Thursday, July 9, 2020

What is a Strata Inspection Report and do I need one?

Strata Inspection Report - Strataville

What is a Strata Inspection Report and do I need one?

Buying a strata property?

A strata inspection report (also known as a strata search, Owners Corporation Records Inspection or Section 182) is a report that all purchasers of a strata titled, community titled or company titled property should invest in whether this is a residential or commercial property.

You’ll need to find out if the scheme is well-run, well-maintained, adequately financed, and planned well.

Do I need a strata inspection report?

Commissioning a strata report before you buy can tell you almost everything you need to know about a property and its people before you’re tied to it financially.

Strata schemes are required by law to keep records. Owners Corporations are required to keep Accounts, Minutes of Meetings, Correspondence and other records to properly manage the building.

When purchasing an apartment, or commercial premises a prospective purchaser automatically becomes a member of the Owners Corporation, & thereby responsible for any issues relating to common property. The Owners Corporation is responsible for any assets the Owners Corporation may have & unfortunately any liabilities.

General levies are usually paid quarterly and should be sufficient to cover annual maintenance and repairs as well as periodic maintenance items such as repainting of the building. In circumstances where the general levy is not sufficient to cover an expense item, the owners corporation will make a special levy on unit holders. It is vitally important to know if the finances of the owners corporation are in order of if there are any major issues affecting the building before bidding at an auction or making an offer.

What’s included in a strata inspection report?

  • Who is the current owner?
  • What are the quarterly levies for the property?
  • What are your voting rights? What is your unit entitlement?
  • When are the levies paid to?
  • The financial status of the scheme
  • Past, current and future major works
  • Any likelihood of special levies
  • A 10-year budget plan
  • The budget and all expenses for the past two years
  • A copy of the schemes by-laws

 
You’ll also find general information on strata insurance, building finances, bylaws, disputes and other property or people related matters. A report would normally reference the by-laws relating to pets, renovations and refurbishment.

Strata inspection reports are conducted by a comprehensive examination and analysis of written records and accounts to ensure that everything is in order. A strata inspection report can give buyers the knowledge and information to make an informed decision, power to negotiate or to provide reassurance and insights to proceed with your purchase.

What to look out for in a strata inspection report:

  • Is the property adequately insured?
  • Is the complex financially well managed (consider age of the building, size of capital works fund, etc.)?
  • Does the building have any defects? How are they being addressed?
  • Does the scheme meet council, fire and safety regulations?
  • Any evidence of legal action or public liability claims?
  • History of disputes (e.g. between owners and the owners corporation)
  • Are there any outstanding invoices or building works that could result in a special levy?
  • What is the future of the building, is it clear?
  • Any evidence of structural or building problems?

 
We recommended engaging a professional strata inspection report firm for this vital step in buying a strata property.

Strataville Editorial
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