There are some important things to consider when buying a strata property. Housing that is part of a strata can include condos, townhouses, rowhouses, duplexes, even single-family homes in bare land strata corporations. Buying one of these types of properties involves some steps and details that you may not be familiar with, especially if you’ve only purchased a single-family home or this is your first property purchase.
Here are some helpful points to consider.
Review Strata Documents
A full review of the strata documents is a crucial step before entering into a purchase agreement. This includes reviewing, at a minimum, the past 2 years of strata meeting minutes. The minutes can provide information regarding potential issues within the strata, which may indicate upcoming repairs that are planned (or not planned, but perhaps should be). They can provide insight as to how the strata is operating.
You also need to review the Form B. This will outline your monthly strata fees, parking, storage, and other crucial information. The Form B is one of the most important documents you will receive. Along with confirming your right to a parking stall and/or storage locker, it will also show you important aspects to consider such as the balance of the contingency fund, outstanding levies, and if there is any outstanding litigation against the complex.
Budget & Contingency Fund
A portion of your monthly strata fees are set aside in a contingency reserve fund. This fund is used to pay for major maintenance and repairs to the common areas. You want to understand if the current contingency fund has enough to cover any upcoming expenses. Is the strata collecting enough in fees to cover expenses for current and future projected costs?
A healthy contingency fund amount will depend on the size and age of the strata. Contingency funds are typically used to fund repairs and upgrades to the complex. There are minimum requirements on how much a strata must contribute to the contingency fund each year.
A key point to understand is that having a strata that is proactive about maintaining the complex is important. Any indication of a lack of repairs is a red flag and will decrease property values in the long run.
A Depreciation Report provides an outline of the condition of the building. It will include information on siding, windows, roof, plumbing, heating structure, and systems. This information will indicate the timeline projected for maintenance and upgrades required, and the projected costs.
There will also be the strata plan showing the unit entitlement, plus there may be Engineering Reports to review.
Insurance Coverage & Claims History
Review the strata’s insurance coverage and understand what it covers. You’ll also need to consider additional personal insurance to cover your unit and personal belongings. Strata insurance deductibles can vary greatly from building to building, so you need to be sure you are protected with adequate insurance for any deductible coverage. Plus additional comprehensive coverage if your property will be tenanted.
Review the Bylaws & Rules
Be sure to understand the bylaws and rules as they can significantly impact your living conditions. If you have any pets, there may be restrictions on pet size and/or number of pets in a strata lot.
Each strata corporation will have a set of bylaws and rules that can limit what you can do in the common property areas as well as inside your own unit. There may also be restrictions on the alterations you can make inside your strata lot (type of flooring, etc). It’s important to carefully review the bylaws and rules to make sure that you can use your strata lot the way you intend to.
Parking and Storage
Having a parking spot (or two) and a separate storage locker are important to overall value, and you need to make sure you check if these features come with your strata lot. You need to be fully informed and remove any possibility of disappointment after you complete your purchase.
Strata documents and the steps involved in purchasing in a strata complex may seem overwhelming at first glance. It’s essential you don’t ignore the importance of fully understanding and confirming all details. This is where expert help should come in. Especially with such a large purchase and commitment on your part.
Whether you’re looking at a gleaming high-rise in Downtown Victoria or a townhouse complex in Cadboro Bay, strata living offers a unique lifestyle with its own set of benefits and considerations. Armed with knowledge and professional guidance, you can confidently make a decision that suits your lifestyle and financial goals.
Our team of strata experts has more than 28 years’ experience buying, selling and managing strata properties in and around Greater Victoria. We have sold more than 660 strata properties, managed thousands of units and have intimate knowledge and relationships throughout the buildings and complexes in our community.
The Folio Group can help guide you through the complexities and answer questions you didn’t even know were important to ask.
To Get You Where You Want To Be. Wherever You Are.