What are the 10 steps to obtaining a DIY Strata Report? We show you exactly what to look for. This post has been provided by Paula Byrnes, Strata Gophers.
Don’t despair, here’s a guide to help you get started on a DIY Strata Report … but be warned, it is not an easy task!
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Before we get started if you’re wondering how much it costs to have a strata report done professionally instead of doing one yourself, we recently responded to this question from a NSW member:
Question: How much does a strata search report in NSW cost?
Answer: The average price for a standard strata report in Sydney seems to be around $250 to $300, with some charging a bit less and some more.
The average price for a standard strata report in Sydney seems to be around $250 to $300, with some charging a bit less and some more.
The information that is included (and not included) varies, likewise with the period of inspection; with some inspecting two years back and others three-five years. Two years is fine if the owners have monthly/regular meetings, which is the case in large schemes (over 100 lots).
On another note, the last few years have seen a shift in NSW from the Purchaser’s legal representative ordering the report, to now the Real Estate Agent ordering the report ahead of the marketing campaign. This is a lot more convenient for buyers and can work out a lot cheaper as they can download the Strata Report online which also means they get the decision-making information without waiting. Companies such as Before You Bid have a popular model that means buyers can pay as little as $29 with a further fee if successful in buying the property … it’s a small price to pay for peace of mind!!
This post appears in Strata News #250.
10 Steps to a DIY Strata Report
If you’d rather go down the DIY strata report path, here is our 10 step guide:
Step 1. Book a Strata Inspection
To get started on your DIY Strata Report, call the Strata office (or person who manages the strata records) and book around 3 hours for a Strata Inspection Report (also called a strata search). You may need longer if there are a lot of records! The legislation requires anyone inspecting the files to obtain a “letter of authority” from the owner or the owner’s conveyancer/solicitor. Most strata offices insist on seeing this before they will give you access to the records. Some insist on seeing this before they even give you a booking.
Step 2. Sort all the file out before you start your DIY Strata Report
When you arrive at the Strata office, go through any hard copy records and short pile what you need. Ask the person in charge if they have given you ALL the files in their possession. Make sure you get their name for future reference.
These days, most strata offices have electronic files … so it’s a good idea to take note of what the main file folder names are.
Step 3. Look for the major issues first up
At this stage of your DIY Strata Report, we recommend you start by looking for reports that have been prepared by specialists for the more serious/major concerns. These can include defect reports, engineer’s reports, fire-audit reports etc.
Most strata offices file these separately, however, at times these are found in a “correspondence” folder. Check the dates to ascertain if the reports have been addressed and what the current status of mattes are. The minutes should give you this information.
Step 4. Read the “Minutes”
The minutes will tell you the people who are/have been elected to make all the decisions about the building, known as the Strata Committee (formerly called the Executive Committee). While carrying out your DIY Strata Report, it’s a good idea to look at the Strata Roll or find an owner list to get contact details of Committee members for future reference.
The minutes will also tell you what the total levy has been each year, and more importantly, the minutes should list serious matters such as defects and serious structural issues, such as major water ingress and concrete cancer, just to name a few. If you do find these types of issues, you have to find out, where the current status … as in, has a report been done? Has the work been quoted for?
The minutes will also tell you what compliance measures have already been taken or have been arranged (refer Step 5 below), and any conflict or legal issues, or complaints about residents. If not, check the Correspondence file. We recommend that you inspect at least the last 3 years of minutes for large buildings. Normally 2 years back is enough for over 100 lots if there are monthly/regular meetings. If there is a worrying issue in the minutes, search back (up to 5 years longer) to find the history. (Five years is the legal requirement to keep strata records). Make sure you copy the most recent AGM minutes and any other minutes that note major issues.
Step 5. Check to see if the Owners Corporation is “compliant”
Apart from compliance measures noted in the minutes, as part of your DIY Strata Report you’ll want to find out if there are any current orders to comply with e.g. a Fire Order from Council or even identified high-risk items in a safety report, such as non-compliant balustrades. These issues can mean a very expensive special levy down the track. It’s also a good idea to get a copy of the Sinking Fund Plan (now called Capital Works Fund) and any safety reports, which are now called a Workplace Health & Safety Report.
