What are the biggest red flags in a strata report?

The six that most often change a purchase decision are combustible cladding, concrete cancer (spalling), water ingress, asbestos, active litigation or NCAT proceedings, and fire safety non-compliance such as an overdue Annual Fire Safety Statement.

Does a special levy mean I shouldn't buy?

Not by itself. What matters is its status and purpose. A levy already struck is a liability you may inherit; one merely proposed is a discussion. A levy that funded a completed repair can even be a good sign that the building addresses its problems.

What does 'unable to be determined from visual inspection' mean?

It means the inspector could not tell either way — commonly because there was no access. It is not an all-clear. It marks a blind spot in the inspection that you may want investigated before committing.

Guides

Strata report red flags

Australian strata · updated 2026

Most issues in a strata report are ordinary. A handful are not. These six come up repeatedly in professional due diligence because each one can cost owners tens or hundreds of thousands of dollars — and each is usually visible in the report if you know the words to look for.

1. Combustible cladding

Since the Grenfell and Lacrosse fires, non-compliant external cladding has been the single most consequential issue in Australian strata. Remediation can run to millions across a building, and affected schemes have faced insurance and re-sale difficulty.

Look for: cladding, ACP, aluminium composite, EPS, combustible, rectification order, Project Remediate, façade.

2. Concrete cancer (spalling)

Water reaches the steel reinforcement inside concrete; the steel rusts, expands and cracks the concrete from within. It is progressive — it does not stabilise on its own — and access costs (scaffolding, engineering) often exceed the repair itself.

Look for: spalling, concrete cancer, reinforcement corrosion, remedial works, engineer's report.

3. Water ingress

The most common serious defect, and frequently the precursor to the others. Recurring references across several years of minutes matter more than a single mention — that pattern suggests a problem being managed rather than fixed.

Look for: water ingress, water penetration, leak, waterproofing, membrane, damp, staining.

4. Asbestos

Common in buildings constructed before the late 1980s and not, in itself, alarming — undisturbed asbestos managed under a register is normal. The cost arrives when renovation or repair disturbs it, so read it alongside the works plan.

Look for: asbestos, asbestos register, ACM, hazardous materials survey.

5. Litigation and disputes

Active proceedings — NCAT applications, builder or developer claims, disputes with owners — mean legal cost, management distraction, and an outcome you inherit. Note that litigation against a builder for defects can be positive: the owners corporation is pursuing someone else to pay.

Look for: NCAT, tribunal, proceedings, litigation, solicitor, mediation, claim.

6. Fire safety compliance

In NSW, most apartment buildings must lodge an Annual Fire Safety Statement (AFSS) every year certifying that the building's fire safety measures have been assessed. This one behaves differently from the others: because the obligation is annual and mandatory, a report that never evidences compliance is itself worth a question — silence isn't reassurance.

Look for: annual fire safety statement, AFSS, fire order, fire safety measures, essential services.

Reading the language carefully

Two phrasings are routinely misread, in opposite directions.

"Unable to be determined from visual inspection" is not an all-clear. It means nobody could tell — usually for lack of access. That is a blind spot in the inspection you paid for, and it may be worth investigating before you commit.

A special levy is not automatically bad. Its status is what matters: a levy struck (approved and payable) is a liability that may pass to you; one merely proposed is a conversation; one already paid that funded a completed repair is arguably evidence of a building that fixes its problems. A pattern of repeated levies is the real warning — that suggests the capital works fund is chronically underfunded.

A red flag is a reason to ask a question, not automatically a reason to walk away. Every one of these has a benign version and a serious version, and the difference is usually in the detail — the severity, the date, and what the owners corporation did next.

Checking your own report

NuData Strata screens for all six automatically and, importantly, distinguishes present from suspected from inconclusive — with the report's own wording and a link to the page it appeared on, so you can read the context yourself.

Screen your strata report