Buying a Residential Apartment in a Mixed-Use Building: Stratum Subdivision, Two OCs, and Commercial Tenant Risks

Mixed-use buildings — typically a high-rise with retail or commercial on the lower floors and residential apartments above — bring together two very different ownership structures within a single Owners Corporation. Buyers of residential apartments in these buildings face higher OC fees, complex levies, commercial- tenant amenity issues, and the risk that commercial vacancies create financial stress for the entire OC.

This guide covers the structure of mixed-use buildings, the Stratum subdivision concept, the OC voting and fee allocation rules, and what residential buyers should check before bidding.

Stratum subdivision — the structure

Mixed-use buildings in Victoria are typically established under a Stratum subdivision (a hierarchy of subdivisions) under the Subdivision Act 1988 (Vic):

• Top tier:The whole building is divided into two or more “volumetric” lots — typically a residential lot (the upper floors) and a commercial/retail lot (the lower floors). Each volumetric lot has its own primary OC.
• Mid tier: Each volumetric lot is then subdivided. The residential volumetric lot becomes the residential plan of subdivision with apartment lots and residential common property.
• Top-level OC: A separate OC manages shared elements (lifts that serve both, building entrances, structural elements, common services).

As a residential apartment buyer, you’re typically a member of two OCs: the residential OC (your floor and above) and the top-level OC (the whole building).

Two OCs — fees and voting

Common buyer concerns

Commercial tenant noise and amenity

Restaurants, pubs, late-trading retail can create noise issues for residential occupants above. Common issues:

• Mechanical plant noise (kitchen exhaust, refrigeration)
• Patron noise on outdoor seating
• Delivery and waste collection at unsocial hours
• Cooking odours travelling up through risers
• Pest issues from food premises

Commercial vacancy risk

If commercial tenancies sit vacant, the commercial volumetric lot owner may have difficulty paying their share of top-level OC fees. This can:

• Delay essential maintenance
• Trigger special levies on residential owners to cover shortfalls
• Force litigation between OC and commercial owner
• Reduce overall building amenity (vacant shopfronts)

Mixed lift access

Lifts that serve both residential and commercial create amenity and security issues. Some buildings have separate lifts (better); others have shared lifts with security access controls.

Higher OC fees

Residential owners in mixed-use buildings typically pay 30–50% higher OC fees than equivalent pure-residential buildings, reflecting the more complex shared services and structural elements.

What the Section 32 must disclose

Mixed-use building Section 32 should include:

• Plans of subdivision for both volumetric lot and the residential lot
• OC certificates for both OCs (top-level and residential)
• OC rules for both OCs
• OC meeting minutes (last 12 months) showing any commercial-residential disputes
• Insurance policy details for both
• Any current VCAT proceedings between OCs or with commercial owner

Buyer due diligence

1. Visit at all hours. Check noise, odours, traffic at peak hours and late evenings.
2. Identify commercial uses. Restaurants, pubs, gyms, convenience stores all have different amenity profiles.
3. Read both OC certificates. Look for unpaid levies, special levies, recent disputes.
4. Top-level OC financials. Confirm commercial owner is current with levies.
5. Lift and access arrangements. Separate or shared. Security access from commercial floors.
6. Commercial lease terms.If commercial spaces are tenanted, what’s the lease tenure and break clauses?

Ready to check your contract? Upload your Section 32 or Contract of Sale at precontractreview.com for a pre-contract check — typically in just a few minutes.