Question: How can a prospective buyer find out whether a strata building has concrete cancer before purchasing?
Is there any way I can find out whether an apartment I am thinking of buying is in a building which has concrete cancer?
What information has to be included in a pre-purchase strata report?
Answer: The legislation gives buyers a right to inspect strata records, but real-world gaps mean a DIY search or professional strata report is the practical path to finding out.
Two simple questions with one long answer because, as they say, “it’s complicated”.
In NSW, the strata legislation is pretty clear about the records to be kept by owners corporations (OC), how long to keep them, the form of records (paper vs electronic), and how access to information is provided to owners, their agents, the strata committee, and the owners corporation itself.
The relevant sections of the various pieces of legislation can be found in:
- Part 10 of the Strata Schemes Management Act 2015 (the Act), covering ss176-188
- Part 7 and Schedule 4 of the Strata Schemes Management Regulation 2016 (the Regulation)
- section 43 of the Property and Stock Agents Regulation 2022.
For pre-purchase consideration, we look at Division 2 of Part 10 of the Act (ss182-186) and Division 1 of Part 7 of the Regulation for specification of information to be provided, and Schedule 4 of the Regulation (for fees). While these sections also primarily apply to requests for the inspection of records (s182) or provision of information about the owners corporation and the subject lot (s184) by “an owner, mortgagee or covenant chargee of a lot”, under those sections those parties may authorise another person to undertake such an inspection or request such a certificate of information.
For potential purchasers of a strata property, a letter of authority from the lot owner (or the other parties listed above) will need to be given, which is then presented to the strata manager acting as secretary of the scheme or directly to the secretary of a self-managed scheme.
The fees charged by the owners corporation for such authorised searches are set in Schedule 4 of the Regulation: $60 including GST for the first hour, and $30 including GST for every half hour or part half hour after the first hour.
Specialist strata inspection businesses can undertake a search on behalf of those eligible under s182 of the Act, and those businesses will collate important information and copies of records and prepare a report on the information gleaned from the inspection.
Traditionally, such reports have been prepared on behalf of potential buyers. In recent years, property vendors (sellers) will often have a report commissioned for provision with other elements of the sales campaign (I’ll call these “vendor reports”). A fee may or may not be charged for access to the vendor’s report. If a purchaser of the report is the successful buyer of the property, they will usually be required to pay the balance of the full cost of the report so it can be made out in their name.
Note that vendor reports may be several months old by the time of reading, and potential buyers may wish to commission their own report to satisfy their own due diligence wishes, including updating any information or records which have changed since a vendor report was completed, such as meeting minutes, insurance renewals, levy changes (including special levies), etc.
Section 183 of the Act details how an inspection may be conducted, but put simply, it may be via some remote access (prevalent since COVID-19) or in person at the strata manager’s office.
The s176 requirement to make and maintain records in electronic form (which has been in force for new records since 11 June 2024), and the widespread electronic nature of records before that requirement came into force, means not only are most inspections done remotely, even those in person are often to access records in solely electronic form.
So, that covers the mechanics of strata records inspections. Let’s turn our attention to the meat of the matter: which records are required to be provided access to?
Section 182 details the records to be provided about the subject lot and the owners corporation generally, and it’s quite an extensive list, but includes under s182(3)(j) “any other record or document in the custody or under the control of the owners corporation”. This means, effectively, all records should be made available (including e-mails, and the full strata roll). Generally, an owners corporation is required to keep records for seven years, so those seven years’ worth of records should be available for inspection, at a minimum.
Other records under this “any other record” umbrella would include:
- subject lot levy statement/s and position
- meeting minutes and agendas (which may indicate any proposed or resolved major expenditure)
- the common property certificate of title
- the registered strata plan
- the current consolidated by-laws of the scheme
- compliance documentation (e.g. annual fire safety statement, asbestos report/s, OH&S report/s, lift and pool registration certificates, roof anchor certifications)
- engineer’s or other specialists’ reports on matters such as defects (including concrete cancer, also known as spalling)
- orders issued by NCAT or courts
Some legally privileged information may not be able to be provided at the time of an inspection, usually depending on whether the subject lot is one of the parties to the litigation.
I will observe here, though, that the legislative requirements exist as an ideal, which is unfortunately rarely comprehensively followed in the real world for various reasons.
Firstly, human error may see a document not stored correctly (it may be stored to the wrong strata scheme records, or under the wrong category), or it may be dated incorrectly (and thereby not provided for the seven year retention period), or just not thought to be provided to the strata manager or secretary for inclusion in the books and records.
It has also certainly been the case that some owners and/or committees/committee members and/or strata managers have wanted to keep some matters “off the books”, that is, not stored with the other books and records of an owners corporation to hide, for example, major issues, upcoming works, disharmony, or evidence of potential legal action. This is often to prevent the matter affecting the saleability and/or value of properties in the scheme.
Suffice to say, this is a breach of the Act by any parties involved in such hiding of material information. Still, it does happen, and when it does, it seriously impacts the comprehensiveness of any search undertaken.
Comprehensively assessing other records which may mention these matters in passing is often the only way to be aware of them, and this often means “reading between the lines” for veiled references or key phrases which may indicate such obfuscating actions are being taken.
Changing strata managers can also create gaps, either through exclusion by the former strata manager/s (intentional or not), or via the very different ways strata managing agencies annotate and store the books and records of their portfolio.
If these gaps are not identified before handover, they will “follow” that set of records from manager to manager/agency to agency.
Often, records from prior strata managers are not fully integrated into the new managing agency’s systems but provided “as-is”. It then becomes a puzzle-solving exercise to review the provided records, follow thin (and sometimes broken) threads, and locate records that may make a difference in a purchase decision.
Because of all these intricacies, most potential buyers do not attempt these inspections themselves, hence the emergence of the strata report industry as an offshoot of the wider strata management industry.
Unlike strata managers, there are no legislated training or licensing requirements for strata searchers. At a minimum, potential clients of strata searchers should look at demonstrated experience in the strata industry and/or the strata/property/conveyancing legal industry, and a current professional indemnity insurance policy for preparing strata reports.
As strata is such a specialist field, I would also caution against using generative AI to summarise documents from your own search or a report provided by a strata inspector. Indeed, I would also be wary of strata reports with generative AI summaries or conclusions included.
Just a final note: I’ve not detailed certificates under s184 of the Act, which are usually requested by the purchaser’s conveyancer before settlement, and are not requested as part of a strata search/report under s182 of the Act.
This post appears in Strata News #803.
Sean McNamara
Select Strata Reports
E: sean@selectstratareports.au
P: 0414 920 726
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