A pre-sale strata inspection is an independent review of an apartment or unit building's financial records, maintenance history, insurance coverage, and bylaws before a property is listed or purchased. In Australia, apartments and units operate under strata schemes where owners share responsibility for common property costs. A thorough strata inspection reveals whether the building is well managed or carrying hidden financial liabilities, deferred maintenance, or unresolved disputes that could cost new owners thousands of dollars in unexpected levies or repairs.
Whether you are buying, selling, or managing a strata property, understanding the health of the scheme before a transaction protects your investment. Poorly funded sinking funds, overdue maintenance, and rising levies are among the most common problems found during strata inspections across NSW, Victoria, and Queensland. This guide explains what a pre-sale strata inspection covers, how to interpret the report, and what red flags to look out for.
What Is a Pre-Sale Strata Inspection?
A pre-sale strata inspection is an independent assessment of a strata scheme's financial, legal, and maintenance records. Unlike a standard building inspection that focuses on the physical condition of the property, a strata inspection examines how the building is managed and funded as a collective.
A professional strata inspector reviews:
- Meeting minutes from the owners corporation, covering past decisions, planned works, and any disputes
- Financial records including the administrative fund, capital works (sinking) fund, income, expenses, and outstanding levies
- Insurance policies to check coverage levels and identify any gaps in protection
- Common property maintenance reports showing the history of repairs, compliance with building codes, and ongoing concerns
- Registered bylaws that govern how the building operates and what restrictions apply to owners and tenants
This inspection gives buyers and sellers a clear picture of the building's health beyond what a physical walkthrough reveals. A well-run strata scheme adds value to every lot in the building, while a poorly managed one can erode property values and create ongoing financial headaches.
Why Strata Inspections Matter for Buyers and Sellers
Apartments and units are different from standalone houses because they operate under a shared ownership structure. Every unit owner pays levies that fund building maintenance, insurance, and long-term capital works. If the scheme is financially unstable or has a backlog of unresolved issues, all owners share the burden.
For Buyers
A strata inspection protects buyers from inheriting hidden costs. Some of the most common problems uncovered include:
- Special levies already approved or pending, sometimes running into tens of thousands of dollars per lot
- Underfunded sinking funds that signal large future costs for roof replacements, lift upgrades, or waterproofing repairs
- Active legal disputes between the owners corporation and builders, developers, or individual lot owners
- Deferred maintenance on common property such as plumbing, fire safety systems, or structural elements
For Sellers
Sellers who organise a pre-sale strata inspection demonstrate transparency. Providing a current strata report with the sales package can speed up the transaction and reduce the chance of a buyer pulling out after discovering problems during due diligence.
For Real Estate Agents and Strata Managers
A strata inspection report helps agents answer buyer questions with confidence and gives strata managers a documented baseline of the building's current standing.
Legal Framework for Strata in Australia
Strata properties in Australia are governed by state-based legislation. Each state has its own rules around financial reporting, bylaw enforcement, and building maintenance obligations.
| Governing Legislation | Key Requirement | |
|---|---|---|
| NSW | Strata Schemes Management Act 2015 | 10-year capital works fund plan mandatory for buildings with the original owner as majority |
| VIC | Owners Corporations Act 2006 | Maintenance plans required for prescribed owners corporations |
| QLD | Body Corporate and Community Management Act 1997 | Body corporate must maintain a sinking fund forecast for 10 years |
| SA | Strata Titles Act 1988 | Strata corporation responsible for common property maintenance |
| ACT | Unit Titles (Management) Act 2011 | Owners corporation must establish and maintain a sinking fund |
Regardless of the state, the owners corporation or body corporate has a legal obligation to maintain common property, keep proper financial records, and hold adequate insurance. A pre-sale strata inspection checks whether these obligations are being met.
Key Areas Examined During a Strata Inspection
1. Strata Financial Health
The financial position of a strata scheme directly affects every owner. The inspection covers:
- Administrative fund: Covers day-to-day expenses such as cleaning, gardening, utilities, and strata management fees
- Capital works fund (sinking fund): Set aside for major repairs and replacements such as roofing, lifts, painting, and waterproofing
- Income vs expenses: Whether the scheme is running at a surplus or deficit
- Special levies: One-off charges approved for specific works, often signalling that the sinking fund was insufficient
- Outstanding levies: Unpaid fees from individual lot owners that create funding gaps
A low or depleted sinking fund is one of the biggest red flags in a strata inspection. It often means large special levies are on the horizon. Buyers should ask for the 10-year capital works forecast to understand projected costs.
