This weekend, the Flat Chat column in the Financial Review will be about how to avoid buying an apartment in a dodgy building. In it, I discuss the importance of forensic checks of strata records.
But what if the records themselves are unreliable and inaccurate? Just by some serendipity, the following press release from Eyeon Property Inspections landed in our inbox today. We share it without further comment:
Property buyers are now well aware of the building defects disasters seen in Opal Tower and Mascot Towers. But the reality is that any building could hide big issues from potential buyers, meaning that people could land in a nightmare scenario, even if they had carried out all possible checks.
While Owners Corporations are obliged by law to keep records, the law doesn’t say that they have to be complete, accurate or true.
Right now, Owners corporations are outsourcing their record keeping to strata mangers, and in many cases the record keeping is poor. There are no consistent standards, and records often disappear when they are transferred from one strata manager to another. The industry should be doing something about it, and laws need to be tougher.
In recent inspections of strata records, EYEON Property Inspections has seen the following examples of altered and incomplete records:
- Strata committee altering general meeting minutes to change decisions made by a majority of owners
- No information provided in records of the status of building rectification works
- Recent records of building defects “lost” on transfer from previous strata manager.
In the property podcast, The Elephant in The Room, a Sydney Strata Manager said she comes across Strata Committees who don’t want certain information to be included in the minutes because it would negatively affect property values.
She said that if she isn’t comfortable with the minutes or disagrees with the included information, she won’t include her logo on it. She knows the minutes are wrong but is powerless to ensure the correct information goes in the records. She can’t stop the owners creating false records.
Strata records need to be better. Strata managers should have consistent record keeping systems and the transfer of records should be audited. Owners corporations should always have their own copy of all records. There should be severe penalties for non-disclosure of information.
Otherwise, how can property buyers trust the information they are provided?
The bottom line is that if there are gaps in records or the detail about current issues is sparse, buyers need to be cautious. These issues should be red flags and buyers should consider making lower offers or walking away from a property if the strata records are poor. In some cases, current owners might be trying to get out of the building before major issues become public knowledge.
Article supplied by Eyeon Property Inspections.