Strata conveyancing NSW: what buyers need to know
Buying a strata property in NSW involves a layer of due diligence that does not apply to standard freehold purchases. Before you exchange, your conveyancer needs to review the strata inspection report, check the owners corporation's finances, interpret the by-laws, and confirm there are no outstanding levies or undisclosed liabilities. This guide explains what those checks involve and why they matter.
General information about NSW conveyancing, not legal advice. Every strata transaction is different. Before signing or exchanging a contract, get advice from a licensed conveyancer or solicitor.
What is a strata property?
A strata property is one that is part of a strata scheme: a building or complex subdivided into individually owned lots (such as apartments, townhouses, or villas) with shared common property (such as foyers, gardens, driveways, pools, and lifts). The common property is managed collectively by an owners corporation (formerly called a body corporate), which is made up of all lot owners.
When you buy a strata lot, you own the lot itself and hold a share in the common property as a member of the owners corporation. You also take on ongoing obligations: paying strata levies, complying with by-laws, and participating in owners corporation decisions.
Strata properties are common across Sydney and NSW: apartments, units, and many townhouse developments are strata titled.
Strata disclosure requirements in the contract
Under the Conveyancing (Sale of Land) Regulation 2022 (NSW), a vendor selling a strata lot must attach specific documents to the contract of sale before it is offered to buyers. These mandatory disclosure documents include:
- A copy of the current strata plan (showing lot boundaries and common property)
- The by-laws for the strata scheme
- A copy of the owners corporation's most recent financial statements
- Details of any current strata management agreement
- Information about any outstanding or proposed special levies
If a vendor fails to attach required documents, the buyer may be entitled to rescind the contract within a certain period after exchange. Your conveyancer checks that all mandatory disclosure documents are present before you sign anything.
The strata inspection report
A strata inspection report (or strata records search) is a review of the owners corporation's records for the scheme. It is one of the most important due diligence steps when buying a strata property, and your conveyancer typically recommends commissioning one before exchange.
What a strata report covers
- Financial accounts: current balances of the administrative fund and capital works fund; whether the funds are adequate for the scheme's size and age
- Meeting minutes: records of owners corporation meetings for the past two years, including decisions about maintenance, disputes, special levies, and building works
- Special levies: any extraordinary levies raised or proposed outside the regular quarterly levy cycle
- Insurance: current building insurance policy details and whether cover is adequate
- By-laws: the rules that govern use of the lot and common property
- Outstanding notices: any notices from local council, Fair Trading NSW, or NCAT (NSW Civil and Administrative Tribunal) relating to the scheme
- Maintenance issues: any known defects, ongoing repairs, or disputes about common property
- Strata management: details of the current strata manager (if any) and management agreement
How much does a strata report cost?
A strata inspection report typically costs between $200 and $600 in NSW, depending on the size of the scheme and the inspector used. Your conveyancer can arrange one on your behalf, or you can engage an independent strata inspector directly. The cost is part of your pre-purchase due diligence expenses.
The strata report is separate from a building and pest inspection, which examines the physical condition of the lot itself. For a strata purchase, both reports are often recommended.
The section 184 certificate
A section 184 certificate is a formal financial disclosure document issued by the owners corporation (or its managing agent) under the Strata Schemes Management Act 2015 (NSW). Buyers are entitled to request this certificate before purchasing a strata lot.
What the section 184 certificate discloses
- The current quarterly levy amounts for the lot (admin fund and capital works fund contributions)
- Any levy arrears owed by the current lot owner
- Details of any special levies that have been raised and are payable
- The current balance of the administrative fund and capital works fund
Why it matters
Unpaid levies are a liability that can become the incoming buyer's responsibility in certain circumstances. Your conveyancer reviews the s184 certificate to ensure the current owner has no outstanding arrears, and to verify the regular levy amounts so you know your ongoing ownership costs before you exchange.
Strata levies: admin fund and capital works fund
Under the Strata Schemes Management Act 2015 (NSW), every owners corporation must maintain two separate funds:
| Fund | Purpose | Typical expenses |
|---|---|---|
| Administrative fund | Day-to-day operating costs | Building insurance, cleaning, gardening, minor repairs, strata management fees, utilities for common areas |
| Capital works fund (formerly sinking fund) | Major repairs and capital improvements | Roof replacement, lift overhauls, external painting, structural repairs, pool resurfacing |
Levy amounts are set by the owners corporation at its annual general meeting and are usually paid quarterly. Your lot's levy share is proportional to your lot entitlement (a number assigned to each lot in the strata plan that reflects its relative size and value).
