The prospect of buying into a strata unit is all too familiar for Vancouverites, and with good reason. The price of land continues to skyrocket due to a demand level that has a voracious, unquenchable appetite, and for many who wish to live in urban areas, condos are the only option. Fortunately most residents of our fair city are more than comfortable with the restrictions involved with shared living.
Buying into a condo doesn't have to be overwhelming, and when it comes to strata documents it really is about consumers being protected and making sure the building isn't facing any major issues.
Condo buyers are very well protected in Vancouver and the rest of BC, largely due to strict government regulations. Depreciation reports need to be done every three years in BC. This expense ensures that there are no big surprises for new owners, and current owners can address and serious issues facing their building. Buildings with four or fewer units aren't required to have a depreciation report, and a strata council can decide not to conform if 75 per cent of owners don't want to incur this expense. Learn more about the requirements in BC here.
Navigating a depreciation report can be quite challenging, so it's important to have as many eyes on it as possible. The key component you'll want to address is any future work that needs to be done to the building. If there are three or four major projects recommended to be completed in the next 10 years, it might be time to reconsider the purchase or to negotiate a further discount from the purchase price.
Going over the year-end financials of a building will reveal what type of expenses your building incurs year after year. Are there any items that stick out like a sore thumb? Buildings require consensus between owners to add any new expenses to the docket, so if you notice a number of questionable items you could be dealing with a condo board that likes to spend.
Contingency is important when buying into strata, many people don't realize that strata's have first dibs on your money - even before property taxes and your mortgage! When you buy into a building, try and buy into a building with a high financial reserve. As a rule of thumb, $5000 per unit for a wood framed structure and $10,000 per unit for a concrete building is a good rule of thumb.
Learn From the Minutes
Reading through the strata council minutes can be a little tedious, but it's an important component of making an informed purchase decision. Do your fellow owners take action when something needs to be done or do they defer to another time? There is no worse course of action than trying to avoid issues in a building, in my opinion. Deciding if the council is proactive or reactive is one of the primary reasons to go over the minutes.
Strata minutes shouldn't be overwhelming or daunting, but it is important to have several people go over the documents on your behalf – including a real estate professional or two. Consumers in BC are very well protected, but leaving anything to chance when it comes to a real estate purchase is extremely foolish.