You have just received a strata report for an apartment you are seriously considering buying. It is 247 pages long. The auction is on Saturday. Where do you even start?
This is one of the most common situations NSW property buyers find themselves in, and it is also one of the most consequential. A strata report can reveal whether you are buying into a well-run building with healthy finances, or walking into a money pit with a dysfunctional committee and a six-figure special levy on the horizon.
The problem is that strata reports are not designed to be readable. They are collections of financial statements, meeting minutes, by-laws, insurance certificates, and correspondence, often spanning hundreds of pages with no executive summary. Most buyers either skim them and hope for the best, or pay a conveyancer $300 or more to review them — and even then, many conveyancers are not strata specialists.
This guide will teach you exactly what to look for, in what order, so you can assess a strata report yourself with confidence. It does not replace legal advice for complex situations, but it will help you know what questions to ask and when to worry.
What Is a Strata Report, Exactly?
Before diving in, it helps to understand what you are actually looking at. In NSW, what people casually call a "strata report" is usually one of two things, or both:
A Section 182 Inspection
A comprehensive inspection of the owners corporation's records, carried out under Section 182 of the Strata Schemes Management Act 2015. It includes meeting minutes, financial statements, correspondence, the capital works fund plan, insurance policies, by-laws, and any building reports on file. This is the meaty document that most buyers are referring to when they say "strata report."
A Section 184 Certificate
A formal certificate issued by the owners corporation that confirms specific financial details about a particular lot: the levy amounts, any arrears, and any outstanding special levies. It is typically included in the contract of sale and is a legal requirement. Think of it as the official financial snapshot; the Section 182 inspection is the full medical history.
When you order a strata report from a provider, you usually get the Section 182 inspection. The Section 184 certificate should come with your contract. You need both.
The Seven Things to Check, In Order
You do not have time to read every page. Nobody does. Here is where to focus, ranked by how likely each section is to reveal something that changes your decision.
1. Financial Statements: Follow the Money
Start here. Always. The financial health of the owners corporation tells you more about the building's future than almost anything else. You are looking at two funds:
The Administrative Fund covers day-to-day expenses: cleaning, gardening, electricity for common areas, lift maintenance, insurance premiums, strata management fees. Think of it as the building's current account.
The Capital Works Fund (formerly called the sinking fund) is for major long-term expenses: roof replacement, repainting, lift overhaul, waterproofing remediation, pipe relining. Think of it as the building's savings account.
What good looks like:
- Both funds have healthy positive balances
- Capital works fund is proportionate to building age and size — for a building over 10 years old, aim for at least $3,000 to $5,000 per lot
- Levies are being collected regularly and on time
- A clear 10-year capital works fund plan accounts for foreseeable major expenses
What should worry you:
- Capital works fund sitting near zero or in deficit
- Administrative fund consistently running at a loss
- No 10-year capital works fund plan (required under law, and from April 2026, must follow a new standard form)
- Capital works fund being raided to cover administrative shortfalls
An important nuance: raw dollar amounts are meaningless without context. A capital works fund of $200,000 sounds impressive until you realise the building has 150 lots and needs $3 million in facade remediation. Always divide the fund balance by the number of lots to get a per-unit figure.
2. Meeting Minutes: Read Between the Lines
If you only read one section carefully, make it the minutes of the Annual General Meeting (AGM) and any Extraordinary General Meetings (EGMs) from the past two to three years. Meeting minutes are where the real story of a building lives.
What to scan for:
- Recurring maintenance issues. If "water ingress in Level 3" appears three years running, that's a systemic waterproofing failure
- Motions for special levies. Even defeated motions tell you something about the building's financial position
- Disputes between owners. NCAT applications, by-law breach notices — these paint a picture of building culture
- Builder defect litigation. Note the stage and defects alleged, especially for buildings under 10 years old
- Strata manager changes. Frequent changes often indicate a difficult building
- Insurance premium increases. Sudden spikes signal increased risk
A practical tip: read the minutes backwards, starting with the most recent AGM. This gives you the current state of affairs first.
3. Special Levies: Past, Present, and Future
A special levy is a one-off charge on top of regular quarterly levies, usually raised to fund major works that the capital works fund cannot cover. They are calculated based on your unit entitlement.
Special levies are not inherently bad — sometimes a well-run building raises one to proactively address a major issue. What you want to understand is the pattern.
Questions to ask:
- Has the building raised special levies in the past five years? How many, and for what?
- Were they planned (part of a capital works strategy) or reactive (emergency repairs)?
- Is there a special levy currently in effect, and will you be liable for remaining instalments after settlement?
- Are the meeting minutes foreshadowing a future special levy? Look for phrases like "insufficient funds for upcoming works"
Special levies in NSW can range from a few thousand dollars for minor works to well over $100,000 per lot for major structural remediation. In extreme cases — such as the well-publicised issues at buildings in Zetland and Mascot — they have reached into the hundreds of thousands.
4. Capital Works Fund Plan: The Crystal Ball
The 10-year capital works fund plan is the closest thing you have to a forecast of future expenses. It should list anticipated major works, estimated costs, and a funding schedule.
