You’re on the cusp of making a significant investment in a property, and the topic of a strata inspection report has come up. It’s tempting to brush it off as just another expense, especially given the considerable expenses already associated with buying real estate. However, investing in a strata report can provide invaluable peace of mind. Let us explain why this modest investment can yield significant benefits especially given this will likely be the most significant purchase most people will make in their lifetime.
What is Strata?:
In real estate terms, strata schemes enable individuals to become co-owners of a property. When you purchase a strata-titled unit, townhouse or villa, you also acquire shared ownership of the common areas surrounding/within the whole property. These common areas encompass everything from gardens, driveways, hallways, pools, lifts, and laundry facilities. As a co-owner, you share responsibility for addressing any building-related, maintenance and up keep issues that may arise. The management of these strata obligations is overseen by a legal entity known as the Owners Corporation, previously referred to as The Body Corporate.
Exploring Strata Inspection Reports:
A strata inspection report represents a comprehensive examination of the records held by the Owners Corporation. Before you invest a substantial sum in a strata-titled property purchase, it’s crucial to gain insight into the people involved and the potential issues you may encounter. This report can save you from purchasing a property that could bring you financial and emotional stress in the years to come and who needs that, especially when it could have been avoided.
When should I get a Strata Inspection Report?
A strata inspection report is a prerequisite when acquiring a strata-titled property, such as a residential unit, villa or townhouse within a complex. If you are purchasing a house, a building and pest inspection report is the appropriate choice. Keep in mind that conducting a strata search can take several days. Generally speaking during the purchase process, you can utilize the cooling-off period to complete the strata report. It would be a good idea to get your legal rep to include a contract clause contingent on the strata report findings.
What Does the Strata Inspection Report Cover?
The strata inspection report encompasses all aspects relevant to the management and maintenance of a group of properties and the associated common areas included. Points to consider in the Strata Report are as follows:
- Current property ownership and voting rights.
- Any Structural or building defects.
- Past or planned major works. Apart from those works in progress you need to know about the history and what’s planned for the future.
- Quarterly levies and proposed special levies. Which could prove to be costly.
- Sinking fund projections.
- Strata scheme insurance.
- Pet policies.
- Compliance documentation.
- Records of disputes or breaches of by-laws.
- Minutes from Annual General Meetings and Executive Committee Meetings.
Determining the Cost:
The cost of a strata report can vary, but generally falls within the range of $250 to $500. It’s advisable to shop around for a qualified strata searcher. Attempting to conduct the strata search yourself is discouraged, as a trained eye is essential to identify pertinent details and potential pitfalls that could cost you dearly.
Key Points to Scrutinize in Your Strata Inspection Report:
Not all strata managers are created equal and may not maintain complete paperwork, and some may withhold crucial information about building defects to preserve property values. While you can’t control everything, you can meticulously review your strata report to identify missing information.
Here are five critical areas to focus on in your strata report:
- Financial Records: Assess whether the Owners Corporation is raising adequate funds for building maintenance and unforeseen expenses. Examine special and quarterly levies and their allocation. Review the Administrative Fund and Capital Works Fund to gauge financial preparedness for ongoing and future projects.
- Disputes: Investigate any history of disputes among residents or within the Owners Corporation to ensure a harmonious living environment.
- Building Defects: Scrutinize past records for significant building defects, which can offer insight into the property’s current condition. When considering a new building, research the builder and developers for any disciplinary actions. This is especially important to ensure that you know what you could be up for in the future.
- Legal Compliance: Ensure that the Owners Corporation complies with legal obligations, including fire safety, workplace health and safety, strata insurance, and asbestos management.
- Strata Management: Assess the competence of the strata manager in maintaining records, financials, and addressing resident concerns by reviewing meeting minutes and written correspondence.
If your strata report reveals gaps or raises questions, don’t hesitate to seek additional information. It’s your investment, and you have every right to attain a complete picture before making a purchase.
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