2. Common Property Condition
Common property includes everything outside the individual lots: hallways, stairwells, car parks, roofing, facades, lifts, pools, gardens, and shared plumbing or electrical systems. The inspection reviews maintenance records and identifies:
- Plumbing issues such as leaking pipes or water damage that could indicate long-term structural problems
- Roof and facade concerns including cracks, dampness, or failing cladding materials
- Lift and pool maintenance delays that can result in costly repairs and ongoing safety risks
- Fire safety system compliance, including sprinklers, smoke alarms, and emergency exits
Poorly maintained common areas lower property values and may result in unexpected levies. A strata inspection highlights any history of deferred maintenance.
3. Outstanding Levies and Arrears
Unpaid strata fees and levies can become a liability for the building as a whole. Buyers need to check for overdue payments and whether legal action is pending against non-paying owners. In NSW, under the Strata Schemes Management Act 2015, a seller must provide a strata certificate (Section 184 certificate) that discloses outstanding levies before settlement.
4. Insurance Coverage
Strata insurance should cover the building structure, common property, and public liability. The inspection checks whether coverage is adequate and identifies any gaps, such as:
- Insufficient building sum insured that would leave a shortfall after a major event
- Missing coverage for natural disasters such as flood, storm, or earthquake
- Gaps in public liability coverage for injuries on common property
- Absence of voluntary workers insurance for committee members
Understanding Strata Bylaws
Strata bylaws are the rules governing how owners, tenants, and visitors use the building and its common areas. They cover matters such as:
- Pet ownership policies, including breed or size restrictions
- Noise restrictions and visitor parking rules
- Renovation and fit-out approval processes
- Short-term rental restrictions (relevant for investors considering Airbnb-style lettings)
- Garbage disposal, recycling, and shared facility usage
Not all buildings allow pets, and some have strict rules about renovations or short-term rentals. Buyers should review the registered bylaws carefully to make sure they align with their lifestyle and intended use of the property.
In NSW, bylaws must be registered with NSW Land Registry Services to be enforceable. In Queensland, by-laws are recorded with the body corporate records. Understanding these rules before buying prevents conflicts with the owners corporation after settlement.
What a Strata Inspection Report Includes
A comprehensive strata inspection report covers several categories of information. Here is a breakdown of what buyers and sellers can expect.
| What It Covers | Why It Matters | |
|---|---|---|
| Financial Summary | Administrative fund balance, sinking fund balance, levy amounts, arrears, and special levies | Reveals whether the scheme can cover current and future costs without additional charges |
| Meeting Minutes | Decisions on repairs, disputes, bylaw changes, and upcoming works from AGMs and committee meetings | Shows how the building is governed and whether owners are actively managing issues |
| Maintenance History | Past and planned maintenance, capital works completed, and outstanding repair items | Indicates whether the building has been proactively maintained or has deferred problems |
| Insurance Details | Building insurance, public liability, fidelity guarantee, and voluntary workers cover | Confirms owners are protected against major loss events and third-party claims |
| Bylaws and Compliance | Registered bylaws, any pending bylaw changes, and compliance with current legislation | Ensures the building rules suit the buyer's lifestyle and that the scheme is legally compliant |
| Disputes and Legal Matters | Active or past disputes, tribunal orders, and legal proceedings involving the owners corporation | Alerts buyers to ongoing conflicts that could affect costs, property values, or livability |
Evaluating Recent Building Works
New renovations or capital works can increase property value, but they can also signal past problems. A strata inspection reveals whether improvements were planned upgrades or emergency fixes triggered by poor maintenance or safety compliance issues.
Assessing Strata Management Quality
Strong strata management leads to efficient conflict resolution, transparent financial decisions, and proactive building maintenance. Signs of poor management include delayed maintenance, lack of financial transparency, frequent changes in strata managers, and ongoing disputes between owners and the committee.
Red Flags to Watch For
Not every strata scheme is well run. The following warning signs should prompt further investigation or a renegotiation of purchase terms.
- Low or depleted capital works (sinking) fund relative to the age and size of the building
- Frequent or large special levies in recent years
- Consistent levy increases without clear justification in the meeting minutes
- Active legal disputes between the owners corporation and builders, developers, or individual owners
- Deferred maintenance on common property, particularly structural elements, waterproofing, and fire safety
- High proportion of outstanding levies from lot owners
- Lack of a 10-year capital works plan (required in NSW and QLD)
- Insurance coverage gaps or a history of underinsurance
What to Do If You Find Red Flags
If a strata inspection reveals problems, buyers have several options:
- Negotiate a lower purchase price to account for anticipated costs such as upcoming special levies or major repairs
- Request that specific issues be resolved before settlement, such as outstanding maintenance or insurance gaps
- Seek independent legal advice if the issues involve active disputes, non-compliance, or potential liability
- Walk away from the purchase if the scheme's financial health or management quality presents too much risk
The Strata Inspection Process Step by Step
Engage a qualified strata inspector
Hire an experienced strata inspector or a property inspection company that specialises in strata reports. Ensure they have access to the full strata records, not just a summary.
