses of the strata committee, the managing agent and any building manager.
- Records
- Where the records and financial statements can be viewed.
- New by-laws
- By-laws made in the 6 months before the certificate that have not yet been lodged with NSW Land Registry Services.
- Renewal
- Whether a strata renewal committee has been set up to sell or redevelop the scheme.
- Embedded networks
- Whether the scheme has an exclusive supply network, such as for electricity or internet.
One protection is written into the rule: if a levy was outstanding before the certificate was given and the certificate does not show it, the buyer is not responsible for paying it.
By-laws, and finding the scheme
By-laws are the scheme’s rules, covering things such as pets, approval for changes to a lot, parking and where children can play. They cannot be harsh, excessive or oppressive or conflict with any law, or the NSW Civil and Administrative Tribunal can reject them.
NSW Fair Trading’s strata search covers the state’s 85,000 schemes and lists each scheme’s address and registration date, its strata plan number and lot details, and the date of its latest annual reporting. For a new building, the developer acts as the owners corporation until at least one third of the unit entitlements are sold, and there are limits on what it may do in that time.
A buyer’s agent’s listed services include inspecting a property and following a purchase through to the end. The strata report itself comes from a strata searcher, a conveyancer, or the buyer’s own look at the records.