As a director of Strata Reports Victoria, I often get asked why we so passionately believe that all property purchasers should do their due diligence when purchasing a property within an Owners Corporation.
For most people, a property purchase will be one of their largest financial investments so ensuring all due diligence around whether it is a prudent purchase is completed – is essential.
When it comes to buying into an Owners Corporation there are unique considerations, a potential purchaser will benefit greatly from being informed of the governance and operation of the Owners Corporation, allowing them to understand their role and responsibility as a member of the Owners Corporation which is effective as soon as settlement takes place.
Currently in VIC an Owners Corporation Certificate is provided to a purchaser as a statutory requirement. However, the information contained within this document is just a snapshot of what is going on within that Owners Corporation. To thoroughly complete due diligence a purchaser should really dig a little deeper and arm themselves with as much knowledge as possible.
This deeper knowledge will assist the purchaser with the entire purchasing process and possibly allow them an opportunity to negotiate on a price if required depending on the information that they have obtained.
Some matters that may occur in an OC, which could create some stress or financial loss for a purchaser if they have not carried out a Strata Inspection Report, include:
- Upcoming strata fees/levies that have not yet been struck or issued or even resolved at a general meeting
- Proxy Farming
- Major water and mould problems and general building defect works
- Air BNB matters
- Major disputes that have occurred or are ongoing
There could also be a lot of positive factors that are highlighted such as a great Nabers Energy Efficiency Rating and the building could be a highly sustainable building.
A purchaser of a lot has the right to carry out an inspection of the full books and records for the property and, if they do not have the resources to do that themselves we are on hand to help, being dedicated to facilitating full Owners Corporation Inspection Reports.
It’s also not uncommon for an existing owner to request a report as it gives them an opportunity to explore the records and find out everything they can about their building. They may not have the time and resources to do this themselves.
Strata Reports Victoria cannot give advice but can provide factual information and highlight what is not there.
Reports can show if there is anything that restricts them in regard to the building itself:
- what their lot liabilities and entitlements are and how this affects their voting rights;
- are there special rules?
- are there any building works or changes in the wings?
- has there been a building valuation recently carried out?
- does the building’s insured amount match the most recent valuation amount?
A building may not have a complete set of records and it is better to find this information out straight away so it can be rectified.
We offer two standard reports – an Essentials Report, going back three years and a Comprehensive Report, which would go back 7 years and include a lot of information from the archives.