Good plan:
- Prepared by an independent quantity surveyor
- Covers all major components: roof, painting, lift, plumbing, waterproofing
- Clear relationship between projected expenses and fund balance
- Updated in the last 3-5 years
Bad plan:
- Does not exist (a legal requirement many buildings ignore)
- Only a few items with suspiciously low cost estimates
- Shows a funding shortfall with no plan to address it
- Has not been updated since 2015
From 1 April 2026, NSW will require all capital works fund plans to follow a new standard form and, for new multi-storey buildings, the initial levy estimates must be certified by an independent surveyor.
5. By-Laws: The Rules You Will Live By
By-laws govern daily life in the building. Before you buy, make sure they are compatible with how you want to live.
- Pets. NSW law prevents blanket bans (since 2021), but buildings can require approval and set conditions
- Renovations. Most buildings require owners corporation approval. Some restrict flooring types or facade changes
- Short-term letting. Many Sydney buildings have adopted by-laws restricting or prohibiting Airbnb
- Parking. Is your car space on-title or allocated under a by-law? By-law allocations can sometimes be changed by vote
6. Insurance: The Safety Net
The owners corporation is required to insure the building for its replacement value, plus common area public liability. Check the insurance section for:
- Replacement value. Is the building insured for a realistic amount? Underinsurance is a genuine problem in NSW
- Excess amounts. Some buildings have been forced to accept $50,000-$100,000+ excesses due to claims history
- Premium trends. A sharp increase signals higher risk
- Exclusions. Buildings in flood-prone or bushfire-prone areas, or with known defects, may have specific exclusions
7. Compliance and Legal Matters
The final check is for anything that could create a legal or financial liability:
- Outstanding compliance orders from council or NSW Fair Trading
- Fire safety orders — buildings can be required to undertake significant (and expensive) upgrades
- Active litigation — is the owners corporation suing or being sued?
- Outstanding work orders or notices from the Building Commissioner
How to Interpret What You Find
Not every issue is a deal-breaker. The key is distinguishing between manageable concerns and genuine risks.
Usually manageable:
- A well-funded building that raised one special levy for a planned upgrade
- Minor by-law disputes that were resolved
- Upcoming expenses that are fully funded in the capital works plan
- Moderate levy increases in line with inflation
Worth negotiating on:
- A capital works fund below benchmark but with a credible catch-up plan
- A recently resolved building defect with completed remediation documentation
- Levies high relative to comparable buildings (affects resale value)
Potential deal-breakers:
- Capital works fund significantly underfunded with no plan, plus an ageing building
- Active structural litigation with no clear resolution timeline
- Recurring special levies indicating chronic financial mismanagement
- Multiple owners in levy arrears
- Building defects flagged but not addressed over multiple years
- A committee that cannot hold an AGM or achieve quorum
What About Getting Professional Help?
Reading a strata report yourself is valuable, but there are situations where professional input is worth the money:
- Conveyancer or solicitor: Essential for understanding your legal position, especially around special levies and contract conditions. Budget $200-$400 for a strata report review on top of standard conveyancing fees.
- Strata report provider: Companies like Before You Bid and Strata Report Sydney will obtain and compile the report for you, typically $250-$350.
- AI-powered analysis: StrataChecks can analyse a strata report PDF in about 60 seconds for $5, providing a risk assessment benchmarked against 88,000+ NSW strata plans. It is not a substitute for legal advice on complex issues, but it is an efficient way to get a structured analysis that highlights what matters.
The approach that gives you the best coverage for a reasonable cost: use an AI tool like StrataChecks for the initial analysis to identify areas of concern, then bring those specific concerns to your conveyancer for legal interpretation. This way, you are paying your conveyancer to advise on the issues that matter, not to read 247 pages from scratch.
A Realistic Worked Example
To bring this together, here is what a typical assessment might look like:
Building A: Inner West, 40 units, built 2008
- Admin fund: $38,000. Capital works: $185,000 (~$4,625/lot — reasonable for 18-year-old building)
- Quarterly levies: $1,100 — roughly in line with Sydney average
- External walls repainted 2 years ago, funded from capital works (no special levy — good sign)
- Lift modernisation planned for next year ($350K) — capital works plan shows fund will cover it
- Pets allowed with approval, no short-term letting restriction
- Insurance current, replacement value recently reassessed, no unusual exclusions
- No active litigation
Verdict: Healthy building. Proceed with confidence.
Building B: Same area, 40 units, similar age
- Capital works: $22,000 (~$550/lot — critically low)
- Three separate leak complaints over two years with no remediation
- Failed motion to raise $400,000 special levy for waterproofing — owners voted it down
Verdict: Serious risk. The problem exists, the money does not, and the owners cannot agree on how to fix it. Walk away, or price the risk into a significantly lower offer.
The Bottom Line
A strata report is not glamorous reading. But for a purchase that is likely the most expensive financial decision of your life, the few hours it takes to review one properly could save you tens or even hundreds of thousands of dollars.
Start with the money. Read the minutes. Check for special levies. Review the capital works plan. Make sure the by-laws suit your life. Confirm the insurance is adequate. Look for legal trouble.
And if 247 pages still feels overwhelming, start with a tool like StrataChecks to get a structured risk analysis in 60 seconds, then focus your detailed reading on the areas it flags. The goal is not to become a strata expert — it is to buy with your eyes open.
Upload your strata report and get a risk assessment in about 60 seconds. Your first report is free.
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