Reviewing strata documents is a key step when you’re buying a condo.
In fact, you shouldn’t even reach for your chequebook or make an offer until you’ve had a chance to read those strata documents.
That’s because, when you’re buying a condo, you’re not just paying for the unit you’ll be living in; you’re also buying a share of the entire building. You’re assuming a proportionate share of its maintenance and security.
Strata documents are your window into the health of the building and the strata corporation that is responsible for it. Reading those strata documents prior to signing a purchase agreement will give you a good idea if you’re making a sound investment or pouring your money into an ever-widening sinkhole. They’ll raise red flags that could make the difference between a good living experience and a regrettable decision.
Strata documents to request from your realtor
• Strata Plan – This is a legal document that is the building plan submitted by the builder. It shows all the dimensions of all the units, common areas, etc. It is important to review this document carefully to determine exactly what you’re buying, and that the square footage in the sales listings matches the legal measurements.
• Form B – This is the strata unit’s financial report. It will tell you the current strata fees for the unit. It will also tell you whether the unit’s current owners owes the strata any money, and whether the unit also includes a parking space and storage locker. The Form B will also advise you of the building’s contingency fund. That’s the money it has in the bank to pay for emergencies or to offset unexpected expenses. A Form B is often required by lenders before you can obtain a mortgage for a strata unit.
• Strata Bylaws – These strata documents are the rules everyone in the building must abide. This is where you can find out about pet, rental and age restrictions. There may also be rules about noise or barbecues on balconies. It could cover storage of things like bicycles. It also outlines consequences of breaking those rules. The bylaws will give you a good idea if a building is a good match for your lifestyle.
• Strata Minutes – Reading the minutes of regular strata council meetings will give you an idea of ongoing issues in the building. These can include troublesome residents, security, noise and maintenance. The minutes will also show how the council deals with those issues. The strata council is a board of residents who volunteer or are elected annually to manage the building and its finances.
• Annual General Meeting Minutes – The AGM is called by the strata council to update residents on the strata’s finances. It sets a budget for the coming year as well as the strata fees to cover that budget. The AGM also gives the council and residents a chance to discuss and put proposed new bylaws and special levies to a general vote, as well as select a new strata council. It’s often a forum for residents to address in an open meeting grievances that may have been bugging them.
• Engineering Report – Every strata building has a 2-5-10 warranty that covers various structural, mechanical and cosmetic components. As each milestone year of the warranty is passed, the strata council must hire an engineering company to assess the building for any deficiencies that might be addressed by the warranty.
• Depreciation Report – In 2013 the BC government mandated every strata with more than four lots needs to submit a depreciation report. It determines the short and long term health and upkeep of the building. The report tells owners how much repair and replacement work is required or could be anticipated in future years, as well as the approximate costs and timeline for that work. It also provides an opinion of the general condition of the strata’s common property, buildings and assets and notes any potential problems that could require additional testing.
Most depreciation reports are prepared by qualified architects or engineers and they must be written in clear, concise language. The reports must be updated every three years.
• Insurance – Every strata corporation must have property and liability insurance for the building(s) on the strata plan, common areas and original fixtures. It is important to examine the strata’s insurance to determine what is covered as well as deductibles for perils like water damage. Take a copy to your insurance provider to ensure your own insurance covers those deductibles in case your unit is deemed responsible for a flood or other damage.
About 34 per cent of BC residents currently live in strata developments. For them, reading and understanding the strata documents can be as important as being familiar with municipal bylaws or even traffic rules.
If you’re looking at strata properties, your realtor can arrange access to all the strata documents you should read before you buy.