Before buying into a strata scheme

The guide to buying into a
Strata scheme in NSW

Before buying in a strata scheme, find out as much information as possible about the management of the scheme itself, for example:

• Is there a strata manager?
• Is the building properly insured?
• Are there enough funds to cover long term repairs and maintenance?
• Are there any outstanding building works? or are any planned in the near future?

Organise to get a Section 184 Certificate from the owners corporation, and a Strata Search performed through a specialist company or your solicitor/conveyancer. More information on these are included below.

COMMON PROPERTY

Find out which parts of the unit will be included in the ‘lot’ and where the common property boundaries are. The registered strata plan defines the boundaries between common property and lots in a strata scheme. Common property boundaries are usually shown on strata plans by thick black lines. Pay close attention to items such as balcony walls, railings, sliding doors and garage doors, as strata plans may differ on whether these items are part of the common property or not.

Check if there are any restrictions on the use of the common property which could affect you. For example, if you want to change the flooring, install air conditioning, or prune trees which shade your balcony, you will probably need the permission of the owners corporation.

LEVIES

Don’t forget that lot owners need to make regular contributions to the owners corporation to cover the maintenance and administration of the strata scheme and help maintain the life of the building. How much are they? Can you afford them?

Remember that levy amounts can change, and that you may be asked to pay extra levies in some circumstances. Besides looking at the unit, also have a look at the whole building. Some buildings have high quality and expensive finishes such as polished granite or marble foyers. These must be maintained along with the swimming pools, lifts and gardens and the costs will impact on your levies. Alternatively, the building may be run down and in need of repair. Find out if there are building works planned and if it will be an extra cost to owners.

10 YEAR CAPITAL WORKS PLAN

The owners corporation must prepare a 10 year capital works plan of anticipated major expenditure to be met from the capital works fund. Take a look at the plan to help determine the contributions that you will need to pay in the future. The 10 year capital works plan must be included in a Section 182 Inspection of Records.

BY-LAWS

Before buying, it is advisable to check the scheme’s by-laws as they will affect the way you will live in a scheme. Of particular importance is whether you would like to bring your pet into your lot, and whether the by-laws will permit this.

Can you hang your washing outside or will you have to buy a clothes dryer? Will it be difficult for you if there are restrictions on visitor parking or where your children can play? Also, be aware that by-laws can be changed by the owners corporation.

SECTION 184 CERTIFICATES

Before you buy into a strata scheme, request a Section 184 Certificate from the owners corporation. A Section 184 Certificate (formerly a Section 109 Certificate) provides information about the strata scheme including:

• the names and addresses of the strata committee members, the managing agent and building manager (if applicable)
• the levies to be paid by the owners
• any outstanding levies
• any outstanding levies for the owner of the lot you are interested in
• the proposals for funding the matters set out in the 10-year capital works plan
• the address where the records and financial statements can be viewed
• any special by-laws made by the owners corporation in the past 2 years
• whether or not a strata renewal committee has been established in relation to the strata scheme under the Strata Schemes Development Act 2015.

If a levy is outstanding before the Certificate is given and it is not shown on the Certificate, the purchaser is not responsible for the payment.

HOW TO GET A SECTION 184 CERTIFICATE

If you are an owner, mortgagee, or covenant chargee, or have their permission, you may write to the owners corporation and ask for a Section 184 Certificate. The Treasurer must give the Certificate under owners corporation seal. The certificate must be on the set form used in the Strata Scheme Management Regulation 2016 – Schedule 1. Statutory costs apply to the issue of all Section 184 Certificates.

See NSW Fair Trading Certificate 184 Form

SECTION 182 INSPECTION OF RECORDS

It is important that you inspect the books and records of the owners corporation before buying. Sometimes your solicitor will arrange to have this done for you, but not always. There are companies which specialise in inspecting the books and can organise a strata search service.

If you are an owner, or you have an owner’s or a mortgagee’s or covenant chargee’s permission, you may ask the Secretary of the owners corporation or the managing agent to let you inspect the books and records of the owners corporation. The request must be in writing and accompanied by the required statutory fee. The owners corporation must let you look at all the records and should make arrangements with you to do this.

The owners corporation must make the following items available for inspection by the person who makes the request or the person’s agent:

• the strata roll,
• any other records or documents required to be kept under this Part,
• the plans, specifications, certificates, diagrams and other documents required to be delivered to the owners corporation before its first annual general meeting by the original owner or the lessor of a leasehold strata scheme,
• if in its custody or under its control, the certificate of title comprising the common property or, in the case of a leasehold strata scheme, the certificate of title for the lease of the common property,
• any applicable 10-year capital works fund plan,
• the last financial statements prepared,
• every current policy of insurance taken out by the owners corporation and the receipt for the premium last paid for each such policy,
• if a strata managing agent has been appointed, a copy of the instrument of appointment,
• if a strata renewal plan has been given to owners for their consideration under Part 10 of the Strata Schemes Development Act 2015 , a copy of the plan,
• any other record or document in the custody or under the control of the owners corporation,
• if the duties of the owners corporation under this subsection have been delegated to a strata managing agent, any other records (including records of the strata managing agent) relating to the strata scheme that are prescribed by the regulations,
•  if a building manager agreement is in force or has been entered into but has not yet commenced, a copy of the building manager agreement,
• particulars of any service agreement entered into by the owners corporation,
• particulars of any agreement entered into with a local council for a strata parking area,
• if the request is made within 5 years after the end of the initial period, particulars of any orders made under section 27 and copies of any related contracts or other documents.

INFORMATION SOURCE: NSW Fair Trading and Strata Schemes Management Act 2015

Any questions, just ask your accredited Strata Plus strata manager.