Newcastle Living

Strata 101:
What to ask your agent when purchasing a strata or community titled property

As you navigate the real estate market in Newcastle, you might consider a strata or community-titled property. Whether you’re a first-time buyer or an experienced investor, purchasing a property under this title comes with certain criteria that should be considered. To ensure you make an informed decision, asking the right questions when working with your real estate agent and conveyancer is crucial. Here are some essential questions to pose.

Strata 101

What are the quarterly levies?

Quarterly contributions paid by lot owners can vary significantly from one property to another and should be a consideration as part of purchase. It’s important to understand what these fees cover, including maintenance of common areas, insurance, day-to-day operating expenses, and any amenities owned by the Owners’ Corporation or association (common property can extend to include structure of lots in the development, roads, swimming pool, etc).

Are there any pending special levies or major works planned?

Special levies can arise for unanticipated largescale building repairs, improvements or defect rectification. It’s important to know if any are pending or if major works are planned and how these might be funded (e.g. cash in bank of scheme or otherwise), as these can affect your financial obligations as a lot owner. If you are considering purchasing a relatively new building, it is important to understand who the builder and developer are and what their track record is like.

What is the Capital Works Fund Balance?

Ask about the current balance of the Capital Works Fund (formerly known as the sinking fund) and whether there are any plans for future contributions or expenditures. It is also important to ensure that the Owners’ Corporation has a relatively up-to-date Capital Works Fund Forecast (CWFF) and whether the owners have contributed towards the fund in accordance with the suggested amounts in the CWFF.

What are the by-laws and rules of the strata scheme?

Each scheme has its own set of registered by-laws and rules governing residents’ behaviour and the use of common property. Ensure you understand these regulations and how they may impact your lifestyle and property usage. By-laws and rules of note might relate to pets, parking and renovations.

Are there any ongoing disputes or issues within the strata committee?

Conflict within a strata or community-titled property can create an unpleasant living environment and potentially impact property values. Review the records via a search to see whether there are any ongoing disputes or issues among residents or the committee.

How often does the committee meet?

Regular meetings allow owners to discuss matters affecting the scheme and make decisions collectively, in a functional environment. A wellrun scheme has regular committee meetings and maintains detailed minutes of these meetings.

What insurance coverage is provided by the scheme?

Strata insurance typically covers the building’s structure and common areas, but it’s essential to understand the extent of coverage and whether the Owners’ Corporation has had difficulty in gaining insurance in recent times due to defects, lack of repairs or under-budgeting for the annual renewal. Community title insurance covers the common property of the owners (e.g. roads, pavements, landscaping) outside of the Torrens title or neighbourhood/strata lots.

Has the scheme appointed a Building Manager?

In most cases, a scheme with more than 50 lots should consider appointing a Building Manager if it doesn’t already have one. This manager is responsible for taking a proactive approach to repairs, maintenance and community projects.

Using a conveyancer that’s familiar with strata/community title

Using a lawyer familiar with strata and community title legislation protects your interests in a property transaction. They will assist in navigating potential pitfalls, reviewing unique by-laws and ensuring your rights are safeguarded through ordering the correct title searches, financial certificates (commonly referred to as S184s & S174s) and obtaining a pre-purchase inspection of the books and records on your behalf.

By asking these important questions, you’ll be better equipped to assess the suitability of a strata or community-titled property for your needs and make a confident decision when purchasing.

Jack Stoker

Jack Stoker
Bright & Duggan Property Group
Email Jack.Stoker@bright‑duggan.com.au
Mobile 0476 111 368

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Office 2/15 Wickham Street,
Wickham NSW 2293