What is a Strata Search or Inspection Report?

building inspection

A Strata Title, or Strata Plan Search can be described as a thorough investigation of the records including minutes of meetings and the financial records of a particular Strata Scheme. It is also known as an Owners Corporation Records Inspection or Section 108 search. The Section 108 refers to the relevant section of the NSW Strata Schemes Management Act 1996, which covers Strata Searches, and should not be confused with a Section 109, more on this later.

Please note: this article does not reflect the NSW Strata Schemes Management Act 2015 which came into effect on 30 November 2016. It is based on the NSW Strata Schemes Management Act 1996. Please use this article for information only, and check with your strata manager to ensure you comply with the most up-to-date legislation and requirements.

Why perform a Strata Title Search?

Any prospective buyer of an apartment or unit in a Strata Scheme, Community Title or Company Title residential or commercial/industrial building would be wise to investigate the exact ins & outs of the building. After all, this is one of the largest purchases in your life and you want to avoid surprises after you sign the contract. A pre-purchase report will highlight major defects, noise issues, expected large expenses and much more.

Even though the benefits are obvious, the majority of potential purchasers often pass on the opportunity to do a search. Time, cost or the fear of missing out may all play a factor.

Who performs a Strata Plan Search?

Anybody can perform a search, but there are many specialists who can provide this service at a fee. Engaging the professional help for a Strata Inspection report will ensure nothing will be missed or misinterpreted. Consider it like commissioning a Building Inspection Report which is common when considering buying a house, rather than a unit (for the avoidance of doubt, a Building Inspection Report can of course also be carried out on strata titled properties, not just houses). It is very common and suggested to use the services of fully qualified, professional Strata Inspection consultancies with either a Real Estate or Legal background. They are best placed to interpret the vast amount of information.Pre Purchase Building Inspection

What to watch out for when doing a Search?

An inspection of the Owners Corporations records should confirm who owns the unit you are considering buying. It will confirm basic information such as your quarterly levies and whether the current owner is fully paid up. A search will also confirm your voting rights and the previously discussed Unit Entitlements. For more on Unit Entitlements, please refer to this article.

If you intend to bring your pet, it will confirm whether the By-Laws allow you to have pets. Are there any other By-Laws you should consider, or that are frequently causing issues within the building, such as noise and parking? Or, are there any special By-Laws to the specific lot you are looking at buying?

In addition, it will give you an insight in potentially crucial information regarding existing or planned special levies for major building work or the remediation of building defects. These could be accompanied by costly legal disputes. These major expenses would need to be adequately covered through the Admin Fund or Sinking Fund, so it pays to investigate these financial accounts. For more on Admin and Sinking Funds, please read this article. Relating to the Sinking Fund, is the Sinking Fund Forecast, which provides you with a detailed overview of expected capital expenses over the coming decade. This covers your routine maintenance from new carpets to a fresh coat of paint.

Like with anything of value, you would also want to confirm that the building is adequately insured.checklist clipboard

What is a Section 109 Certificate?

Some of the critical information previously mentioned is provided as part of the so-called Section 109 certificate (S109), which is also covered under the NSW Strata Schemes Management Act 1996.

In summary, an Inspection Report will give you a good idea of how well the building is maintained and managed by the Owners Corporation, and therefore your potential investment, is looked after. After all, you would want your investment to appreciate in value and not the opposite!

How do you organise a Strata Search?

If you feel comfortable enough to perform your own searches, you will need to contact the relevant Strata Managing Agent to make an appointment. If you use a professional, they will arrange this for you. An appointment is important as it gives the Strata Manager the time to ensure all relevant minute books and documents are up-to-date and available. It will ensure any recent minutes have been pasted into the official records.

It is important to have written authority to perform the search. This can be obtained via the real estate agent. The records of the strata scheme are private information, which cannot be sighted without proper permission. As a potential purchaser this approval cannot reasonably be withheld from you on the basis you have provided the written consent required.

How much does a Strata Search Cost?

Besides the fee your Search Agent charges, you will also be required to pay the Owners Corporation a search fee. There are scheduled fees, which cover photo copies, a time-based charge for making records available for inspection under section 108 and for the Section 109 Certificate. Details can be found here. Exact charges vary, as it is charged on a time basis and on the number of copies made during the search.

In summary, a Strata Search is well worth the investment and will help avoid surprises or disappointment. It is highly suggested you engage a trained professional to perform the search for you.