The strata report is the single most important document in any apartment purchase. Most buyers glance at it. Experienced buyers read it carefully and know exactly what they are looking for.
A strata report that looks fine on the surface can conceal a building with serious financial problems, deferred maintenance, legal disputes, or an owners corporation that has been underfunding its capital reserve for years. Understanding how to read it properly is the difference between buying with confidence and buying into a problem.
A strata report, also called an owners corporation report or body corporate records in different states, is a collection of documents from the strata scheme. It typically includes:
In NSW, a strata report is obtained through a strata search conducted by your conveyancer or a specialist search company. In Queensland, the equivalent document is the body corporate records search. The process is similar in other states but terminology varies.
Coposit | Buy with $10K | Sydney Real Estate Market | Buy Townhouse in Muswellbrook NSWThe financial statements are the most important part of the strata report for most buyers. They tell you whether the building is being managed responsibly or whether you are buying into a financial problem.
Administrative fund balance. This should be positive and sufficient to cover several months of operating expenses. A fund that is near zero or negative indicates that the building is running its day-to-day operations on a thin margin with little buffer for unexpected expenses.
Capital works fund balance. This is the most important number in the financial statements. It should reflect genuine accumulation toward the future major expenses the building will inevitably face. Check the capital works plan or 10-year maintenance plan if it is included -- this document projects the major expenses expected over the next decade and whether the current contribution rate is sufficient to cover them.
A capital works fund balance that is very low relative to the age and size of the building is a significant red flag. It typically means one of two things: either the building has recently completed a major project and spent down the reserve, or the fund has been chronically underfunded and a special levy is coming.
Levy schedule. What are the quarterly contributions to each fund? Have they been increasing? Large increases in levies can indicate that the building has been underfunded and is catching up, or that a significant expense has been identified.
Coposit | Buy with $10K | Sydney Real Estate Market | Buy Townhouse in Oran Park NSWThe minutes of recent AGMs and EGMs tell you what has been happening in the building over the past few years -- what issues have been discussed, what decisions have been made, and what disputes have arisen.
What to look for:
Major maintenance discussions. Any significant building defects, water ingress issues, structural concerns, or major system failures discussed at meetings should be noted. The minutes will also reveal whether these issues have been resolved or are ongoing.
Special levies. Any special levy raised -- a one-off charge to all owners beyond the normal quarterly amount -- indicates that the capital works fund was insufficient when an expense arose. Look at what the levy was for and how much it was. A history of special levies is a sign of chronic underfunding.
Disputes. Disputes between owners, disputes with builders, disputes with the strata manager, and disputes about the use of common property all appear in meeting minutes. Some disputes are minor. Others are signs of a dysfunctional building community that will be difficult to live in.
Legal proceedings. Any legal action involving the owners corporation should be disclosed. This includes disputes with builders over defects, claims by or against individual owners, and proceedings with external parties.
Owner attendance and engagement. A building where fewer than half the owners bother to attend AGMs or send proxies often has an owners corporation that struggles to achieve quorum for major decisions. This is not itself a disqualifying factor but it can create governance challenges.
Coposit | Buy with $10K | Queensland Real Estate Market | Buy Townhouse in Deception Bay QLDThe by-laws govern how you can use your lot and the common property. Key things to check:
Pets. Are pets permitted? Are there size or breed restrictions? Is approval required?
Renovations. What approvals are required for internal renovations? Some buildings require owners corporation approval for any works that affect the building's structure or services, which can be time-consuming and uncertain.
Short-term letting. Is short-term letting permitted? In NSW, buildings can pass bylaws restricting it with a 75% majority. If you are buying with the intention of using the property on Airbnb or similar platforms, confirm the current status.
Noise and conduct. Understanding the rules before you move in prevents friction with neighbours and the owners corporation later.
Depleted capital works fund in an older building. A building more than 20 years old with a capital works fund of less than $50,000 to $100,000 per lot is likely underfunded for the maintenance it will need.
Multiple special levies in recent years. One special levy for an extraordinary expense can happen to any well-managed building. Three in five years is a pattern.
Outstanding council orders or fire authority notices. These indicate the building has compliance issues that the owners corporation has not yet resolved. These can be expensive to fix and may affect your ability to lease the property.
Ongoing legal proceedings. A building in active litigation -- especially against a developer or builder for major defects -- creates uncertainty that can be difficult and time-consuming to resolve.
Low insurance coverage. The building's insurance must cover the full replacement value of the building. Insurance that appears low relative to the building's size and quality is worth questioning.
Coposit | Buy with $10K | Sydney Real Estate Market | Buy Townhouse in Marsden Park NSWFor buyers who are nervous about what a strata report might reveal in an established building, off the plan new builds have a specific advantage, there is no strata history to review because the strata scheme does not yet exist.
New buildings start with no deferred maintenance, no history of special levies, and no accumulated disputes. They also come with a statutory defects warranty period during which the builder is responsible for fixing any significant defects.
The trade-off is that you are making decisions about a building that has not yet been built. Assessing the developer's track record and the quality of the specifications is the equivalent process for off the plan, not a strata report review, but a due diligence process that is just as important.
Through Coposit, eligible off the plan developments can be secured with $10,000 upfront and the remaining deposit paid through weekly interest-free instalments during construction.
For renters working toward their first apartment purchase, Unrent by Coposit is now live -- a model where weekly rent payments accumulate toward a property deposit. Find out more at Unrent by Coposit.
Browse current off the plan listings on the Coposit projects page, download the Coposit app, or contact the Coposit team to understand which projects are currently available.
This article is general information only. Strata laws, reporting requirements, and terminology vary by state. Always engage a qualified conveyancer to review strata records before exchanging contracts on any strata-titled property.
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