Buying a Condominium: Difference between revisions

:A.'''[http://www.bclaws.ca/Recon/document/ID/freeside/12_43_2000#FormBInformationCertificate Form B Information Certificate]'''—this sets out required facts about the current status of the strata corporation and the strata lot being sold. The Form should include the financial obligations for that strata lot, any parking and storage facilities assigned to the strata lot, and other useful facts. The Form B should have attached documents such as the current budget, rental disclosures statement (if any), rules and the depreciation report for the strata corporation (if there is one).  

:The Form B Information Certificate also shows if the strata corporation has adopted any new bylaws which will take effect but haven’t yet been filed at the Land Title Office, and whether the strata corporation is involved in any lawsuits or arbitration.  

:You should always review a current Information Certificate before making an offer to buy a strata lot. Or you should make your offer subject to reviewing a current Information Certificate.  

:The strata corporation may charge a fee plus the cost to copy the Form B Information Certificate.

:B. '''Depreciation report'''—every strata corporation with 5 or more strata lots must obtain a depreciation report unless the owners have regularly voted by 75% vote resolution to defer the report. If a depreciation report has been prepared, a copy of it must be attached to the Form B Information Certificate. The depreciation report must have financial forecasting and an inventory and evaluation of the common property and common assets and any other property that the strata corporation has a duty to maintain. A depreciation report helps the owners anticipate and budget for future common expenses and special assessments.  

:If a depreciation report has not been obtained, be very careful in evaluating the condition of the property as a whole.

:C. '''Title to the strata lot'''—this document lists any covenants, easements and other encumbrances on title. With your lawyer, review the documents registered against title, and confirm that there are no registered documents which reduce the value or usability of the strata lot.   

:D. '''The strata plan'''—it shows the boundaries of the strata lot you are thinking of buying. The strata plan, or associated schedules, show the unit entitlement which determines the strata lot’s proportionate share of contributions, and the schedule of voting rights for the strata corporation. Compare your obligations to those of other strata lots to ensure that they are proportionate.

:E. '''The bylaws of the strata corporation'''—these set out the specific rights and obligations which an owner has, and give you a good sense of how rigidly the strata corporation controls the owners.   

:F. Obtain and review the '''Land Title Office’s ''Strata Plan General Index''''' for other documents registered in the Land Title Office, such as limited common property designations, or other important documents, such as a rare, unanimous section 100 resolution which changes the default division of expenses.

:G. Several years of '''minutes of meetings''' of the strata council, and general meetings of the owners, including minutes of any section, can give you a sense of how active the strata council is, and recent issues the strata corporation has been dealing with. Ask for at least 2 years of minutes, and review them carefully. Request minutes for a longer if possible.

:H. For new developments, the owner-developer must give prospective first buyers a copy of the up-to-date '''disclosure statement''' including any amendments as filed with the Superintendent of Real Estate. That document discloses the intentions of the Owner-Developer, and has marketing representations, as well as disclosure of legal encumbrances and other important information.  

:Checking those documents, a smart buyer or their lawyer can get a reasonable and current sense of the strata corporation and the strata lot, and any other documents to review.  

#1.'''Financial obligations'''—make sure that you can afford to be an owner.

#:a. Monthly strata fees—all strata lot owners must pay a proportional part of the common expenses of the strata corporation by paying strata fees for their strata lot. The strata fees are normally based on the strata corporation’s annual budget divided by the unit entitlement which sets out the share for each strata lot. Check the current budget and the Form B Information Certificate for the current strata fees. Compare the strata fees to other similar developments.  

#::i. If the strata fees seem high, check if there are expensive recreational facilities or other features, or budgeted items which you will have to help pay for—whether they benefit you or not.   

#::ii. If the strata fees seem low, consider whether the budget is adequate for the strata corporation, and be realistic about likely strata fee increases.  

#:b.'''Other assessments'''—strata lot owners may need to pay other expenses, including:

#::i.'''Special levies'''—a strata lot owner also needs to pay their share of any special levy for extraordinary expenditures which is assessed against all strata lot owners

#::ii. '''User fees'''—there may be user fees to use parking or other facilities.  

#::iii. '''Fines and reasonable costs of bylaw enforcement'''—these can be charged back to an owner who contravenes the bylaws or rules.

#::iv. '''Insurance deductibles'''—many strata corporations will charge an owner for insurance deductibles or other charges arising from sources of damage within a strata lot.  

#:Review the financial statements and budget of the strata corporation to assess its financial situation, where money is being spent, and the balance of the contingency reserve fund and other accounts. Review what special levies and other funds have been assessed and spent on major expenses such as repairs.  

#2. '''The physical condition of the project'''—the general rule is that every owner in a strata corporation must contribute to common expenses, such as repairs, unless an exception to the rule applies. If the development is in poor repair, you will have to pay your share of the cost to fix it, even if the repairs do not involve your strata lot or the part of the project where your unit is located. You may have to pay for special levies. that have been previously approved, with future installments.  

#: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, plus 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 soon and for which no contingency reserve funds have been set aside.

#3.'''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 buy a strata lot, then watch for discussions which might indicate expenses, such as ongoing or threatened litigation, water leaks, building envelope problems, and structural or major repair concerns.  

#:A careful review of the minutes can tell a lot about the strata corporation. You might see 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 concern you. Are the minutes a well-organized and well-written record of 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?

#4. '''The type of ownership''': freehold or leasehold—our legal system distinguishes between freehold ownership and leasehold possession. In a leasehold development, 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”.  

#:Leasehold developments—in these, 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 buyers, for a specific 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.

#: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 cautious with leasehold developments—be sure 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 in 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.

#5. '''Bylaws and rules'''

#:As an owner of a strata lot, you must comply with the bylaws and rules of the strata corporation. The law assumes you know them. Read them carefully before you buy.  

#:Together, bylaws and rules set out rights and responsibilities of owners, tenants, occupants and visitors. They also set out special restrictions on the use of each strata lot, common property and common facilities.  

#: Bylaws can very broadly restrict what people can do in the development, including restricting or prohibiting:

#*rental of a residential strata lot by the owner to a tenant.