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Strata Titled Unit

Purchasing a Strata Titled Unit

Buying a strata titled apartment is possibly one of your largest investments so it is important that you are aware of the potential risks.

Upon the purchase of a strata titled unit you immediately form part of the owners corporation which is the body consisting of all owners in the strata scheme. An owners corporation is similar to that of an unlimited liability company.

This basically means that where an owners corporation is unable to pay its debts, for any reason, individual owners will become responsible for these debts which can result in your personal assets being liquidated to pay outstanding dues of the owners corporation.

This is an extremely rare situation; however prospective purchasers need to be fully informed of the associated risks of strata living. Some examples of these rare cases are listed below:-

• Insurance claims - where the liability exceeds the insurance limits of liability;

• Building defects - where the cost to repair the building is almost as much as the cost to replace it; and

• Strata Insurance - where a scheme is uninsured or the policy has lapsed and subsequently a claim occurred during this period.

There are many options for strata schemes today to help reduce their associated risks; however it is important for prospective buyers to be aware of any existing risks or problems before they purchase. If you fail to uncover an existing problem before you settle it may be too late for you to recover from this position.

In order to identify any existing risks or problems within the scheme we recommend that you undertake the following:-

• Engage a professional to inspect the books and records of the scheme and provide you with a strata records inspection report, and.

• Engage a professional to inspect the building and provide you with a building inspection report.

Strata Records Inspection Report

A strata records inspection report details such things as the financial state of the owners corporation, management matters and past known building problems. A strata records inspection will also report on any major works that may have been planned or if any special levies have been placed on the owners.

A strata records inspection report will provide you with answers to the following questions which will help you make a wise purchase decision:-

• What regular or special levies you'll have to contribute?. 

• Whether or not there is any evidence of building or structural problems that may forewarn you of further expenses down the track?

• Whether or not the strata scheme has an adequate reserve of funds?

• Whether or not the strata scheme is adequately insured?
  
• If there has been a history of disharmony between owners? 

• What the by-laws are regarding items such as renovation, refurbishment or pet ownership? Building Inspection Report

Building Inspection Report

A strata records inspection report details such things as the financial state of the owners corporation, management matters and past known building problems. A strata records inspection will also report on any major works that may have been planned or if any special levies have been placed on the owners.

It is also recommended that the building inspector be provided with a copy of the strata report prior to inspecting the property, as it may assist in preparing a more accurate assessment as the report may identify areas that the inspector should focus on.

The Strata Agency works with a number of specialist strata records and building inspectors, if you would like any further information please contact us