What is a strata report and why do you need one?

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Every property that goes up for purchase in Australia will come along with a title. Although they may sound like just another boring piece of legal jargon, titles are actually extremely important. Your property’s title will contain all the legal details about what you’re buying when you make the purchase and will henceforth be used to prove your ownership of the property. 

 

In Australia, there are various property titles out there, each of which entail a different type of ownership structure. The category we’ll be talking about today is the ever-elusive strata title.

So, what is a strata report?

Before we get into the nitty gritty of strata reports, let’s first define a strata title property.

The word strata derives from the Latin word ‘stratum’, which means to lay something down. These days, we use the word strata to describe layers of something. So, keeping in line with its original definition, a strata title property is a property that has multiple layers. The three most common types of strata title properties in Australia are apartments, units, and townhouses. 

 

Strata titles may be understood as a specific type of ownership structure. It’s a way of allocating individual ownership of an actual lot while offering shared ownership of common areas. For example, if you’re purchasing an apartment lot, the strata title will grant you individual ownership of the actual lot (in the form of the apartment unit), and will grant you shared ownership of common areas such as the swimming pool, or the gym, or the lobby. 

 

Strata obligations are managed through a separate legal entity called the Owners’ Corporation. When you purchase into a strata titled property, you’ll be required to pay an ongoing Owners’ Corporation fee.

 

A strata report is a full review of the Owners’ Corporation’s records. These types of documents report not only the physical condition of the building, but also on the accounts and records of the Owners’ Corporation. 

What is the purpose of a strata report and why do I need one?

If you’re considering purchasing a strata titled property, you should absolutely invest in a strata report. Why? Because you want to ensure that you’re not buying into a property that will cause you financial or emotional distress in the future. 

 

The purpose of a strata report is to provide you with a full understanding of the situation you’re walking into. By reporting on details such as current and past finances, insurance covers, and forecasts for sinking funds, you as a buyer will receive a much clearer picture on the type of property you’re purchasing into, as well as the level of ongoing financial commitment you’ll be expected to provide as an owner.

What do you look for in a strata report? 

A good strata report will help you understand whether or not the strata scheme you’re buying into is well-managed, well-maintained, and financially healthy. 

 

Your strata should include details such as:

  • Property ownership and voting rights
  • Structural defects
  • Planned or previous works
  • Strata scheme insurance
  • Pet policies
  • Minutes from Owners’ Corporation meetings
  • Disputes, both past and present
  • Compliance documentation
  • Annual or quarterly levies 

 

If the strata report reveals that the strata scheme is in poor financial standing or poor physical condition, or that it’s badly managed or in the middle of disputes, you should take any of these findings as a red flag. Essentially, what you want to look out for in a strata report are pieces of evidence that show you that the property you’re buying into is unlikely to cause you any kind of financial or emotional distress in the future.

Is a building report the same as a strata report? 

A strata report is not the same thing as a building inspection report. First of all, a strata report is only required for buyers who are looking at purchasing a lot in a strata titled property. 

 

If you’re buying a house, then there’s no need for a strata report. In these cases, a building inspection report will provide you with all the details you need to make an informed purchase. These kinds of reports will report on the state of the property and any repairs that may need to be completed in the future. 

If you’re buying a strata-titled property like a unit in an apartment building or a townhouse, you need to know not only the condition of the particular lot you’re purchasing, but also the condition and the forecasted condition of the building itself. In these scenarios, it is worthwhile to get both a building inspection and a strata inspection completed. The building inspection will examine the unit as well as the building’s exterior, its foundations, roof, and its common areas. The strata inspection, on the other hand, will investigate all Owners’ Corporation records to analyse the building’s current policies and current standing (both physical and financial) and its future standing.

How much do strata reports cost? 

Strata reports in Australia usually cost a few hundred dollars – usually around $300 to $500. In terms of who pays to get a strata inspection completed, it can vary depending on the situation. Some vendors get strata reports done in advance and choose to supply the completed reports to potential buyers for free. 

However, it’s a good idea to find an independent inspector to complete the inspection and the report. That way, you can be sure that you’re getting an unbiased report from a professional who does not have a vested interest in the sale. For a few hundred dollars, you’re receiving peace of mind and clarity.

Strata living is a great lifestyle for many Australians. However, before signing on the dotted line, you want to be sure that the property is the right fit for you. A good strata report will provide you with insights that will allow you to make an informed decision. 

 

At Jim’s Building Inspections, we provide industry leading building inspections and strata inspections. You can be sure that our reports will be easy to understand, free of jargon, yet extremely thorough and comprehensive. If you think you’ve found the perfect property, be sure to arrange an inspection before you make any kind of commitment. Give Jim’s Group a call on 131 546 or get in touch online to book an inspection today.

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