“Buyer beware” is one of the most commonly used phrases in property, and it’s just as important to heed if you’re considering purchasing an apartment or villa unit as it is for houses.
That’s where a strata inspection report – otherwise known as a strata search or Owners Corporation Records Inspection – can prove invaluable in protecting your prospective investment.
Similar to a building inspection report, it details what is happening within a residential complex or commercial building (strata scheme).
Information is extracted from Owners Corporation Records that are required under law to prove that the building is being managed properly.
Why it’s important
When purchasing a strata-titled property, a buyer automatically becomes a member of the Owners Corporation (known also as body corporate), which is responsible for any issues relating to common property.
The Owners Corporation is responsible for the development’s assets and liabilities, which could potentially include significant repairs or remediation works, such as the flammable cladding issue plaguing many modern apartment buildings on Australia’s east coast.
Possession of such information is vital to determine if there are any issues before you consider making an offer or making a bid at auction.
Treasure trove of information
Besides stating the property’s current value, the report can include quarterly or proposed special levies, your voting rights and unit entitlement within the scheme, compliance measures with fire requirements, and work health and safety or asbestos requirements.
It also extends to any records approving pets, pest inspection reports, the balance of any sinking or administrative funds, proposed major expenditure and details of insurance coverage.
The finer details of the report are usually found in minutes of annual general meetings, extraordinary general meetings and executive committee meetings, and any building or compliance reports.
More importantly, it outlines if any legal matters have arisen in the past three years, such as by-law breaches, building defects or homeowner warranty claims, or disputes.
Costs range from $200 for a basic strata report to a combined building, strata and pest report for about $650 – a small price for peace of mind.
The most important thing to remember is that, despite first impressions, no property is perfect.
Being proactive by commissioning a report means you’re likely to avoid a major headache and hefty repair bill down the track.
A strata inspection report can also assist greatly when it comes to negotiating price or conditions or having works done before settlement.
Once armed with the knowledge of what you may be getting into, you can choose to proceed and enter the negotiation process with confidence.