KEY TAKE OUTS:
- What is a Strata Report?
- Key information provided by the Report
- Why is it important to obtain prior to a purchase of a unit?
- How to get a Strata Report
Buying a unit or apartment is a significant investment, and when it comes to properties that are part of a strata scheme, such as many units in New South Wales (NSW), it’s crucial to take the necessary steps to protect your investment and save yourself from any ugly and expensive surprises.
One of the most important documents you should obtain and thoroughly review before making a decision to purchase a unit in NSW is the strata report. A strata report provides an overview of the building’s financial health, condition, and any potential legal issues that may affect the property.
In this blog, we’ll break down the key information provided by a strata report and why it’s essential for prospective buyers in NSW.
What is a Strata Report?
A strata report is a detailed document that offers insight into the management and finances of a strata-titled property. It gives you a snapshot of the condition of the building, the financial status of the owners corporation (the collective entity that manages the building), and any issues that may impact the property’s value or your enjoyment as a resident. Strata reports are typically compiled by professionals, often licensed strata inspectors, who have access to the strata records and documents.
Key Information Provided by a Strata Report
1. Financial Health of the Strata Scheme
- Current Budget and Financial Statements: The strata report will include a breakdown of the budget for the building, highlighting income and expenditures for the year. This is crucial for understanding whether the owners corporation is effectively managing the building’s finances. It will also include details on how much money is in the building’s reserve fund, which is used for major repairs or improvements.
- Strata Levies: The report will outline the amount of strata levies or any upcoming or proposed special levies you’ll be required to pay as a unit owner. These levies cover ongoing maintenance, insurance, and any other expenses associated with the building. Understanding the levies in advance helps you budget appropriately and avoid unpleasant surprises.
2. Building Condition and Maintenance
- Recent Repairs and Maintenance: A good strata report will give you details about past and ongoing repairs and maintenance work. This can include anything from minor cosmetic repairs to major structural issues. If there have been any large repairs recently, such as replacing the roof or repairing plumbing, it can signal potential future costs.
- Upcoming Maintenance: You’ll also want to know about any planned or anticipated repairs, as these can affect your strata levies or the general living experience. For example, upcoming work on the building’s elevators or common areas might cause disruptions or increase costs.
3. Insurance Information
- The strata report will confirm that the building is properly insured, providing peace of mind that you, as an owner, are protected in the event of damage or disaster. This will include details of the building’s insurance policy, covering things like public liability, building insurance, and other essential coverages.
4. Legal Issues and Disputes
- Ongoing or Potential Legal Actions: It’s important to know if the owners corporation is involved in any legal disputes or has had any litigation in the past. This could indicate underlying problems, such as disputes between owners or unresolved issues with contractors or neighbours. Knowing about any potential legal challenges can help you avoid purchasing a property that could face prolonged legal issues or financial strain.
- Bylaws and Rules: The strata report will also provide you with a copy of the current bylaws for the building. These are the rules and regulations that govern how the property is used. Knowing these rules in advance helps you understand what is allowed within the building, such as pet ownership, subletting, renovations, and other restrictions.
5. Building’s Age and History
- Older buildings may come with more maintenance needs, and the strata report can provide information on the age of the building and its history of repairs and upgrades. For example, a 30-year-old building might require more frequent repairs or updates to keep it up to standard.
6. Ownership and Occupancy Trends
- A good strata report will offer information about the building’s occupancy, such as the proportion of owner-occupiers vs. tenants. A high percentage of tenants can sometimes lead to issues with maintenance or respect for the property. Understanding the demographic of the building can also give you a sense of the building’s atmosphere and community.
Why is a Strata Report Important?
1. Informed Decision-Making
- A strata report helps you make an informed decision about whether the property is worth purchasing. It gives you insight into hidden costs, potential issues, and the general state of the property, which could influence the property’s future value or your overall enjoyment of living there.
2. Avoid Unexpected Costs
- Without a strata report, you might be unaware of costly repairs or high strata levies. For example, if the owners corporation has a large repair bill coming up, it could mean an increase in levies. Alternatively, major repairs that are required might be passed onto you as a new owner.
3. Peace of Mind
- A thorough strata report ensures that you aren’t caught off guard by unexpected issues. By understanding the building’s history and its financial situation, you can avoid potentially costly or stressful situations down the line.
4. Legal Protection
- If there are ongoing legal issues or disputes, the strata report will help you understand the risks involved. Without this information, you could end up buying into a building with unresolved legal challenges, which could be both financially and emotionally draining.
How to Obtain a Strata Report in NSW
In NSW, strata reports are available from licensed strata inspection companies. It’s important to use a qualified inspector or service to ensure you receive a comprehensive and reliable report. These reports typically cost between $200 and $600, depending on the size of the building, but they’re a small price to pay for the peace of mind they provide.
Conclusion
Before buying a unit in a strata scheme in NSW, obtaining a strata report is one of the most important steps you can take. This report provides vital information about the building’s financial health, condition, and any ongoing issues or risks that could affect your investment. By reviewing this report, you can make an informed decision, avoid unexpected costs, and ultimately secure a property that fits your needs and expectations. Don’t skip this crucial step—it’s an essential part of the property-buying process that can save you time, money, and stress in the long run.
ABOUT KAY VITOGIANNIS:
Kay joined the Coutts team in May 2021 working as a Licensed Conveyancer within our Property & Conveyancing team, based in our Narellan office.
Kay has over 20 years of experience in the Legal industry. She began her journey in CBD Conveyancing firms as a secretary and attained her Advanced Diploma in Conveyancing in December 2010.
For further information please don’t hesitate to contact:
Kay Vitogiannis
Licensed Conveyancer
info@couttslegal.com.au
1300 268 887
This blog is merely general and non specific information on the subject matter and is not and should not be considered or relied on as legal advice. Coutts is not responsible for any cost, expense, loss or liability whatsoever in relation to this blog, including all or any reliance on this blog or use or application of this blog by you.
