SHOULD YOU INSPECT THE STRATA RECORDS?
When you buy a unit or strata titled townhouse, you take on certain obligations. To protect yourself from any unforeseen expenses, make sure you conduct an inspection of the strata records before you commit to buying. This is even more important with older buildings. It is recommended to check the following points to find out how well the building has been managed.
Building defects or maintenance issues
Review the owners corporation’s meeting minutes and record books for mention of building defects or extraordinary maintenance issues. Once you own the unit you will be liable to contribute to common property repairs and maintenance, which can be costly. Check the records for mention of building defect reports and always ask to see a copy of the actual defect report.
The minutes of the annual general meeting will detail the amount for current levies plus whether any special levy has been passed. If there is a special levy, consider its purpose. A special levy to fund a façade upgrade should enhance the value of the property. On the other hand, a special levy for maintenance work can indicate poor budgeting.
In NSW, an operational account called an administrative fund and a 10 year sinking fund are required. The sinking fund is to ensure adequate funding of the repair and maintenance of the common property. Is there enough money set aside to cover future liabilities?
Bylaws that may affect property use
Bylaws are the rules by which unit owners and occupiers must abide and they can have a serious impact on investment plans. For example, some bylaws prohibit short term letting, which includes holiday lettings. Other schemes control the number and type of animals that may be kept, which will impact rentals by pet-owners. Always make sure bylaws don’t negatively impact on your plans for the property.
Behaviour of owners
Ultimately, a good community is a harmonious community. If there is any history of disputes and legal action, this is a warning sign that there may be serious issues within the building. Noise and behaviour issues are common sources of complaint so always check for any patterns of complaints that may indicate the property has acoustic issues or problem owners or occupiers.
Please contact us if you are thinking of purchasing a unit in a strata scheme or a company title unit and we can arrange for either a strata report or a review of the company records prior to your purchase.
Acknowledgements: Allison Benson, Kerin Benson Lawyers and GK Strata Management with respect to blog posts