The Hidden Risks of Buying a Strata Property Without Proper Due Diligence

Buying into a strata scheme can be a brilliant move—shared amenities, lower maintenance responsibilities, and often a more affordable entry point into the property market. But strata living comes with layers of complexity that free‑standing homes simply don’t have. When buyers skip or skim their due diligence, they expose themselves to financial, legal, and lifestyle risks that can turn an exciting purchase into a long‑term headache.

If you’re considering a strata property, here’s why thorough due diligence isn’t optional—it’s essential.

1. Unexpected Special Levies and Financial Shock

One of the biggest traps for strata buyers is walking into a building with looming major expenses. Without reviewing the strata records, you may have no idea that:

• The building is planning a multimillion‑dollar remediation project

• The sinking fund is severely underfunded

• A special levy has already been proposed or voted on

• Insurance premiums have spiked due to claims or defects

These costs don’t disappear just because you’re a new owner. If you settle before the levy is struck, you may be liable for thousands—or tens of thousands—of dollars you never budgeted for.

2. Hidden Building Defects and Safety Issues

Strata buildings can suffer from defects that aren’t visible during a quick inspection. These may include:

• Waterproofing failures

• Structural cracking

• Fire safety non‑compliance

• Cladding issues

• Plumbing or drainage failures

A building with unresolved defects can be a financial time bomb. Without due diligence, you may not discover the problem until you’re already on the hook for your share of the repair bill.

3. Dysfunctional or Poorly Managed Owners Corporations

A strata scheme is only as strong as the people running it. Poor governance can lead to:

• Chaotic or incomplete financial records

• Mismanaged funds

• Delayed maintenance

• Unenforced by‑laws

• High levels of conflict among owners

Minutes of meetings, correspondence, and financial statements reveal the culture and competence of the owners corporation. Skipping this review means you’re buying blind into a community that may be dysfunctional.

4. By‑Laws That Restrict Your Lifestyle

Strata living comes with rules, and some schemes enforce them strictly. Without reviewing the by‑laws, you may be surprised to learn:

• Pets are prohibited or heavily restricted

• Short‑term letting is banned

• Renovations require extensive approvals

• Parking rules are strict and enforced

• Noise restrictions are tighter than expected

These rules can significantly affect how you use and enjoy your property.

5. Legal Disputes and Ongoing Litigation

Strata schemes can become embroiled in disputes with:

• Builders

• Developers

• Contractors

• Individual owners

• Local councils

Litigation is expensive, slow, and stressful. If you don’t check the records, you may unknowingly buy into a scheme already facing legal battles that could impact levies, insurance, and resale value.

6. Poor Insurance Coverage or High Premiums

Insurance is one of the largest expenses in a strata budget. Without due diligence, you may miss:

• Underinsurance

• Exclusions that leave owners exposed

• High premiums due to claims history

• Unresolved risks that insurers have flagged

If the building is underinsured, owners may be forced to cover the shortfall in the event of a major incident.

7. Misleading Marketing or Incomplete Disclosure

Developers, agents, and sellers often present a polished version of the property. But marketing material rarely tells the full story. Without independent investigation, buyers may overlook:

• Defects in new builds

• Disputes between owners and the developer

• Inaccurate representations of amenities

• Pending changes to by‑laws or levies

Due diligence cuts through the sales pitch and reveals the reality.

8. Reduced Resale Value and Marketability

A building with a troubled history—defects, disputes, poor management, or financial instability—can be harder to sell. Even if you’re comfortable with the risks, future buyers may not be. This can:

• Reduce your resale price

• Increase time on market

• Limit your buyer pool

Due diligence helps you assess not just the property’s present condition, but its future prospects.

The Bottom Line

Buying a strata property without full and satisfactory due diligence is like buying a business without checking the books. You’re not just purchasing a unit—you’re buying into a shared financial and legal ecosystem. The more you understand about that ecosystem before you commit, the better protected you are.

A thorough strata review gives you clarity, leverage, and confidence. It can save you from costly surprises and help you make a decision that aligns with your financial goals and lifestyle.

Your Call to Action: Protect Yourself With the Right Legal Guidance

If you’re buying a strata property, don’t navigate the process alone. A property lawyer can guide you through every step, explain the strata inspection report in plain language, and help you identify risks before they become your responsibility. It’s one of the smartest ways to safeguard your investment and minimise your exposure.

Renee Roumanos Legal — call us for your property needs.

We’re here to ensure your strata purchase is informed, secure, and stress‑free. We support you to buy with clarity and confidence.