Learn > Before You Buy > Things to know & do
Things to know & do
HARMONIOUS LIVING
Building your community is part of enjoying ‘Strata’.
You will need to develop good relationships and be conscious about neighbours.
KNOW THE RULES TO
AVOID PROBLEMS
Owners and residents in Strata share facilities and common spaces.
To ensure residents are clear about use and behaviour, rules are provided: By-laws.
GET GOOD HELP
If you’re considering buying new or off the plan, make sure you work with a specialist property lawyer,
The lawyer will help you know exactly where you stand and can examine a complex ‘new build’ or off-the-plan contract.
A general conveyancer may not have a background in this kind of assessment.
BUYING OFF THE PLAN?
WANT TO KNOW MORE?
Strata Defects & Risky Buildings
Strata Inspection Report
Entitlements
NSW-gov Buying Strata Property
Insurance – Building
NSW-gov Finances, insurance
USE DOCUMENTS TO ASSESS THE STRATA SCHEME
Is the building run well?
Are responsible levy increases made to cover costs?
Are meetings run well?
Are By-laws clear?
ARE THERE ANY SURPRISES?
A building inspection can help you avoid or budget for significant outlays to remediate or improve.
REPAIR HISTORY & MAINTENANCE SCHEDULE
If repairs or maintenance are not being carried out, but the purchase has other benefits, you can prepare to take an active part improving the property.
There is a step-by-step process which ensures transparency, including gaining agreement from other owners.
Sometimes it takes just one motivated person to organise others and transform how owners go about caring for the premises.
STRATA PLAN
Brochures, marketing flyers and estate agents may give incorrect information.
Checking the Strata Plan confirms details such as the number of parking spaces, gardens for private / common use.
COMMON BY-LAWS
Common by-laws include rules about smoking, short-term rental accommodation (like Airbnb) and noise.
For example, approval needed to keep a pet, where can you hang washing, parking restrictions.
HELPFUL LINKS
ONLINE
Read or watch online – tips for Strata Living
Keep up-to-date, use Newsletters / Insta
SO MUCH READING…
TAKE A BREAK & WATCH INSTEAD
Buying an apartment – top tips on what to look out for (video)
At 1.20 min: Tell-tale signs about the building
BASIC CHECKS & INFORMATION
Looking for peace of mind when choosing a building professional? This guide tells you about –
- what an iCIRT rating is
- how it works
- benefits of choosing an iCIRT-rated building professional
- a template clause for use in your Contract of Sale or Building Contract.
Click here: iCIRT Home Buyers Guide
To find trusted developers, builders, certifiers and consultants, click here: Register of Trustworthy Constructors
Look up the Strata, to verify boundaries – scroll to the ‘Understanding Results’ to get the best from this information:
If a Building Management Committee (BMC) is the governing body, it might act in favour of the commercial owner/s, not residents. Check the management and approval conditions.
Check for Latent Defects Insurance (LDI) – it provides cover due to a defect in the design, workmanship, or materials in the structure or waterproofing envelope. It must be purchased prior to construction.
OFF THE PLAN & NEW
- starts the day the strata plan is registered with the NSW Land Registry services
- ends when the original owner sells more than one third of the total unit entitlements.
- during the initial period, the ‘original owner’ (usually the developer or builder) acts as the owners corporation
- at the first Annual General Meeting (AGM), duties and responsibilities are assumed by owners.
- exercise caution and obtain legal advice before signing any documents, or paying any money
- look out for clauses that allow the developer to rescind the contract after you have exchanged
- before signing a contract, ask the following questions:
- Are there separate contracts for purchase of the land and construction of the dwelling?
- How do those two contracts interact?
- Will there be additional costs or penalties if there are delays to building start dates?
- remember, there are no price guarantees until you have exchanged contracts.
NEW BUILDS – FIRST AGM
Within 2 months of the initial period ending, the original owner must hold an Annual General Meeting (AGM), giving 14 days notice to owners and invested parties on the Strata Roll.
At least 14 days before the first Annual General Meeting, the original owner must provide certain documents and estimate the amount of money it will need to credit to its Administrative Fund (day-to-day costs).
a) all plans, specifications, occupation certificates or other certificates, diagrams, depreciation schedules, and other documents such as insurance policies.
b) all planning approvals, complying development certificates and related endorsed plans, approvals, ‘as built’ drawings, compliance certificates (within the meaning of the Environmental Planning and Assessment Act 1979), fire safety certificates and warranties.
c) the strata roll and any notices or other records.
d) the initial maintenance schedule.
e) any building inspector interim report or final sh report regarding building defects.
New owners can request additional quotes to compare the proposed costs and period of engagement.
E.g., check the Building Manager contract – it may be 10 years.
When purchasing in a new strata scheme, it is recommended that owners research various strata managing agents and their services. Seek information from friends, relatives and work colleagues and share your information with other new owners in the strata scheme.
Try to make an informed decision based on service level rather than cost alone and check the Contract schedules for fees, as they may be high to offset a low base fee.
Some developers are choosing not to pay for installation of necessary building infrastructure, such as gas, electricity, water, stormwater filtration, heating, air-conditioning and internet access. Instead, the cost is transferred to owners in the form of inflated service contracts.
A good embedded electricity network aims to save owners and tenants money, but in some strata schemes, this is not the case.
The owners corporation needs to enforce the statutory warranties – depending on the contract date for the works, the owners corporation may have 2-year and 6-year warranties for non-major and major defects respectively. NB: A serious issue may not be considered ‘major’ under the terms of the contract.
The Owners Corporation will need to quickly engage expert specialists to determine the nature of each defect, as the process can be slow.
A defects report will assist with negotiations or legal proceedings to enforce warranty rights, if negotiations are unsuccessful.