It’s often difficult to tell if the Owners are following these compliance reports, but take a look at the financial statements; they may give you some idea. The expenditure should show if any safety items have been addressed in a Safety Report. To ascertain if the Owners Corporation is following their Capital Works Fund Plan, check both the income and the expenditure on the Financial Statements for the past 5 years.
Another potentially expensive item that Owners Corporations have to now comply with is Child-Safety Window devices. If the building you are buying into has not yet updated all their windows with Child-Safety locking devices, you may very well have to pay a special levy after you buy the property as the deadline imposed by NSW Fair Trading is 13 March 2018. Look out for our other articles about the consequences of Owners Corporations not complaining with legislation.
Step 6. When carrying out your DIY Strata Report, check for any new by-laws
Assuming that you were given the registered by-laws in your Contract of Sale, now look for any new by-laws that haven’t been registered. The Certificate of Title will tell you what by-laws have been registered and will give you a clue as to any by-laws that have been approved but not (yet) registered. By-laws have to be registered to be enforced. The Certificate of Title will tell you what your Units of Entitlements are you your unit, which is how the levies are calculated. The newer Certificates of Title now note which option relating to keeping animals has been registered. Remember, By-laws can be restrictive when it comes to lifestyle choices.
Step 7. Find out who lives in the building
If the strata roll is up-to-date, it should include information about tenants, although some Property Managers are remiss in advising the Strata Manager when there’s a change in tenancy. The aim is to find out the ratio of tenants and owners in the building. Generally speaking, buildings that have a high ratio of owner-occupiers tend to be maintained more diligently. Taking a close look at correspondence and the minutes may indicate if there are any party-animals in your building or noise-sensitive retirees on the flip side.
Step 8. Work out what the financial status is like
Strata offices will print out the current balances, year-to-date income and expenditure and an Owners Ledger showing any levy arrears for the current owner. As part of your DIY Strata Report, we recommend that you get copies of the last 5 years of the end of year financial statements as well to go through. They will tell you all the income and expenditure for each financial year.
Step 9. Is the building adequately insured?
You will want a copy of the current certificate of currency or a renewal scheduled showing what insurance is in place and when it’s next due. Some insurance policies we’ve seen don’t even comply with strata legislation. Also, make sure you check the most recent insurance valuation. The building must be insured for the same amount or greater than the valuation.
We recommend that you find out if any measures have been undertaken for new buildings in relation to Home Owners Warranty.
Step 10. Don’t skip the Correspondence file
The correspondence should (but not always) give you the most recent status of important matters. You may also find out about complaints about other residents and pet/renovation approvals. Sometimes, you can pick up more serious issues that haven’t been raised at meetings, such as residents complaining about water leaks and other maintenance issues that could lead to work that requires a special levy.
Unfortunately, we often hear about missing documents that should be in the files.
If you end up feeling totally bamboozled once you have started doing your own Strata Inspection, you’re not alone … and don’t forget, you can always order a Professional Strata Report!
The above information is just a guide and we recommend seeking advice from a Solicitor/Conveyancer when buying a Strata Property.
Have you carried out a DIY strata report or do you prefer to source a professional report? If you have a question, some tips or something to add to the article, please leave a comment below.
Related articles:
- What is a Strata Inspection Report?
- NSW: Q&A Should a Free Strata Report be available at inspection?
This post appears in Strata News #133.
Paula Byrne
Founder
Strata Gophers
P: 1300 405 605
E: [email protected]
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It’s good to know that oftentimes, the seller’s Real Estate Agent will order a strata report ahead of marketing the home. I’d imagine that strata reports contain all sorts of useful information for home-buyers. It must certainly help with making educated purchasing decisions.
Great article Paula. I would add/clarify just one thing in Section 5 under compliance. Buyers should check to see if there is an Annual Fire Safety Statement Statement being lodged with the Council each year. If there is, that’s good. If there isn’t, then the scheme is probably not yet on the Council’s compliance ‘radar’. This means that, sooner or later, it is going to be hit with a fire order and each lot will probably be up for around $10k to $15k in a special levy to cover the costs of a fire safety upgrade.