How to read a strata report — and when to get a second opinion

If you’re buying an apartment or townhouse in Australia, at some point your conveyancer will send you a pre-purchase strata report — sometimes called a strata inspection report, records inspection, or (in NSW) a Section 184-backed search. It’s usually 100 to 300 pages of meeting minutes, financial statements, insurance schedules and correspondence, and you typically get it days before you need to make a decision.

Almost nobody reads it properly. That’s not a character flaw — it’s an unreasonable document on an unreasonable timeline. But buried in those pages is most of what determines whether your levies stay sane, whether a five-figure special levy is coming, and whether the building is quietly fighting a defect it can’t afford to fix. Here’s what to look for, in the order that finds problems fastest.

1. The levy history — direction matters more than the number

Find the administrative fund and capital works fund contributions for the last three to five years (usually in the AGM minutes or the levy notices). A levy that has jumped more than 10–15% a year, repeatedly, is a building catching up on underfunding. A levy that has been flat for five years in an ageing building can be worse: it often means deferred maintenance that someone, possibly you, will pay for later. You can check how the current levy compares to similar buildings free with LevyCheck.

2. The capital works fund balance — against the plan, not in isolation

A $200,000 balance sounds healthy until you read the 10-year capital works plan and find $600,000 of works scheduled in the next four years. Compare the fund balance and current contribution rate against the plan’s recommendations. In NSW, the 2026 capital works rules make the 10-year plan mandatory and harder to ignore. If the report shows the scheme isn’t following its own plan, ask why before you exchange.

3. Special levies — past, struck, and looming

Three places to look: levies already struck (they bind you after settlement in most states), special levies in the recent past (a pattern means the base levy is set too low), and motions in the minutes that discuss works without a funding decision — that’s a special levy that hasn’t been priced yet. The phrase “to be funded by special levy if required” deserves a highlighter.

4. Insurance — valuation date and exclusions

Check the building sum insured against the most recent insurance valuation (they should be close, and the valuation should be recent — within two or three years). Then read the exclusions and the excess. Buildings with known cladding, flammable insulation, or defect litigation often carry eye-watering excesses or named exclusions, and that risk transfers to owners. A premium that jumped sharply year on year is the insurer telling you something the agenda papers might not.

5. Defects and major works in the minutes

Read the last two to three years of AGM and committee minutes looking for: water ingress (the most common and most expensive recurring item), façade or balcony works, lift replacement discussions, fire-safety orders, and anything involving lawyers. One mention is a data point; the same problem appearing across multiple meetings without resolution is a structural pattern — financially, if not literally.

6. Arrears and cash flow

A levy arrears figure above roughly 5–10% of annual contributions means the scheme is collecting less than it budgets, and the shortfall lands on the owners who do pay. Cross-check the admin fund: schemes that run it near zero have no buffer for the first surprise invoice.

7. By-law disputes and building culture

Tribunal proceedings, repeated by-law breach motions, and committee turnover read like gossip but price like risk: disputes consume management time, legal budget and eventually levies. You’re not just buying a lot; you’re buying into how this particular group of strangers makes financial decisions together.

8. What the report doesn’t say

A strata report is a records inspection, not a building inspection — nobody crawled the roof. Gaps are findings too: missing financial statements, no recent valuation, a capital works plan older than five years, or minutes that skip a year. If the records are thin, the question is whether the record-keeping is bad or the history is being tidied. Thin records are exactly when a second pair of eyes earns its keep.

When to get a second opinion

If the report is clean, short and boring — congratulations, boring is the best outcome in strata. Get a second opinion on your strata report when any of these is true:

• the building is more than 15 years old
• water ingress or cladding appears anywhere in the minutes
• levies have moved sharply in either direction
• a special levy appears in the last three years
• the report is long enough that you know you won’t read every page before exchange

Paid review services charge $200–500 for this. LevyCheck does it free. Upload the report your conveyancer sent you and we read every page, cross-check the financials against benchmark data from comparable buildings, and email you plain-English commentary once a human reviewer has signed off: special levies, capital works shortfalls, insurance gaps, defects.

This guide is general information, not legal or financial advice. Strata law differs by state; talk to your conveyancer or solicitor about your specific purchase.