Buying an apartment or unit is an exciting prospect, but purchasers should apply the same scrutiny to the strata title as they do to the dwelling itself.
Realmark Urban Residential Buyers Advocate Angela McGrath said purchasing a strata property meant acquiring more than just a home.
“You’re also becoming part owner of the common property and financially responsible for the building,” she said. “Buyers need to understand how strata works, what their levies cover and what they could be responsible for in the future.”
Realestate 88 Founding Director Jasmyn Wright said overlooking strata responsibilities was a major mistake for purchasers.
“Buyers should carefully review the annual general meeting minutes, financial statements and any planned works to identify potential issues, including upcoming special levies that could create a significant additional expense after settlement,” she said.
Ms McGrath said the strata documents could reveal problems that were not apparent during the home open, including building defects, lack of funds, major upcoming works and ongoing maintenance issues.
She said water leaks, repeated insurance claims and inadequate maintenance reserves were all red flags for buyers.
“Also check meeting minutes for disputes, ongoing problems and issues that keep coming up without being resolved,” Ms McGrath said.
“The by-laws are also really important because they tell you what you can and can’t do.”
Ms Wright said strata considerations were especially important for those planning to rent their property out as short-stay accommodation.
“Many strata schemes do not permit short stays because they want greater oversight of who is entering and staying in the building, particularly where safety, security and resident amenity may be affected,” she said.
“Buyers should never assume short-stay use will be allowed and should confirm the building’s by-laws and approval requirements before committing.”
For all buyers, Ms Wright recommended asking whether the strata management company was changing close to the time of settlement.
“A transition between managers can sometimes delay access to records, approvals or move-in arrangements,” she said.
“Thorough due diligence before signing can prevent considerable cost, inconvenience and disappointment later.”
Low strata fees should not be brushed aside either.
“Don’t assume low strata fees are always a good thing,” Ms McGrath said. “Low fees can sometimes mean the building simply isn’t putting enough money aside for future works.”
Ms Wright said buyers should look closely at the balance of the reserve fund and consider whether it appeared adequate for the age, size and condition of the building.
“It is also important to compare financial statements across different quarters or reporting periods,” she said.
“A noticeable drop in funds, an increase in expenditure or an unexpected change in the building’s financial position should be investigated.
“It is important to remember every building will have maintenance requirements and issues from time to time, particularly as it ages.
“The presence of an issue does not necessarily mean a buyer should walk away.
“It is about understanding the nature of the issue, how well it is being managed, what costs may be involved and whether that level of risk is acceptable for the individual buyer.”
Although prospective homeowners may be apprehensive about their strata responsibilities, it is worth considering their benefits.
“Strata properties can offer an excellent lifestyle and, in many cases, a more affordable entry point into highly desirable locations,” Ms Wright said.
“Shared facilities, added security and reduced personal maintenance can all be significant advantages.
“Buyers should ask questions, review the available documents carefully and seek professional advice where needed.
“The more informed they are before making an offer, the more confidently they can enjoy the benefits of strata living.”