The most expensive sentence in an apartment purchase is often not in the building report. It is in the minutes of an annual general meeting from two years ago, in a line about a facade engineer, a basement pump, or a special levy that was discussed and then deferred. A buyer who paid for a careful look at the bathroom and skipped the strata file has inspected a room. They have not inspected the building.
This article is about the two reports, and about how to read them as a pair. It sits in our apartments and strata coverage. It is not legal or financial advice, and it is not a substitute for a strata search done for your lot. For the fabric side, start with inspecting apartments and townhouses.
Two inspections, two objects
A building inspection, under AS 4349.1, is a visual inspection of a residential property. In a unit that means the lot and the accessible edges of the common property. The inspector looks at wet areas, windows, the balcony they can stand on, safety items, and the stains that happen to be visible. The product is a report with photographs of a dwelling.
A strata inspection, sometimes called a records inspection or an owners-corporation search, is a reading of the books. The searcher sits with the minutes, the financial statements, the levy history, the insurance certificate, the by-laws, the correspondence, the defect reports, the cladding statements, and whatever else the manager will produce in the time booked. The product is a report about a legal entity that owns a building and owes money.
They should be booked together. They should be read together. They are still sold, too often, as alternatives. A cheap building inspection on a unit without the minutes is a brochure with a torch. A strata report without anyone looking at the bathroom is a set of papers about a dwelling you have not smelled.
The lot inspector will not know that the basement has been on the agenda since 2019 unless someone tells them. The stain on the storeroom door is not a waterproofing diagnosis.
Minutes, and the defects that never enter the lot
Annual general meetings and extraordinary general meetings are where buildings admit what they are. The minutes are uneven — some managers write a novel, some write a haiku — but they are the best ordinary record of what the committee has been told.
Read them for the items a 45-minute lot inspection will not see. Facade investigations. Combustible cladding. Basement waterproofing and hydrostatic leaks. Lift modernisation. Fire-system upgrades. Concrete spalling on soffits. Waterproofing of podiums and rooftop terraces. Insurance claims after a storm. Legal advice about a builder. A defect consultant’s report that was received and noted.
Then read them for the tone. A building that has commissioned reports, levied money and started work is a different risk from a building that has commissioned reports and deferred the levy for three AGMs. Deferral is not always cowardice — sometimes the committee is waiting on a court, an insurer or a better price. It is still a fact the buyer should know before they bid.
The lot inspector will not know that the basement has been on the agenda since 2019 unless someone tells them. The stain on the storeroom door, if they even see a storeroom, is not a basement waterproofing diagnosis.
Levies, special levies and the money that is not yet a bill
Ordinary levies pay the administrative fund and the sinking or capital works fund. They are the membership fee. Special levies are the extra call when the ordinary money is not enough: a facade, a lift, a cladding bill, a court. Buyers fixate on the current quarterly figure and miss the special levy that has been flagged but not struck, or the levy that was struck and is payable after settlement.
The strata report should set out the current levies, any arrears on the lot — arrears travel with the lot in ways that surprise people — and any special levies that are on foot or seriously proposed. The building report will not. A buyer who calculates “affordable” from the advertising and the current levy is doing a sum that the building has not agreed to.
Insurance sits beside the levies. The certificate shows the sum insured, the policy type, the excess, and sometimes a long list of exclusions and conditions. A building with a cladding issue, a defect claim, or a history of water damage can be expensive to insure, or insured with a large excess on water. That is a cost. It is also a clue that the building has a history the lot inspection did not reach.
Sinking funds, capital works funds, and plans that do not match the tower
Names change by state. New South Wales requires a capital works fund and a ten-year capital works plan. Queensland talks about sinking funds and administrative funds, with a forecast that is supposed to look forward. Victoria’s owners corporations run maintenance funds and, depending on the tier of the corporation, more or less planning. Western Australia has reserve funds in various forms. The vocabulary is local. The question is national: is there a plan for the expensive parts of the building, and is there money that bears any relation to the plan?
A healthy-looking fund in a twenty-year-old building with original lifts, original waterproofing and a facade that has never been touched is not healthy. It is a delay. A smaller fund in a building that has just finished a levies-funded facade and has a current plan for the lifts is a different object. The number without the plan is a decoration.
