for everything you need to know about strata...

Strataman gesturing to STOP
"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."

WARNING WARNING
Everyone is still trying to come to grips with exactly how the NEW legislation changes (that came into effect on Nov 30, 2016) will affect our strata lives and some companies may be a little slow changing some of their webpages, forms and articles to reflect the new laws.

So please be a little patient if some of the links I give you refer back to some old legislation or have simply disappeared.

I have to have SOME faith so I'm hoping most will update their info as soon as possible. Eventually everyone will be on the same page but it could take just a little time.  Just know that I will be keeping my ear to the ground for changes...and that I will do my best to fix what I can as soon as I can.

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BUYING A STRATA TITLE PROPERTY



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 (i.e. common property).  There's also an Owners Corporation and an Strata Committee that regularly hold meetings to discuss important issues.  Yes, in many ways it can be quite foreign to the uninitiated.

As the NSW Fair Trading's excellent fact sheet 'Buying into a Strata Scheme?' states:

"It is important for you to be aware of the additional and different responsibilities and responsibilities that apply to living in a strata schemes if you are considering purchasing a lot in a strata scheme.  Some activities may be more restricted than if you were living in a freestanding house – for example, where you can park your car or how you can renovate your lot."

And it also hits you right 'between the eyes' with some really great stuff like:

  • What is a strata scheme?
  • What would I actually own in a strata scheme?
  • What do levies pay for?
  • Difficulty in paying levies
  • Are there any meetings I would have to attend?
  • Before signing a contract
  • Getting a Section 184 certificate

This is only a little of what's in there...

TIP - I can highly recommend you have a read of this NSW Fair Trading fact sheet as many of the questions you'll have about buying into strata will be answered.....and in straightforward, simple way too.

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The Strata Search - the S182

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 182 of the NSW Strata Schemes Management Act 2015.

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 capital works fund plan
  • general information on:
    • insurances
    • by-laws
    • any disputes
    • any other areas under investigation

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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 capital works 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 capital works fund allocation adequate?
  • What are the current balances in the Administrative and Capital Works 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?
  • What special by-laws are in place and will they impact me in any way?
  • 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.

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Section 184 Strata Information Certificate

This is a certificate, issued by the Owners Corporation or the Strata Manager (if one is being used), showing details that effectively provide a very simple barometer of how well (or poor) a Strata Scheme is being run, financially speaking.  It also will tell you if there are any outstanding debts or expected future outgoings on the property.  Normally it's requested by prospective purchasers usually via their solicitor.

Oh, and there's a discount for the times when an update to a previous S184 request is done - but this only applies if the update request is made within 3 months of the original request.  This may not apply to you but it's something to be aware of.

Check out all the fees in the Schedule 4 - Fees of the Strata Schemes Management Regulation 2016.

Other specific legislative information about S184 certificates can be found in the Strata Schemes Management Act 2015 - Section 184 BUT, if you want a "user-friendly" version of the form then look no further than NSW Fair Trading's Section 184 Certificate form. This will save you a lot of time and effort. Thanks NSW FT.

Details shown on the certificate must include:

  • insurance cover
  • Strata Committee members
  • any Strata Managing Agent or Building Manager information
  • current levy contributions
  • any outstanding levy amounts or other amounts plus the interest rate charged (if applicable)
  • any special levies
  • details of how the 10 year capital works fund will be funded
  • any by-laws approved by the Owners Corporation but NOT lodged within 6 months before the date of the certificate
  • lots of other stuff - see the paragraph directly below for the link to the actual form

Make sure you know everything that MUST be on the S184.  The special format to be used (along with ALL the data required) for the certificate is shown under Schedule 1 Form 4 (Sections 1-20) of the Strata Schemes Management Regulation 2016.  You will have to scroll down to FORM 4.

There's a lot of information NOT included in the basic list above that MUST be on the certificate - especially if you're dealing with a Community Association.   Then even more items must be added but the form tells you all.

SPECIAL NOTE - Any outstanding amounts owing by the seller will be taken into account on settlement of the purchase.  So, if (for example) a levy is outstanding and it's NOT shown ON the S184 certificate, the purchaser (the new owner) will not be responsible for the payment of that levy.

How to apply for the S184 certificate

The S184 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 - refer to the link above on Fees in the small box.

The Seal of the Owners Corporation must also be affixed to the S184 certificate.  Please refer to the Strata Schemes Management Act 2015 - Section 273 and Section 272 for more details on the Seal of the Owners Corporation.

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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 Fair Trading links

Links to various articles

Strata Title Terms and Jargon


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DISCLAIMER:  All information on this website is of a general nature and is intended as a guide only.  Readers should check all information obtained from this website for accuracy from other sources and seek professional legal advice before taking any action based on any information obtained from this website.  Information on this website should not be substituted for proper legal advice.  The owners of this website will not be held responsible for any action taken as a consequence of same.

EXTERNAL SOURCES:  The owners of this website do not make any warranty or representations regarding the information, products, services provided by or qualifications of any external sources listed on this website.  Readers should make their own appropriate enquiries regarding accuracy, qualifications, licences, etc.  The owners of this website will not be responsible or liable in any way for any representations made by any external sources listed on this website.

IMPORTANT NOTE:  This website deals with strata matters in NSW, Australia only.  Legislation varies in different states and territories and in other countries.  For information pertaining to places outside of NSW, Australia please refer to the appropriate legislation for your region.



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