Strata risks: what every apartment owner should watch for
Apartment risk lives across the lot, the shared building and the scheme that runs it. Read the maintenance plan beside the funds and liabilities, then follow the minutes for water, façade, fire, defect and legal issues. Work out who makes each decision and who pays. Recent problems may not have reached the minutes yet, so thin or delayed records deserve a question.
- 01IssueThe problem itself: a leak, a crack, a lift, a façade
- 02BoundaryWhose side of the plan it falls on
- 03ResponseWho decides, who pays, and where that gets written down
In a shared building, the committee is part of the structure.
Shared-building exposure
Apartment ownership connects a private lot to common property and collective decisions. The registered plan and state law establish the precise boundary. Shared systems, building defects, insurance, contracts and scheme finances can affect an owner even where the lot interior looks sound. Recent events, poor recordkeeping and inaccessible areas can leave gaps in the records.
The risks that land on owners
Special levies from an underfunded reserve
A scheme may resolve an additional or special levy when available funds fall short of an approved need. Assess the fund beside the maintenance plan, the quotes, the contracts, the liabilities, the arrears and the levy schedule. Who ends up paying around a sale comes down to the contract and the state.
Combustible cladding
For mid-rise and high-rise buildings of roughly the 2000s–2010s, combustible cladding remains a live risk. The exposures are the cost of assessment, the cost of rectification, and the effect on insurance and resale in the meantime. The records should show whether a cladding assessment has been done and whether any rectification, and its levy, is on the books.
Builder defects
Newer buildings carry the risk of original construction defects, waterproofing, fire separation, structural and services issues that surface in the early years. They can be expensive to rectify and slow to resolve where they end up in dispute or a warranty claim. The minutes usually reveal whether defects have been identified and pursued, or are still unresolved.
Waterproofing and balcony membranes
Failed waterproofing, particularly in balcony membranes, is consistently one of the leading defect categories in apartment buildings, and an expensive one because the repair usually crosses common property and multiple lots. It is a frequent trigger for special levies, and a recurring line in the minutes of buildings that have it.
Underinsurance of the building
Scheme insurance obligations and the boundary between building, common-property, lot-owner and contents cover vary by jurisdiction, plan and policy. Review the current schedule, valuation basis, declared value, excesses, exclusions, claims and responsibility for owner improvements. The event and policy determine any coverage gap.
A poorly run owners corporation
Thin minutes, high arrears, deferred decisions, missing close-out evidence or long-running disputes are investigation signals. Compare several reporting periods and trace material issues from proposal to resolution, funding, completion and warranty.
Buying in? You inherit all of this on day one
A buyer acquires the lot within the scheme's continuing physical, financial and governance position. The contract and state law determine treatment of existing levies and disclosure. Use the records to identify exposure and uncertainty, then have legal and technical advisers explain their effect. The companion checklist is what to check before buying an apartment.
How to stay ahead of them
Read financial statements, the maintenance-fund balance and minutes as they arrive. Compare the same signals year on year using the owners-corporation records guide.
Frequently asked questions
What are the strata risks for apartment buyers?
The same ones owners carry, inherited in full at settlement: special levies from an underfunded maintenance fund, combustible cladding, builder defects, failed waterproofing, underinsurance and weak governance. For a buyer they are a pricing exercise: every one is visible in the owners-corporation records before you commit, which is why reading those records is the core pre-purchase check.
What are the biggest risks of owning an apartment?
Mostly building-wide ones: a special levy from an underfunded maintenance fund, combustible cladding, builder defects, failed waterproofing, an underinsured building, and poor owners-corporation governance. Each can land a large, unplanned cost on you regardless of your own unit’s condition.
What is a special levy in strata?
An additional contribution resolved under the applicable scheme process. Its purpose, amount, instalments and responsibility around a sale must be read from the resolution, state law, disclosure and contract.
How do I avoid a surprise strata levy?
Read the building’s records as they arrive, the financial statements, the sinking-fund balance against the building’s age, and the minutes for deferred major works. A large, deferred work is usually a special levy in waiting, and reading the papers turns it from a shock into a date you can plan for.
Is combustible cladding still a risk for apartment owners?
For buildings of roughly the 2000s–2010s it can be, through the cost of assessment and rectification and the effect on insurance and resale. Check the owners-corporation records for any cladding assessment and whether a rectification levy is on the books.
What should I check about scheme insurance?
Check the current policy, valuation basis, declared value, excesses, exclusions, claims and the boundary between scheme and lot-owner cover. Obligations and shortfalls depend on state law, the plan, policy and actual event.
How can I tell if my owners corporation is well run?
Look for a current works plan, aligned funding, manageable arrears, clear minutes, appropriate insurance and closed-out disputes.
How this guide was researched
For each physical problem, we traced the same four questions: whose side of the boundary, who decides, who pays, and where the evidence lives.
Limits: General Australian strata guidance. Use the registered plan, scheme documents and state-specific professional advice.
Sources
- Who is responsible for what in strataNSW Government · accessed 2026-07-19
- Changes to strata lawsNSW Fair Trading · accessed 2026-07-19
- What is an owners corporation?Consumer Affairs Victoria · accessed 2026-07-19
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