Read the plan against the building you can see and against the minutes. If the plan says “repaint” and the minutes say “engineer — concrete spalling”, the plan is late. If the plan is missing, the strata report should say so. A missing plan is itself information.
By-laws: pets, smoking, short stays, and the life you think you bought
By-laws are the house rules with a statutory backbone. They are not a building defect, and they are not the inspector’s job. They decide whether you can keep a dog, whether someone can smoke on the balcony above your clothes airer, whether the apartment can be listed on a short-stay site, whether you can put a floorboard down without acoustic underlay, and whether a barbecue is allowed on a balcony that is already leaking.
Buyers treat by-laws as a formality and then discover that the building they wanted for a dog, or for a spare room on the internet, does not allow either. The strata report should flag the by-laws that change ordinary use. The recent minutes should flag whether those by-laws are enforced, ignored, or about to change. A by-law that is about to be repealed is not the same as a by-law that is being used to issue notices.
Smoking and short stays also have a building-fabric shadow. Cigarette smoke in a shaft is a common-property problem that a lot inspector may smell and cannot fix. Short-stay traffic is a wear problem on lifts and corridors. Neither will appear as a crack in the bathroom.
How the two reports should be read together
Start with the lot report for the dwelling. Wet areas, balcony fall, windows, safety, visible mould, the limitations. Then open the strata report at the minutes and the levies, not at the by-law about hanging washing. Look for the same words. If the lot report mentions staining at the balcony door and the minutes mention a podium waterproofing report, you have a theme. If the lot report is quiet and the minutes are full of facade engineers, you have a theme the inspector could not reach.
Then read the insurance and the capital plan. Then read the correspondence if the searcher has included the interesting letters — the ones from lawyers, cladding consultants, and owners who have already had enough. Then, and only then, read the by-laws for the life you want to live.
How to read a building inspection report is the companion method for the fabric document. The same discipline applies here: limitations first, then the expensive items, then the lifestyle items. Do not start with the pet clause and work backwards to the basement.
If the two reports disagree — a lot inspector who saw nothing and a strata file that is a novel about water — believe the file until someone shows you the completed repair. If the lot inspector saw a serious balcony defect and the minutes have never mentioned balconies, believe the inspector and ask why the committee has been quiet.
The defects that will never enter a 45-minute visit
A short list, because it is the point of the piece.
- The facade. An inspector in a mid-floor lot sees a window. They do not see the panel, the cavity, the fixings or the fire issue. Cladding status lives in letters and audit reports. See our cladding, balconies and apartment checklists.
- The basement. Waterproofing, drainage pumps, concrete cancer on columns, a history of parked cars sitting in water. You may own a storeroom in that basement. You will not inspect the membrane.
- The lifts. Age, breakdown history, modernisation quotes, the special levy that will arrive when the parts become unobtainable.
- The roof and the box gutters. Common property. Visible only as a stain in a top-floor lot, if you happen to be buying one.
- The fire system. Occupancy is not a promise that the system is current. Upgrade costs appear in the minutes and in fire-order correspondence.
- The common wet areas and the podium. The gym that leaks into a bedroom, the rooftop terrace that was a selling point and is now a membrane claim.
None of these are reasons, on their own, to walk away. They are reasons to stop treating the lot inspection as the building inspection. The building is the thing you are joining. The lot is the room you will sleep in.
A practical order of work
Book the building inspection and the strata search as soon as the contract allows. Give the searcher time. A same-day strata report on a large scheme is a skim. Read the lot report the evening you get it, and send the searcher any item you want them to hunt — balcony, cladding, basement, lifts. Read both reports before you are out of time to raise a condition or to walk.
If the building is of an age that has a defects claim or a cladding audit, ask for those reports specifically. They are sometimes not in the first bundle. If the sinking fund looks thin and the building looks tired, ask what the next AGM is expected to levy. No one has to tell you a future decision. The minutes will still show the last time they tried.
Apartments are sold as a simpler product than houses. The paperwork is the proof that they are not. The inspection that is worth the fee is the pair of them, read in the same week, before anyone is attached to the view.
