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Difference between revisions of "Buying a Condominium"
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#:Review the minutes of meetings to see if any major repairs have recently been made or are planned. If the strata lot is part of something called a '''section''', you also need to check the minutes of general meetings of the section as well as minutes of the meetings of the section’s executive. In each case, ask for complete copies of the relevant minutes for at least the past 2 years. | #:Review the minutes of meetings to see if any major repairs have recently been made or are planned. If the strata lot is part of something called a '''section''', you also need to check the minutes of general meetings of the section as well as minutes of the meetings of the section’s executive. In each case, ask for complete copies of the relevant minutes for at least the past 2 years. | ||
#:Ask to see the Strata Corporation’s depreciation report, and carefully review it for expensive replacements, repairs or upgrades which have been recommended, particularly those which are likely to be costly, required in the near future and for which no contingency reserve funds have been set aside. | #:Ask to see the Strata Corporation’s depreciation report, and carefully review it for expensive replacements, repairs or upgrades which have been recommended, particularly those which are likely to be costly, required in the near future and for which no contingency reserve funds have been set aside. | ||
#''' | #'''Is the community right for you?'''—Review the minutes carefully for issues which might concern you. If you are on a fixed income, or borrowing heavily to purchase a strata lot, then watch for discussions which might indicate expenses, such as ongoing or threatened litigation, water ingress, building envelope, structural or major repair concerns. | ||
#:A careful review of the minutes can tell a great deal about the Strata Corporation. You might note noise complaints relating to an adjacent strata lot, or very strict enforcement of the bylaws, recurring disputes, the existence of factions or similar trends which may or may not concern you. Are the minutes a well-organized and well written record which transparently records decisions, or do they resemble a gossip column? Is there a licensed strata manager involved in meetings? Do they appear to have difficulty electing a full strata council? Does the Council meet monthly or infrequently? | #:A careful review of the minutes can tell a great deal about the Strata Corporation. You might note noise complaints relating to an adjacent strata lot, or very strict enforcement of the bylaws, recurring disputes, the existence of factions or similar trends which may or may not concern you. Are the minutes a well-organized and well written record which transparently records decisions, or do they resemble a gossip column? Is there a licensed strata manager involved in meetings? Do they appear to have difficulty electing a full strata council? Does the Council meet monthly or infrequently? | ||
#''' | #'''The type of ownership: freehold or leasehold'''—our legal system distinguishes between freehold ownership and leasehold possession. In a lease, the landlord owns the property, but gives possession to the tenant for the term of the lease. In most condominium developments, people own their strata lots. These are called freehold developments—each owner holds “fee simple title”. | ||
#:However, in a leasehold development, a landlord owns the entire property parcel, but grants a long-term lease to a developer (often, for 99 years) to build a strata development there. The developer is a long-term tenant who, with the landlord’s permission, creates a strata development on the landlord’s property, and then the developer sells leasehold interests in each strata lot to purchasers for a specified term. | #:However, in a leasehold development, a landlord owns the entire property parcel, but grants a long-term lease to a developer (often, for 99 years) to build a strata development there. The developer is a long-term tenant who, with the landlord’s permission, creates a strata development on the landlord’s property, and then the developer sells leasehold interests in each strata lot to purchasers for a specified term. | ||
#:If a person is registered on title as the long-term tenant under a long-term lease in a leasehold strata development, the Strata Property Act treats that person as an owner. The long-term tenant must pay the monthly strata fees and any other contributions, such as special levies, and can sell their leasehold interest in their strata lot to the next leasehold buyer. | #:If a person is registered on title as the long-term tenant under a long-term lease in a leasehold strata development, the Strata Property Act treats that person as an owner. The long-term tenant must pay the monthly strata fees and any other contributions, such as special levies, and can sell their leasehold interest in their strata lot to the next leasehold buyer. | ||
#:Depending on the project, the developer may prepay all the rent due under the long-term lease, or ongoing head lease payments may form a part of the leasehold strata corporation’s budget payable as part of the strata fees. | #:Depending on the project, the developer may prepay all the rent due under the long-term lease, or ongoing head lease payments may form a part of the leasehold strata corporation’s budget payable as part of the strata fees. | ||
