for everything you need to know about strata...

"STOP!  Are you thinking about buying a strata title unit or townhouse, either as an investment or as your next home?  If so, you would be wise to learn as much as you can about how strata schemes operate and this site is a great place to start.  I've put together a quick check list to help prospective buyers avoid some of the main pitfalls and traps along with a few links to some other useful information."

BUYING A STRATA TITLE PROPERTY

• It's a different world
• The Strata Search
• some important 'specific' questions......
• Section 109 certificates
• How to apply for the S109 certificate
• Extra information resources

---

It's a different world

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 excellent publication 'Buying into 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."

TIP - I can highly recommend you have a read of this publication as many of the questions you'll have about buying into strata will be answered.....and in straightforward terms too.

Top

---

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

Top

Then you need to ask some other important 'specific' 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 account the 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

Lannock Finance have produced a quick reference guide to selecting a strata searcher called 'Choosing the right pre-purchase strata inspector' and is worth having a look at.

Top

---

Section 109 certificates

This is a certificate, issued by the Owners Corporation or the strata managing agent (if one is being used), showing details that effectively provide a very simple barometer of how well (or bad) a strata scheme is being run, financially speaking.  Normally it's requested by prospective purchasers.

Specific legislative information about S109 certificates can be found in the NSW Strata Schemes Management Act 1996 - Section 109.

Details shown on the certificate will include:

• insurance cover
• Executive Committee members
• any strata managing agent or caretaker information
• current levy contributions
• any outstanding levy amounts or other amounts
• any special levies
• any special by-laws drafted by the Owners Corporation within the past 2 years

WARNING - Any outstanding amounts shown on the certificate will transfer to the new owner.  However, if a levy is outstanding before the certificate is given and it's not shown on the certificate, the purchaser is not responsible for the payment.

How to apply for the S109 certificate

The S109 certificate is available upon application to the Owner's Corporation or strata managing agent (if one is being used).  If the application is made by someone other than the owner, the owner's or mortgagee's written permission will be required before the certificate can be released.  Unless the vendor is attempting to hide something, prospective buyers can expect the vendor to welcome the application.  The cost of preparing the certificate attracts a statutory fee and is paid for by the applicant.

The special format to be used for the certificate is shown under Schedule 7 Form2 of the NSW Strata Schemes Management Regulation 2005.

The common seal of the Owners Corporation must also be affixed.  Please refer to the NSW Strata Schemes Management Act 1996 - Section 237 and Section 238 for more details on the common seal.

Top

---

Extra information resources

Here are a few extra resources to help you learn and understand a bit more about the implications of buying into strata.

NSW Office of Fair Trading links

• Strata living (this PDF can take a while to load so please be patient)
• Living in a community scheme (this PDF can also take a while to load so please be patient)
• Retirement Village Living

Links to various articles

• Buying a strata unit to live in (Lannock Finance)
• Buying a strata unit for investment (Lannock Finance)
• Strata living: what you need to know (SMH - Domain)
• What are the advantages of buying into a boutique block? (SMH - Domain)
• What inspections should you do before buying? (SMH - Domain)
• Strata scheming (SMH - Money Manager)
• Know About Strata Ownership (Streamline Strata Searches)

Strata Title Terms and Jargon

• Strata Terms and Jargon (to find out what everything means)

What is strata?
Strata terms and jargon
Frequently Asked Questions
Do-It-Yourself Strata
Strataman News
Helpful Websites

Buying a strata titled property
Buying "off-the-plan"
By-Laws
Community & Neighbourhoods
Compliance issues
Executive Committee
Insurance requirements
Legal advice
Levies & Special Levies
Meetings
Ongoing maintenance&repairs
Owners Corporation
Preventative maintenance
Records & Accounts
Resolving disputes
Small & Large schemes
Strata Managing Agents
Strata trades guide
Taxation & GST

home page

Strata Jobs

Want to keep up with the latest news, trends and legislation in the world of Strata?

Then Register HERE  to receive Strataman News