Request strata records from the owners corporation
The inspector will request access to financial statements, meeting minutes, insurance certificates, bylaws, maintenance records, and any active correspondence or legal matters.
Document analysis and review
The inspector analyses all records, cross-referencing financial data with maintenance history and meeting decisions. They identify any inconsistencies, red flags, or areas of concern.
Report compilation
A comprehensive report is prepared, summarising the financial health, maintenance status, insurance coverage, bylaw compliance, and any disputes or risks.
Review findings and make your decision
Review the report carefully. Use the findings to negotiate terms, request further information, or proceed with confidence.
In NSW, sellers must provide a Section 184 certificate from the strata managing agent before settlement. This certificate discloses key financial and legal information about the lot and the scheme. However, this certificate provides only a snapshot. A full strata inspection report goes much deeper.
Strata Inspection vs Building Inspection
Buyers often wonder whether they need a strata inspection, a building inspection, or both. The answer depends on what you want to know.
| Strata Inspection | Building Inspection | |
|---|---|---|
| Focus Area | Financial records, bylaws, management, insurance, and disputes within the strata scheme | Physical condition of the property, including structure, roofing, plumbing, and electrical systems |
| What It Reveals | Hidden financial liabilities, deferred common property maintenance, and governance issues | Structural defects, moisture damage, pest activity, and safety hazards within the lot |
| Who Needs It | Buyers and sellers of apartments, units, and townhouses in strata schemes | Buyers of any property type, including houses, apartments, and commercial buildings |
| Typical Cost | $250 to $500 depending on the size and complexity of the scheme | $400 to $800 depending on the property size and location |
For apartment purchases, getting both a strata inspection and a building inspection gives the most complete picture. The strata inspection covers the scheme-level risks, while the building inspection covers the physical condition of your specific lot and the broader structure.
Costs and Timeframes
A pre-sale strata inspection in Australia typically costs between $250 and $500, depending on the size of the building, the number of lots, and the complexity of the strata records. Larger schemes with extensive history may cost more due to the volume of documents to review.
Turnaround time is usually 3 to 7 business days after the inspector receives the strata records. In busy markets or during peak selling seasons, it is worth ordering the inspection early to avoid delays.
For sellers, organising the strata inspection before listing the property saves time. Having the report ready for prospective buyers shows confidence in the building's standing and can speed up the sales process.
Key Takeaways
- A pre-sale strata inspection reviews the financial, legal, and maintenance health of a strata scheme before an apartment or unit is bought or sold.
- It covers sinking fund balances, outstanding levies, insurance coverage, registered bylaws, meeting minutes, and active disputes.
- A low or depleted sinking fund is one of the most common red flags, often leading to large special levies for current and future owners.
- State-based legislation in NSW, VIC, QLD, SA, and ACT governs strata obligations, and compliance varies between jurisdictions.
- Strata inspections and building inspections serve different purposes. Apartment buyers benefit from getting both.
- Reviewing the bylaws before purchase prevents conflicts around pets, renovations, short-term rentals, and noise restrictions.
- Sellers who provide a strata report upfront demonstrate transparency and can reduce the risk of a sale falling through.
- Pre-sale strata inspections typically cost $250 to $500 and take 3 to 7 business days to complete.
Frequently Asked Questions
QWhat is a pre-sale strata inspection for apartments?
A pre-sale strata inspection is an independent review of a strata scheme's financial records, meeting minutes, insurance coverage, maintenance history, bylaws, and any legal disputes. It helps buyers understand the health of the building's management and finances before purchasing an apartment or unit. Unlike a building inspection that checks physical defects, a strata inspection focuses on governance and financial risk.
QCan a strata inspection save me money when buying an apartment?
Yes. A strata inspection can uncover hidden financial liabilities such as upcoming special levies, underfunded sinking funds, or unresolved maintenance issues. Knowing about these costs before you buy allows you to negotiate a lower purchase price, request issues be fixed before settlement, or avoid a financially troubled building altogether. In some cases, the inspection prevents buyers from inheriting tens of thousands of dollars in unexpected costs.
QWhat is included in a strata inspection report?
A strata inspection report typically includes a financial summary (administrative and sinking fund balances, levy amounts, arrears), a review of meeting minutes from AGMs and committee meetings, details of insurance coverage, a summary of maintenance history and planned works, registered bylaws, and any active disputes or legal proceedings. The report is designed to give buyers and sellers a complete overview of the scheme's current standing.