Special levies
An owners corporation may raise a special levy at any time if the regular funds are insufficient to cover an unexpected or urgent expense. Common triggers include emergency structural repairs, insurance premium increases, or legal costs for a dispute. Special levies can run into tens of thousands of dollars per lot for large schemes. The strata report and s184 certificate will disclose any special levies that have been raised or proposed.
Is the capital works fund adequate?
A thin or depleted capital works fund is one of the key red flags in a strata inspection report. Schemes with ageing infrastructure and low fund balances are more likely to require special levies in the near future. Your conveyancer or strata inspector can advise on whether the fund looks adequate for the scheme's age, size, and known maintenance obligations.
By-laws: what buyers need to check
By-laws are the rules that govern how lot owners and their tenants use the lot and common property. They are registered on the title and are binding on all owners. By-laws can restrict or regulate a wide range of activities.
Common by-law topics
- Pet ownership (whether pets are permitted, and if so, what types and sizes)
- Renovations (approval requirements for internal works, especially to common property or structure)
- Short-term rental (Airbnb and similar platforms, which may require by-law approval)
- Parking (entitlements, visitor parking, and prohibited uses of car spaces)
- Noise and behaviour standards
- Use of common areas (pool hours, storage areas, BBQ facilities)
Before exchanging, your conveyancer reviews the by-laws to identify any restrictions relevant to your intended use of the property. For example, if you plan to keep a dog or rent the property on a short-term basis, the by-laws will determine whether that is permitted.
Model by-laws vs registered by-laws
NSW has a set of standard (model) by-laws, but many older schemes have their own registered by-laws that differ significantly. It is the registered by-laws, not any verbal representations from the selling agent, that govern what you can and cannot do as an owner.
Strata red flags to watch for
Your conveyancer and strata inspector review the report and documents for issues that warrant further inquiry or negotiation before exchange. Common red flags include:
- Low capital works fund balance relative to the scheme's age and known maintenance needs, suggesting special levies may be coming
- Proposed or recent special levies that may be payable by the incoming owner
- Ongoing disputes or NCAT proceedings involving the owners corporation or individual lots
- Building defects or major remediation works noted in meeting minutes or correspondence
- Inadequate building insurance or lapses in insurance cover
- High levy arrears across the scheme (indicating financial strain in the owners corporation)
- Repeated unresolved maintenance issues noted across multiple sets of meeting minutes
- Restrictive by-laws that conflict with your intended use (pets, short-term rental, renovations)
Levy adjustments at settlement
Strata levies are usually paid quarterly in advance. At settlement, your conveyancer calculates the levy adjustment: if the vendor has paid levies in advance for a period after settlement, the overpaid amount is credited back to the vendor in the settlement figures. If there are any outstanding levies unpaid up to the settlement date, these are deducted from the vendor's proceeds.
The levy adjustment is part of the standard settlement figures your conveyancer prepares. It ensures that each party pays the levies for their period of ownership.
Frequently asked questions
- What is a strata inspection report in NSW?
- A strata inspection report (also called a strata records search) reviews the owners corporation's records: financial accounts, meeting minutes, by-laws, insurance, and any outstanding notices or disputes. It is commissioned before exchange as part of due diligence on a strata property.
- What is a section 184 certificate in NSW strata?
- A section 184 certificate, issued by the owners corporation under the Strata Schemes Management Act 2015 (NSW), discloses the current levy amounts, any arrears owed by the current owner, and details of any special levies. Buyers are entitled to request this certificate before purchasing.
- Who pays strata levies when a property is sold in NSW?
- Levies are adjusted at settlement. The vendor is responsible for levies up to the settlement date; any levies paid in advance for the period after settlement are credited back. Your conveyancer calculates the adjustment as part of the settlement figures.
- What are the two main types of strata levies in NSW?
- The administrative fund covers day-to-day costs (insurance, cleaning, minor maintenance). The capital works fund covers major repairs and capital improvements (roof, lifts, painting). Both are set by the owners corporation annually, usually paid quarterly.
- Do I need a conveyancer to buy a strata property in NSW?
- You are not legally required to use one, but strata purchases are more complex than standard freehold transactions. A conveyancer reviews the strata inspection report, interprets the by-laws, checks the s184 certificate, and advises on red flags before exchange. Most buyers of strata properties engage a conveyancer precisely because of this added complexity.
Get help with your strata purchase
A licensed conveyancer can review the strata inspection report, negotiate contract terms on your behalf, and make sure all disclosure documents are in order before you commit to exchange. If you would like to connect with a conveyancer for your NSW strata purchase, use the enquiry form below.
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Conveyancing Explained provides general information about property transactions in Australia. It is not legal advice and does not create a client relationship. For advice on your situation, engage a licensed conveyancer, settlement agent, or property solicitor in your state or territory.