Strata reports – full disclosure to potential buyers?

Hello,

This post is about ‘what information must Owners Corporations and Strata Managers provide to prospective buyers and what can we do if we find out they have withheld critical information from us’.

We saw a property we liked a week before its auction.

Very quickly we got a reputable legal company to check the contract and commissioned a Strata Inspection Report company recommended by our solicitor  to do a strata search for us.  They came back with a report that stated that “records for this strata plan were poorly kept; therfore we cannot guarantee that all records were made available to us at time of inspection”.

However it did seem that the Strata Committee was functioning well and there was a healthy sinking fund.

Two days before auction someone made an offer on the property, we counteroffered and ultimately were successful in getting the property. To stop the auction going ahead we had to exchange contracts very quickly and waive the cooling off period.

This all happened in big rush during a working week.

While paperwork was travelling back and forward across the city, I had a closer look at the Strata Report and saw that a number of documents weren’t provided to us. While we were provided with a seven year old Ten Year Sinking Fund Plan and the 2016 AGM agenda, we were not provided with the minutes of that meeting, papers that accompanied that agenda, including a paper on Sinking Fund and Works Planned or minutes of the Executive Committee for 2016 (though we were provided with papers from 2015-2011).

I asked for the AGM meeting minutes and was advised they were not yet completed. I asked for the paper on the Sinking Fund and Works Planned that was distributed with the agenda and instead received an email from the Owners Corporation assuring me that they were carefully managing the building.

I don’t doubt that, however I’m concerned they may not be fully disclosing the current financial state of the building, even though they may have very good plans to address it and we are able to cover special levies up to a point.

The Strata Schemes Management Act 2015 states the owners corporation must make the following items available: 

(i) if a strata renewal plan has been given to owners for their consideration under Part 10 of the Strata Schemes Development Act 2015 , a copy of the plan,

(j) any other record or document in the custody or under the control of the owners corporation, “

The fact that these have not been provided, and that ‘the records are badly kept’ raises red flags for me. I’ve asked our solicitor to seek the documents again.

Our also solicitor advises that should a special levy be struck before we settle, that is more than 1% of the contract, we can rescind the contract.

Have other Flat-Chat members had similar experiences? What did you do?