QHow do I know if the strata scheme has enough funds for future repairs?
Review the sinking fund (capital works fund) balance in the strata report and compare it to the 10-year capital works forecast. A healthy fund should have enough money set aside to cover planned maintenance and replacements without needing special levies. In NSW and QLD, a 10-year capital works plan is mandatory. If the fund is low relative to the building's age and upcoming obligations, large levies are likely in the near future.
QWhat are the most common issues found during a strata inspection?
The most common issues include inadequate sinking funds, outstanding levies from lot owners, deferred maintenance on common property (particularly plumbing, waterproofing, and fire safety), ongoing disputes between owners and the committee, insurance coverage gaps, and bylaws that are outdated or poorly enforced. Buildings constructed during apartment booms, such as the 2010s surge in Sydney, are more likely to have structural or compliance concerns.
QIs a strata inspection legally required before buying an apartment in Australia?
A strata inspection is not legally required in most states, but it is strongly recommended. In NSW, sellers must provide a Section 184 certificate that discloses key financial and legal details about the strata scheme before settlement. However, this certificate is only a snapshot. A full strata inspection provides a much more detailed analysis of the building's financial health, maintenance history, and governance.
QWhat happens if I find problems during a pre-sale strata inspection?
If the inspection reveals issues, you have several options. You can negotiate a lower purchase price to account for expected costs, request that the seller or owners corporation resolve specific issues before settlement, seek independent legal advice for serious matters such as disputes or non-compliance, or choose not to proceed with the purchase. The key is to use the report findings as a basis for informed decision-making.
QHow do strata bylaws affect my decision to buy a unit?
Strata bylaws set the rules for living in the building. They cover pet ownership, noise restrictions, renovation approvals, parking, short-term rentals, and use of shared facilities. If the bylaws conflict with your lifestyle or intended use of the property (for example, if you plan to keep a dog or rent the unit on a short-term basis), this could create ongoing issues. Always review the registered bylaws as part of your due diligence before buying.
QDo I need both a strata inspection and a building inspection for an apartment?
Yes, both inspections are recommended for apartment purchases. A strata inspection reviews the scheme's finances, management, and governance. A building inspection assesses the physical condition of the property, identifying structural defects, moisture damage, and safety hazards. Together, they give buyers a complete picture of the risks associated with the purchase. The strata inspection covers scheme-level concerns, while the building inspection covers the condition of your specific lot and the broader structure.
QHow much does a pre-sale strata inspection cost in Australia?
A pre-sale strata inspection typically costs between $250 and $500, depending on the size of the building and the complexity of the strata records. Larger schemes with extensive meeting minutes, financial histories, and multiple active matters may cost more. The turnaround time is usually 3 to 7 business days after the inspector receives the strata records. Given the potential costs of buying into a poorly managed scheme, the inspection fee is a small investment.
QWho should I contact for a pre-sale strata inspection?
Engage a qualified strata inspector or a reputable property inspection company that specialises in strata reports. Look for inspectors who have experience with the relevant state legislation (such as the Strata Schemes Management Act 2015 in NSW) and who provide detailed, independent reports rather than basic summaries. A good strata inspector will review the full set of records and flag any concerns that could affect your purchase decision.
QWhat is a Section 184 certificate in NSW?
A Section 184 certificate is a document issued by the strata managing agent or owners corporation in NSW under the Strata Schemes Management Act 2015. It provides a snapshot of the scheme's financial position, including levy amounts, outstanding debts, sinking fund balance, insurance details, and any pending legal matters. Sellers must provide this certificate before settlement. While useful, it does not replace a full strata inspection, which provides a more thorough analysis of the scheme's overall health.
References and Resources
- NSW Fair Trading - Strata Schemes - Information on strata scheme obligations and owner rights in NSW
- Strata Schemes Management Act 2015 (NSW) - Governing legislation for strata schemes in New South Wales
- Body Corporate and Community Management Act 1997 (QLD) - Queensland body corporate legislation
- Consumer Affairs Victoria - Owners Corporations - Guidance on owners corporation management in Victoria
- QBCC - Queensland Building and Construction Commission - Regulatory body for building and construction in Queensland
- NSW Land Registry Services - Registration of strata bylaws and scheme details in NSW
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Thinking about buying or selling an apartment or unit? Owner Inspections provides independent strata inspection reports and building inspection services across NSW, Victoria, and Queensland. Our licensed inspectors review the full strata records and deliver clear, detailed reports that help you make informed decisions. Get a quote today or call us on 1300 471 805.