What's a strata inspection report and why are they so valuable?
What is a strata report?
A strata inspection report is prepared by a specialist and contains all the information that a prospective buyer would want to know before making an offer on a strata property. It includes details about the finances and management, what by-laws and restrictions to expect, how safe and well-constructed the building is, and owners' voting rights.
Ideally, it should not take too long for a strata report to be compiled, as the various state laws across Australia require body corporates to keep and make available much of the information necessary to complete the report. However, the level of organisation and compliance can vary from corporation to corporation. You can do the inspection yourself but it's often wiser to leave them up to experts, but more on that later.
What does a strata report include?
A good strata report would contain a lot of detail. In fact, everything you'd want to know before committing to buy, and can include things such as:
- Current owner: who it is? Does it match your contract for sale?
- Current levies: and when are they paid up to? Remember levy amounts can vary from unit to unit.
- Potential special levies: are any proposed or likely? Special levies are on top of your normal strata fees and are voted on at body corporate general/special meetings in order to pay for specific expenses
- Compliance: is your body corporate up-to-date with its fire safety, health and safety, asbestos and cladding management obligations and other statutory responsibilities?
- Insurance: has your body corporate taken out proper and adequate residential strata insurance as required by law? Does it just cover the basics, or is it more comprehensive and pro-active?
- By-laws: what rules and restrictions must owners and residents follow? These can include rules about owning pets, short-term rentals, facility use, noise, parking, moving in/out etc.
- Financial health: how much is in the administrative fund and the sinking or reserve fund? Are there any debts, overdrafts or shortfalls?
- Expenses: What have been the major outlays over the past few years? Are any major expenses coming up or proposed?
- Legal matters: are there any current or former legal disputes that may affect the property? These could be internal, i.e. between owners or owners and the body corporate, or they could be external, i.e. between the body corporate or owners and external third parties.
- Building condition: is there a current and comprehensive building inspection report? Have any major or minor defects been identified? Have any owners made claims under warranty against the builder or suppliers? Are fittings, fixtures, machinery, access/exits etc all compliant?
- Community: are there any social or administrative (non-legal) disagreements between owners, or with the body corporate?
- Records: are they up-to-date, accessible and well-organised? Body corporates are required by law to keep proper records including minutes of annual general meetings, extraordinary/special general meetings, and committee meetings, financial statements, building reports, compliance certificates and insurance details.
Strata report cost
While it's definitely possible to undertake your own inspection, the average price for a specialist to do it is only around $250 to $400 - even in Sydney1. So, when you're planning to outlay hundreds of thousands of dollars to purchase a strata property, spending a few hundred on an inspection report is probably pretty good value - and could save you a lot of time, money and headaches in the long-run.
Can I do my own strata inspection report?
While even the best strata report might miss something, it's usually smarter to use an expert to do all the legwork, ask all the questions and drill down into the details.
They know what to look out for and how to follow up inconsistencies, and the cost is usually pretty minor.
Find out more about Flex Insurance's residential strata insurance offering:
Reference:
[1] https://www.lookupstrata.com.au/nsw-10-steps-diy-strata-report/