#:Be sure that you understand the remaining term of the head-lease, the term of your own leasehold, and what happens when the terms expire. Normally, the long-term tenant must vacate, or leave, the strata lot, unless other arrangements are made. The landlord may have to pay an amount to the departing long-term tenant using a formula in the long-term lease or by government regulation. It is important to carefully read and fully understand the lease contracts and related documents. If you plan to buy the interest of a long-term tenant in a leasehold strata lot, you should make any offer subject to first reviewing the long-term lease and all related documents with your lawyer. Make sure that you understand what you are buying and that the leasehold is being valued correctly. The fair market value of a leasehold strata lot is usually much less than the value of a comparable freehold strata lot. | #:Be sure that you understand the remaining term of the head-lease, the term of your own leasehold, and what happens when the terms expire. Normally, the long-term tenant must vacate, or leave, the strata lot, unless other arrangements are made. The landlord may have to pay an amount to the departing long-term tenant using a formula in the long-term lease or by government regulation. It is important to carefully read and fully understand the lease contracts and related documents. If you plan to buy the interest of a long-term tenant in a leasehold strata lot, you should make any offer subject to first reviewing the long-term lease and all related documents with your lawyer. Make sure that you understand what you are buying and that the leasehold is being valued correctly. The fair market value of a leasehold strata lot is usually much less than the value of a comparable freehold strata lot. | ||
#''' | #'''Governing Bylaws and Rules''' | ||
#:As an owner of a strata lot, you will be legally bound to comply with the bylaws and rules of the Strata Corporation, and you will be deemed to have knowledge of their requirements. Read them carefully before you buy. | #:As an owner of a strata lot, you will be legally bound to comply with the bylaws and rules of the Strata Corporation, and you will be deemed to have knowledge of their requirements. Read them carefully before you buy. | ||
#:Collectively bylaws and rules set out rights and responsibilities of owners, tenants, occupants and visitors, and also set out special restrictions on the use of each strata lot, common property and common facilities. | #:Collectively bylaws and rules set out rights and responsibilities of owners, tenants, occupants and visitors, and also set out special restrictions on the use of each strata lot, common property and common facilities. | ||
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#:If you ask, a seller can obtain strata documents from the strata corporation for you to review, including a set of up-to-date, consolidated bylaws, as well as a complete copy of the rules. | #:If you ask, a seller can obtain strata documents from the strata corporation for you to review, including a set of up-to-date, consolidated bylaws, as well as a complete copy of the rules. | ||
#:Also, understand that the bylaws and rules can be changed, and some changes may dramatically affect how you can use your property. | #:Also, understand that the bylaws and rules can be changed, and some changes may dramatically affect how you can use your property. | ||
#'''Other Restrictions'''—Bylaws are not the only documents which can restrict how you may use a strata lot. Covenants, easements and other documents registered against title may limit the use of the strata lot or affect its value. For example, in a bare land strata development, the title of your strata lot may be encumbered with a building scheme that limits the size or other details of any house you want to build on your strata lot, or may restrict your use of the strata lot. | |||
#:Municipal Bylaws and Zoning may further restrict use of a strata lot. | #:Municipal Bylaws and Zoning may further restrict use of a strata lot. | ||
#:With your lawyer, review the results of a current title search for the strata lot, and the other legal documents and circumstances. | #:With your lawyer, review the results of a current title search for the strata lot, and the other legal documents and circumstances. | ||
#''' | #'''Confirm what you are buying'''—Check the location, dimensions and area of your strata lot. | ||
#:Balconies, parking stalls, storage units and other non-residential areas you may expect to have access to are sometimes configured in odd ways legally. For example parking spaces can be common property, limited common property, or part of your strata lot. Each of those configurations have differing legal implications and can change your repair obligations. | #:Balconies, parking stalls, storage units and other non-residential areas you may expect to have access to are sometimes configured in odd ways legally. For example parking spaces can be common property, limited common property, or part of your strata lot. Each of those configurations have differing legal implications and can change your repair obligations. | ||
#:If the parking stall or storage locker currently assigned to the strata lot is designated as common property, then the bylaws may authorize the strata corporation to allocate or reallocate the use of a stall or locker, and you need to confirm whether you will keep that assignment. The strata corporation may also use a short-term exclusive use agreement or special privilege to give an individual owner or tenant the use of a stall or locker. Alternatively, the developer may have arranged for an affiliated corporation to hold a long-term lease over the common property parking or storage area. In that case, to use a particular stall or locker, the owner may need to negotiate an assignment of the right to use that stall or locker under the long-term lease. | #:If the parking stall or storage locker currently assigned to the strata lot is designated as common property, then the bylaws may authorize the strata corporation to allocate or reallocate the use of a stall or locker, and you need to confirm whether you will keep that assignment. The strata corporation may also use a short-term exclusive use agreement or special privilege to give an individual owner or tenant the use of a stall or locker. Alternatively, the developer may have arranged for an affiliated corporation to hold a long-term lease over the common property parking or storage area. In that case, to use a particular stall or locker, the owner may need to negotiate an assignment of the right to use that stall or locker under the long-term lease. | ||