What should you look for in a strata search before buying?
Buying into a body corporate property is a significant decision. A records search can reveal useful information before you commit, including the building’s history, decisions, expenditure and unresolved issues.
A search is one part of your due diligence. You should also review the contract, seller disclosure information, body corporate certificate, building condition and your likely financial commitments.
Most Queensland community titles schemes are governed by the Body Corporate and Community Management Act 1997, known as the BCCM Act. Different legislation can apply to some other bodies corporate, so first confirm which legislation applies to the property. The community management statement, or CMS, can help identify the applicable regulation module.
The seller must provide information about the lot and the scheme before you sign the contract. This can include the body corporate certificate, seller disclosure information, by-laws, CMS and improvements register.
A body corporate records search can help you ask better questions. It may highlight defects, noise issues, planned expenditure, levy concerns or ongoing disagreements. You still need an independent building inspection, legal review and financial assessment.
How do you access Queensland body corporate records?
Access depends on your status and the legislation applying to the scheme. For most schemes covered by the relevant regulation modules, a buyer of a lot, an owner, mortgagee, person with a proper interest or an agent of one of those people may inspect or obtain copies of records.
Prospective purchasers cannot automatically inspect records. Confirm that you are entitled to access them, or arrange for an authorised person to make the request.
Requests must be made in writing and a fee may apply. You can ask to inspect the records or request copies of specific documents. If you cannot identify the documents you want, you may need to search the records yourself or appoint someone else to do so.
Be specific about what you want to review. Useful requests may include:
- committee and general meeting minutes
- financial statements, budgets and levy information
- contracts with the body corporate manager, caretaker or other service contractors
- insurance policies and valuation documents
- defect reports, maintenance reports and correspondence
- notices or orders from a court, tribunal, council or other authority
- by-laws, exclusive-use agreements and the current CMS.
After a written request and payment of the fee, the body corporate must generally allow inspection at a reasonable time and place, or provide the requested record, within 7 days.
Some records may have been disposed of in accordance with the applicable record-keeping rules. Some documents may be withheld because of legal professional privilege or other limited grounds.
What financial information should you check before buying?
Start with the body corporate certificate and the latest financial information. Check:
- current and future levy amounts
- administrative and sinking fund budgets
- the latest financial statement
- unpaid levies for the current lot
- special or interim contributions
- major contracts and recurring expenses
- the available funds for planned works.
Annual levies are decided at the annual general meeting, based on the approved administrative and sinking fund budgets. The body corporate also decides the instalment amounts and due dates.
A special contribution is an additional levy for unexpected costs, including costs that were not included in the budget or where the budgeted amount is not enough. Confirm the reason for the contribution, the amount, the approval and when payment is due.
A significant levy increase calls for further questions. It may reflect rising operating costs, additional funding needs or upcoming works. Look at the budgets, meeting minutes and supporting quotations before deciding whether the increase indicates a problem.
A deficit in body corporate funds may be a timing issue or may indicate financial difficulty. Check the explanation, outstanding invoices, levy arrears and whether further contributions are proposed.
Unpaid levies can affect the body corporate’s finances. The body corporate can take debt recovery action when contributions are not paid by the due date.
For a plain explanation of the costs owners contribute towards, see our guide to understanding your body corporate levies.
What building, maintenance and insurance issues should you investigate?
Body corporate records can help you identify past expenditure, recurring maintenance concerns and known building defects. Look for reports, correspondence, quotations, meeting decisions and evidence of completed work.
Pay particular attention to:
- building defect reports
- water ingress or plumbing issues
- repeated repairs in the same area
- lift, roof, balcony or external wall maintenance
- fire and evacuation documents
- large works proposed for common property
- maintenance responsibilities affecting your lot or an exclusive-use area.
A report about a building problem does not show the full cost or seriousness of the issue by itself. Ask what was found, what work has been completed and whether an independent building professional should review the report.
The body corporate is responsible for insuring common property, body corporate assets, public risk and, in most cases, buildings containing lots. The exact responsibility depends on the survey plan.
Where the body corporate is required to insure a building, it must insure it for full replacement value. An independent valuation must be completed at least every 5 years.
Check the insurance certificate, policy details, claims history and latest valuation. An up-to-date valuation helps you assess whether the building insurance appears adequate. You should also confirm what you need to insure yourself, including contents and any building that is your responsibility.
Read more in our body corporate insurance factsheet.
Which by-laws and scheme rules could affect you?
By-laws regulate the behaviour of owners, occupiers and their invitees in the scheme. They commonly cover noise, pets and parking.
Read the current by-laws before you buy. Check whether they affect how you intend to live in, renovate or use the property.
Also review:
- rules about keeping animals
- exclusive-use areas attached to the lot
- approval requirements for improvements
- restrictions on parking or storage
- noise and nuisance provisions
- any special by-laws applying to your lot.
For a community titles scheme, the by-laws listed in the CMS are generally the by-laws that apply. If the CMS does not list them, older scheme documents and registered changes may need to be checked.
A CMS can also identify proposed development, lot entitlement schedules, relevant by-laws and the regulation module applying to the scheme.
If you are unsure which rules apply, obtain the current documents from Titles Queensland and seek independent advice.
What red flags in body corporate records need further questions?
A red flag is a reason to investigate, not proof that the body corporate is poorly managed. A well-run scheme can still have defects, arrears, disputes or large projects.
Ask further questions when you find:
- a substantial levy increase
- repeated levy arrears
- a deficit or significant unpaid invoices
- a special contribution
- a building defect or recurring maintenance issue
- major expenditure without a clear funding plan
- missing or outdated insurance valuation information
- unusually limited records for the age and size of the building
- an abrupt change in the body corporate manager
- a committee change or dismissal
- records showing repeated disagreement between owners
- no clear evidence of fire safety planning or maintenance
- a CMS or set of by-laws that needs further investigation.
A body corporate must keep financial records, meeting minutes, contracts, insurance information, correspondence, registers and other specified documents.
Records should show how significant decisions were made and recorded. Compare meeting decisions with financial statements, contracts, notices and follow-up correspondence. This can help you understand whether an issue was resolved, is still active or may create a future cost.
A very small set of records is worth asking about, but it does not prove records were destroyed or that the scheme is unlawfully managed. Some records can be disposed of after specified periods if they are no longer current.
Should you use a professional body corporate records search agent?
You can conduct a records search yourself if you have the time and understand what you are reviewing. A professional search agent may be useful when you live elsewhere, have a short timeframe or want help identifying documents that require closer attention.
Potential benefits include:
- an agent may be near the property or records location
- an experienced agent can organise and complete the search efficiently
- they may recognise common body corporate documents and issues
- you do not need to spend your own time reviewing the records
- an agent may help you identify questions for the seller, body corporate manager or committee.
Ask what the search includes, whether copies of key documents are provided and whether the agent offers a written report. A search agent’s report is a useful starting point, but it is not a substitute for legal, building or financial advice.
A thorough body corporate records search can help you understand the scheme’s history, costs, rules and potential risks before buying, alongside your other due diligence. If you need help understanding body corporate records or your next step, contact our team at reception@stratacare.com.au.
