Before you buy a strata unit, a search of the Strata Property should reveal any obvious concerns. Different states have different ways to conduct this search. Your conveyancer/solicitor or the real estate agent should advise you on the process in your own state (but don’t just rely on a real estate agent’s advice, they’re working for the seller as much as for the buyer).
To search a strata scheme in NSW you obtain a Section 109 Certificate, in Victoria the Owners’ Corporation Certificate is attached to the vendor’s statement (Section 32).
Whereas in SA, you conduct a search through a form provided by the Real Estate Institute of SA – ask the estate agent to get this form completed. Qld and WA do their own thing etc – you get the picture. If you want to find out more about what happens in your state go to the FAQ section of https://www.ourbodycorp.com.au/strata-management-owners-corporation-knowledge-base/www.ourbodycorp.com.au
Fluff around and get the relevant search forms completed. But for all states/territories the bottom line is - get answers to these questions:
1-How much money must be paid for the upkeep, maintenance and management of the common areas?
2-What are the assets and liabilities of the corporation, including arrears on strata fees?
3-What are the expenses incurred or about to be incurred by the corporation, such as painting or gutter replacement?
4-Review copies of minutes of general meetings and management committee meetings for the last two years.
5-Obtain the statements of accounts and financial records of the corporation.
6-Get details of the community’s by-laws (also known as articles)?
7-What’s the current insurance policy for the property?
8-Who’s the strata manager?
9-Are there any legal issues you need to know about?
Next, use commonsense. Walk around the building and assess the state of repair, what do the common areas look like? Identify problem areas and see if they’re mentioned in the past minutes. Is there a budget provision or plan for repairing or replacing these items.
Do your research on big items such as lifts, pools and gyms. A block that’s 25 years old may need a new lift and that ain’t cheap. Is the property compliant with fire regulations? Another possible expense.For every issue, keep asking - is there a plan and budget provision for this possible expense?
Strata concerns don't mean you shouldn’t buy a unit, but it means you go into the purchase with your eyes wide open. An unbudgetted strata expense may result in your re-considering your financial offer to purchase the property.
Of course, there's some occasions when you should walk away from your potential purchase because you just can't afford the strata fees or potential costs of an aging building.
Tune in tomorrow for my final tip to the “strata virgin”
