If you’re looking to buy a strata unit – and especially if you’re doing it for the first time – the experience can be overwhelming. You find a place you love in a great building in a neighbourhood that fits your lifestyle, and then you’re presented with a stack of paper and told to read through it before making a final decision. The pile usually includes a whole mess of different documents, and it’s not always clear what you should be looking for when you read them. In today’s post, I’m going to try to clear that up.
The first step is to understand what the various documents are for. In most strata in B.C., you’ll be looking at some or all of the following:
- Form B: This is your unit’s financial report. It sets out the unit’s square footage, strata fees, parking space and storage locker, and any money owed to the strata by the unit’s current owner. It also lists the building’s contingency fund – the money strata council has set aside to cover unexpected expenses. Lenders will generally want to see this document before approving a loan.
- Depreciation Report: This is a report completed by an external consultant that details the building’s overall condition, estimated costs and timelines of upcoming repairs or replacements and identifies issues in need of further investigation. In B.C., all strata developments with more than four units must have one of these reports done every three years.
- Strata Bylaws: These are the rules that everyone in the complex must abide by. They relate to a long list of issues, including pets, noise, barbecuing, rental restrictions, storage, use of common property and so on. They also set out the consequences for breaking those rules.
- Engineering Report: Every strata council in B.C. must hire an engineering consultant at the 2-year mark, the 5-year mark and the 10-year mark (from the completion of construction) to assess the building for deficiencies that could be covered by their warranty. Engineering reports summarize the results.
- Strata Minutes: These are the records of the regular meetings of the building’s elected strata council, during which they discuss ongoing issues related to security, noise, maintenance and so on, and how to address those concerns. You should obtain copies of these going back at least two years.
- AGM Minutes: These record the building’s annual general meetings attended by representatives of all strata units, where they discuss and vote on an annual budget, proposed bylaws, special levies, the new council and other high-level issues.
- Special General Meeting Minutes: These record any general meeting of strata owners that was called to deal with something out of the ordinary, such as urgent problems with the building, substantial conflicts between units, special levies and so on.
- Insurance Note: This details the strata’s property and liability insurance. This generally covers the building’s structure, its common areas and its original fixtures – but not the contents of your unit.
- Strata Plan: This is the plan submitted by the complex’s builder, showing the dimensions of all strata units, common areas and so on.
All of these documents are important in one way or another, but when you’re reviewing them, you should be on the lookout for certain key items. I’ve detailed the most vital below.
1) Details of the Unit
Make sure the particulars of your unit’s maintenance fees, parking stalls, storage locker and square footage match the listing. If not, ask why (source: Form B / Strata Plan).
2) Upcoming Special Levies
Look for any big upcoming charges that could affect you. Have the owners agreed to a big assessment in the near future? Is one being discussed by council? If so, be sure to price it in to the purchase cost (source: AGM Minutes, Strata Minutes).
3) An Up-to-Date Depreciation Report
Be sure a depreciation report has been completed within the past three years. Lenders generally require a copy of this document; if none can be provided, it may limit your borrowing options, and could point to an inattentive strata council (or worse, one that’s hiding from a problem).
4) Future Repairs
Make sure you know about any upcoming major repairs – such as building envelope or elevator replacements – that haven’t yet been approved, since these could result in significant levies down the road (source: Depreciation Report).
5) Robust Contingency Reserve
Make sure there’s enough money in the strata’s contingency reserve to cover the type of major repairs noted above (source: AGM Minutes).
6) Lifestyle Restrictions
Be sure you understand any restrictions the strata has put on rentals, pets, smoking, barbecuing, quiet hours, unit alterations and so on. If any of these conflict with your plans or lifestyle, you may need to reconsider the purchase (source: Strata Bylaws).
7) Persistent Problems
Look for indications of recurring issues, such as reports of break-ins, recent security upgrades, noise complaints, owner conflicts, special levies and so on – and ensure these have either been resolved or that you’re prepared to put up with them (source: Strata Minutes).
8) Proactive Strata Council
Look for signs that the strata council is performing well. Are they avoiding deficits? Are they resolving conflicts quickly? Are they addressing problems proactively? Are they price shopping on big purchases? These can have a big impact on your budget and lifestyle (source: Strata Minutes, AGM Minutes, Special General Meeting Minutes).
9) Strata Insurance
Be sure you understand what the strata’s insurance covers, how much it covers it for and what kind of deductibles are involved – and pass this information along to your insurer to make sure you have proper coverage (source: Insurance Note).