Strata schemes are more popular than most Sydney homebuyers realise – particularly when it comes to apartment apartment living. But it’s important to understand that buying into a strata scheme is not like buying a traditional property.
Strata schemes have their own specific rules and regulations, plus individual obligations and collective responsibilities that you should be aware of before signing a contract.
Pay close attention to the following three considerations before making a purchase.
1. Read the Section 109 Certificate
The Section 109 Certificate, issued by the strata manager or owners’ corporation, provides up-to-date financial information of the scheme. This is important because you need to know how well the scheme is being managed.
This report will disclose levy contributions and outstanding levy amounts, special levies or fines (if applicable), insurance coverage and any recent by-laws adopted by the owners’ corporation. It will also provide names and contact information of managers, caretakers, executive committee members and where to find financial records and statements. Be sure to do your due diligence by reading the fine print.
2. Be Clear About Applicable Levies
In a strata scheme, the owners’ corporation is funded in two different ways. An administration fund addresses the current day-to-day expenses, while a sinking fund covers long-term costs.
The levy amount is voted on annually at a general meeting and is usually paid on a quarterly basis. The levy covers such items as common utilities, maintenance and repairs and insurance for the building and public liability.
In order to be prepared, prospective homebuyers and property investors should be absolutely clear about current applicable levies.
3. Know And Understand The By-Laws
Each strata scheme has its own set of by-laws by which you will be expected to conform. These rules can apply to just about anything your neighbours deem appropriate to common behavior.
For example, they may address items such as use of common property and areas, noise levels, safety and security measures, garbage disposal, pets and the installation of satellite TV equipment and air conditioning units.
Before buying into a strata scheme, be sure you know and agree with the by-laws. Your future co-owners can be very strict about rule infractions.
One last tip for home buyers and property investors going into a strata scheme is to make sure you get good, sound professional advice from a lawyer, conveyancing specialist or professional strata researcher.
The Section 109 Certificate, owners’ levies and by-laws can be overwhelming and confusing, so it pays to have someone on your side to check out the details before you sign on the dotted line.