Strata reports explained: what to read before buying into a body corporate

When you buy a unit, apartment or townhouse in a strata or community title scheme, you are not just buying a home. You are buying a share of a small organisation — the body corporate or owners corporation — with its own finances, rules, disputes and to-do list. The strata report (sometimes called a strata search or records inspection) is how you find out what you are joining.

Your solicitor or conveyancer will review it with you. This article explains what is in it so the review is a conversation rather than a monologue.

The minutes

Meeting minutes — annual general meetings and committee meetings, usually going back a few years — are the most readable part of the report and often the most revealing. They show what owners argue about, what has been proposed and voted down, what the committee is worried about, and whether the same problem (a leaking roof, a lift, a noisy tenant, a dispute with the builder) keeps appearing year after year.

The financials

The scheme’s financial statements show income (levies), expenses (insurance, management, maintenance, utilities for common property) and what is left over. You are looking for a scheme that lives within its means, collects its levies, and is not running down its reserves or carrying large unpaid levies from other owners.

The capital works or sinking fund

This is the fund set aside for big-ticket future items — roof replacement, repainting, lift overhaul, pool resurfacing, fire-system upgrades. A capital works fund plan or forecast, where one exists, sets out what is expected and when. A thin fund in an older building often means a special levy is coming; the minutes will usually tell you whether one has already been discussed.

Special levies

A special levy is a one-off charge to owners, usually for something the ordinary funds cannot cover. Check whether any special levy has been struck, proposed or discussed, and whether it has been fully paid. Depending on the contract and the state, a levy struck before settlement may become the buyer’s problem — ask your solicitor how this is handled in your purchase.

By-laws

The by-laws are the scheme’s rules: pets, parking, renovations, noise, short-term letting, what you can put on a balcony, and how disputes are handled. If you intend to have a pet, rent the property out, run it as short-stay accommodation, or renovate, the by-laws decide whether that is possible. Read them before you fall in love with the floor plan.

Insurance

The body corporate insures the building and common property. Check that the policy is current, the sum insured looks sensible for the building, and there is no history of declined claims or large excesses. Note that this insurance generally does not cover your contents, or a landlord’s specific risks — that is separate.

Defects and disputes

Newer buildings may have building-defect claims against the builder or developer; older buildings may have ongoing maintenance disputes or legal action. Both can mean cost, delay and stress. The minutes and any correspondence in the report are where these appear.

How TNC Group uses the strata report

We order the strata report early — before the offer where possible — so the questions are answered while you still have choices. Then it goes to your solicitor or conveyancer, who reviews it with you and tells you what it means for the contract. We coordinate; the legal advice comes from the legal professional.

Buying into a scheme and want the process managed properly? Book a free 15-minute call — book here — or visit www.tncgroup.com.au.

General information only. This is not legal advice. Strata rules differ between states and territories — speak to your solicitor or conveyancer about your purchase.