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Buying a Strata Title Property

Friday, 16th October 2015

Tips from Strata Choice

Buying a property that's strata titled is very different to purchasing one that isn't, especially for those intending to live in it.  In many cases, those with no previous experience in the 'Strata Lifestyle' are not fully aware of the differences between strata living and residing in a normal house.  There's special rules to obey (by-laws), there's money you have to pay every quarter (levies) to maintain your portion of the parts of the complex that you own jointly with all the other owners (common property).  There's also an Owners Corporation and an Executive Committee that regularly hold meetings to discuss important issues.  Yes, in many ways it can be quite foreign to the uninitiated.

As the NSW Office of Fair Trading's publication 'Buying in a Strata Scheme' states:

"Strata schemes are in effect small communities where the activities and attitudes of residents can have a significant impact on the satisfaction and enjoyment of others.  It's important for people to be aware of their responsibilities and obligations when owning a strata unit."

The Strata Search

Before purchasing a strata title property, it's wise to arrange an inspection of the records and accounts of the Owners Corporation by a suitably qualified strata searcher.  This is called a Strata Search and is covered under Section 108 of the NSW Strata Schemes Management Act 1996.

There are many things that aren't apparent from a visible inspection of the building and a Strata Search can uncover any issues prior to the purchase.  There are also a number of factors which can impact on you once you become the owner and it's better to be informed about these before purchasing so you can make an informed decision. The Strata Search report will include:

  • The financial status of the scheme
  • Pending building works
  • Special levies
  • Past works history
  • All expenses for the past two years
  • 10-year budget analysis

General information on:

  • Insurances
  • By-laws
  • Any disputes

Any other areas under investigation

Other important questions....

  • Is the building adequately insured?
  • Is there a recent building valuation to support amount of insurance?
  • Does the Strata Scheme have an adequate sinking fund, taking into accountthe age of the building, the current state of repair and the type of construction?
  • Can I afford the quarterly levies?
  • Are there any special levies planned?
  • Are there any outstanding building works, unpaid invoices, etc that could result in a special levy?
  • Is the annual sinking fund allocation adequate?
  • What are the current balances in the Administrative and Sinking Fund account?
  • Are there any current or proposed litigation matters involving the Owners Corporation?
  • Are there any limitations or restrictions on the use of common property which may affect me?
  • Are there any outstanding public liability claims involving the Owners Corporation?
  • Are animals permitted?  and if so, are there any restrictions or conditions?
  • Have any alterations to the unit been approved by the Owners Corporation? for example: the installation of an air conditioning unit.

 

This story was supplied by Strata Choice

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