Buying an apartment or unit in Victoria is one of
the biggest financial decisions you’ll ever make.
But while most buyers focus on the property itself,
the strata report — or owners corporation (OC)
documents — can reveal serious issues that affect
your investment for years to come.
In Victoria, what other states call a “strata report”
is actually a collection of owners corporation
documents including the OC certificate, financial
statements, meeting minutes, and insurance records.
Knowing what to look for could save you tens of
thousands of dollars.
Here are 10 red flags every Victorian buyer should
watch for.
1. A Depleted Sinking Fund
The sinking fund (called a maintenance fund in
Victoria) is money set aside for major future repairs
— think roofing, lifts, and structural work. If the
balance is low relative to the size and age of the
building, owners face a special levy to cover
upcoming works.
What to look for: Compare the maintenance fund
balance against the capital works plan. A healthy
fund should cover at least the next 2-3 years of
planned expenditure.
2. A History of Special Levies
Special levies are one-off charges raised when the
OC doesn’t have enough money to cover unexpected
repairs or legal costs. One special levy can be
understandable. A pattern of them signals poor
financial management.
What to look for: Check AGM minutes for the past
3 years for any special levy resolutions. Ask
whether any are currently proposed but not yet
passed.
3. VCAT Disputes
The Victorian Civil and Administrative Tribunal
(VCAT) handles disputes between lot owners and
owners corporations. Active or recent VCAT
proceedings are a serious red flag — they indicate
unresolved conflict, potential legal costs, and
building management problems.
What to look for: The OC certificate must disclose
any current VCAT proceedings. Also scan AGM minutes
for mentions of legal action or disputes.
4. Unresolved Building Defects
Older Melbourne apartment buildings in particular
can carry unresolved defect issues — waterproofing
failures, structural cracks, or fire safety
non-compliance. These become the collective
responsibility of all lot owners to fix.
What to look for: Check committee meeting minutes
for references to building defect reports,
contractor disputes, or outstanding rectification
orders.
5. Cladding Issues
Melbourne has been significantly affected by the
combustible cladding crisis following the Grenfell
Tower fire in London. Buildings with non-compliant
cladding face mandatory rectification under
Victoria’s Cladding Safety Victoria program —
at significant cost to owners.
What to look for: Ask the selling agent and
check OC records for any cladding audit results,
rectification orders, or Cladding Safety Victoria
correspondence. This is non-negotiable due
diligence for any Melbourne apartment built
between 1994 and 2014.
6. Inadequate Insurance
Under the Owners Corporations Act 2006 (Vic),
owners corporations must maintain building
insurance. But not all policies are equal.
Underinsurance is common — if the insured
replacement value is lower than actual
rebuild costs, lot owners make up the
difference.
What to look for: Check the insurance
certificate for the building’s insured
replacement value and compare it against
independent valuations if possible. Note
any exclusions.
7. Infrequent or Poorly Attended Meetings
A well-run owners corporation holds regular
AGMs and committee meetings with good owner
participation. Sparse minutes, low attendance,
or years between meetings suggests passive
management and deferred maintenance.
What to look for: AGMs should be held annually.
Committee meetings should occur regularly.
Check that quorum was achieved and resolutions
were passed properly.
8. High Levels of Arrears
If multiple lot owners are behind on their OC
fees, the owners corporation has less money
to maintain the building and may need to
raise special levies to cover the shortfall.
High arrears also signals financial stress
among current owners.
What to look for: The OC certificate will
show whether fees for the specific lot are
paid up to date. Ask your conveyancer to
request a full arrears report for the scheme.
9. No Capital Works Plan
Tier 1 and Tier 2 owners corporations in
Victoria (those with more than 100 lots or
annual fees over $200,000) are legally
required to have a maintenance plan. Smaller
OCs are encouraged to have one. Without a
plan, there’s no visibility on future costs.
What to look for: Ask whether a capital works
or maintenance plan exists and request a copy.
If none exists for a large building, treat
it as a serious warning sign.
10. An Unresponsive or Poorly Reviewed Manager
The owners corporation manager handles
day-to-day administration, financial
management, and compliance. A poor manager
leads to deferred maintenance, financial
mismanagement, and owner frustration.
In an industry with low barriers to entry,
quality varies enormously.
What to look for: Google the management
company name and check reviews. Look for
patterns of complaints about communication,
fee transparency, or maintenance response
times. Check that the manager is registered
with Consumer Affairs Victoria.
What To Do Next
Reading OC documents can be overwhelming —
especially for first-time buyers. Before you
sign anything, we recommend:
- Engaging a licensed Victorian conveyancer
to review the full Section 32 and OC
certificate - Booking an independent building and pest
inspection - Speaking to a mortgage broker to understand
your borrowing capacity before making an offer
Disclaimer: This article is for general
informational purposes only and does not
constitute legal, financial or property advice.
Always engage qualified professionals before
making any property purchase decision.
Vic Property Guide 
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