By Law, if the original owner still owns half or more of the total unit entitlement at the time of the first Annual General Meeting, their vote is reduced to one-third of the total unit entitlement.
The Developer or lessor is always excluded from votes relating to building defects.
- 25% or more of people that have the right to vote or
- enough eligible owners to represent 25% or more of the scheme’s total unit entitlements.
If a quorum is not present within 30 minutes of the starting time, a new meeting is called with not less than seven days’ notice. If there is still not a quorum, the meeting can proceed.
Link for information on typical strata meetings – with information such as how voting works: NSW-gov Strata-Meetings.
ESTABLISHED BUILDINGS
A strata inspection report can also assist when it comes to negotiating price, or having works done before settlement.
This is a general list, see more explanation further on:
- assessment of the interior and exterior of the unit
- compliance with fire and asbestos rules
- major expenditures, past and proposed
- pending / past building works or defects
- voting rights and entitlements
- financial status, including fund balances and expenses
- quarterly strata fees (levies)
- special levies
- insurance for the building/s
- building reports
- by-laws
- indications of residents living harmoniously.
Watch for gaps in records (Strata Managers vary in reliability).
Evidence of poor management might be continuous disputes with tenants or owners.
The minutes of Strata Committee meetings may reveal if matters were resolved well and if correct procedures are followed.
‘Unit entitlement’ determines your share of ownership in common property, which affects your levies and voting power.
If levies have been set and raised in a responsible way, this may be a sign of good management
LookupStrata – Fees, Levies states:
For Strata complexes in NSW, expect to pay anywhere between 0.3% – 1.2% of a property’s value:
- with facilities (lifts or pool, etc), average fees 0.8% – 1.2%
- without many facilities, average fees 0.3% and 0.7%.
Covers damage sustained to the building as a result of an accidental or malicious act. Common examples are:
- Fire / Arson
- Burst Pipes
- Vandalism
- Burglary & Theft
- Glass Breakage
- Vehicular Impact
- Storm/Tempest
- Earthquakes
- Lightning Strikes
The lot owner is responsible for the repair, replacement and maintenance of all building components within the lot, such as:
- Internal walls
- Shower screens
- Internal doors
- Toilets, baths & basins
- Built-in wardrobes
- Kitchen sinks, cabinet, bench tops
- Appliances such as wall and bench ovens, cook tops, range hoods, hot water heaters, bathroom exhaust.
Check the whole building, including the basement, storage and car parking. Is everything well-maintained? This shows if the residents care about upkeep and maintenance.
Find out what’s been going on – look at financial statements.
Has enough been put aside for big ticket items? E.g. lift repair, painting the building, replacement of garden waterproofing.
Building defects may be mentioned (original or from lack of maintenance) – how they were dealt with shows the way the Committee handles such matters.
Check the 2 operating funds – the amount of money in each should be in line with the Budget, which is approved by all owners at the Annual General Meeting.
‘Every day’ expenditure as shown in the annual Budget. This includes such items as building insurance, electricity, water, carpet cleaning, garden care, and regular maintenance inspections.
It is prepared by a qualified expert and there should be minutes showing it is being implemented as per dates nominated.
If a Capital Works item cannot be paid from the amount saved into the Fund, owners can choose to raise more via a loan, or a special levy (additional payment from owners).
However, it is certainly worthwhile checking the details.
Check that they are raised in sensible increments, to keep pace with the aging ‘building/s, inflation and any new requirements in the Budget, such as solar installations and electric vehicle infrastructure. NSW-gov Levies, Admin Fund, Capital Fund
Look for minutes of regular strata committee meetings and evidence that issues are being dealt with effectively (absence of applications to NCAT – NSW Civil and Administrative Tribunal).
The person allocated to look after your scheme takes direction from the Committee and should react with sound advice.
Look for professionalism, deep knowledge of Strata, good records and minutes which convey the issues under discussion in a clear way.
Fees: The Strata Manager contract fee may seem low, but you might be caught paying more overall, if charges for additional services and their associated disbursements are high (answering emails, envelopes, photocopying).
CONTRACT
For new buildings, check what defect period applies to your lot. Being familiar with conditions will help when you move in and wish to advise defects before the reporting deadline.
Fixtures are anything on the property that is ‘fixed’ in place whether it’s glued, nailed, bolted, plumbed or screwed and they are generally included with the sale of the property. E.g.
- stove
- hot water system
- fixed carpet
- in-ground plants and trees
- ceiling fan
- built in air-conditioning or heating
- letter box
Chattels are freestanding, moveable items. Chattels are not usually included in a contract of sale and need to be itemised separately on the contract. E.g.
- pool and spa equipment
- potted plants
- washing machine.
If in doubt, you should clarify, then ensure the items expected are written into the contract before you sign. E.g.
- gas bottles
- sprinkler systems (planter boxes)
- dishwasher
- light fittings
- curtains.
This will be a few pages into the contract. Ideally it should only have the owner’s name and the mortgage details (if any).
Easements, covenants or property subdivisions can restrict use of the property.
Section 149 of the contract is the Council report. It will tell you about zoning requirements and any other issues relating to the land you want to purchase. For instance, soil contaminants; if the land is located in a flood plain.
By-laws are rules that all residents living in your strata ‘scheme’ (your building or complex) must follow. In existing buildings, they have been approved by an owners’ vote.
By-laws impact the way you live, even the curtains or blind you may install. This is because –
- the majority of owners expect the apartments to look standardised and co-ordinated
- ceilings, walls or floors may be connected to an area for which all owners bear responsibility under ‘Owners Corporation’ legislation (law)
- residents often don’t realise the impact they have on their neighbours.
