I’m an information junkie. So when my clients are interested in a property, or have an accepted offer on a property, we’ll go through all Strata documentation available to us to ensure you know what you’re buying.
A Strata is a building where units are owned by individual owners, but all common spaces are shared between everyone. Due to the shared nature of a Strata, all of these properties have to follow what’s called the Strata Property Act, which is legislation that details how a Strata property is managed along with the rights of the Strata Council and each Owner. Keep in mind that the “Strata” is a term that implies all owners as a collective group and the “Strata Council” is the 3-7 people elected for one fiscal year to represent the Strata and make most decisions relating to management of the building (some decisions require all owners to vote).
Strata’s are required to keep certain information on file, including Strata Meeting Minutes, the current Budget, recent Financial Statements, any Engineering or Maintenance Reports, the official Strata Plan, Bylaws and Rules, Current Insurance Policy and more. As a potential Buyer, we get to review this information prior to making your purchase official.
For more information on how Strata’s should operate, check out the Province of BC website on Strata Housing.
As a Buyer you should review all Strata Documents prior to making any purchase official, even if you don’t particularly understand what you’re reading. You’ll understand more than you think, and if anything, it will lead to a better and more thorough conversation with me. As your agent, I will also review all documentation as I understand Strata’s and have the benefit of comparing this building to many others I’ve reviewed in the past.
Here is a quick description of the most common Strata documents we’ll receive, along with some things to consider as you review:
Form B Information Certificate
The Form B is a document prepared by the Strata Property Manager which details up to date information about the following:
- Current Monthly Maintenance Fee
- Current amount in the Contingency Reserve Fund (CRF)
- Current amount of money the Seller owes to the Strata (whether that is late fees or a recent special levy)
- Any agreements for which the owner takes responsibility for any previous renovations
- If any Bylaws have been approved by not yet filed in the Land Title Office
- If the Strata has passed any other resolutions
- If the Strata is a party to any current Lawsuits
- Any current work orders for the Strata or unit
- Current number of rentals in the building
- Parking Stall number and how it is allocated, if any
- Storage Locker number and how it is allocated, if any
The following documents will be attached, if available: current budget, up to date rules, Developer’s Rental Disclosure Statement, most recent Depreciation Report.
The Form B details pertinent, current information that may not be found in the minutes that is pertinent to the Buyer. Also, issues with parking and storage lockers are one of the most common lawsuits in real estate, so Form B’s have been updated to ensure the Buyer understands if a stall will be available to them and how it is allocated. The Form B is also really important to your mortgage lender, so make sure this document is received prior to making your offer official.
Bylaws and Rules
The Strata Property Act dictates that every Strata in BC has to follow the standard set of bylaws detailed by the Strata Property Act. Every Strata is allowed to change these bylaws with at least 75% approval of the Owners at the Annual General Meeting (AGM) or a Special General Meeting (SGM) so you want to ensure that you’re reading the most up to date Bylaws. Ensure you verify that what you want to do in the unit is allowed. Some of the biggest concerns of Buyers include: pet restrictions, rental restrictions, BBQ restrictions, age restrictions, number of people allowed to live in a unit, property use restrictions, renovation rules, responsibility for maintenance and repairs, and more. If you break a Bylaw, the Strata Council can continually fine you and take you to court if the issue doesn’t subside.
Rules are different from Bylaws in that they’re easier to institute and carry lower fines. Rules typically relate to use of common spaces within the building, i.e. gym rules, party room rules, etc.
Either way, ensure that your lifestyle fits in with the current Bylaws and Rules of the Strata, and understand that all Bylaws and Rules can change. You’ll typically read in the minutes if the Council is considering changing a Bylaw in the short term.
Strata Meeting Minutes
The Strata Council may meet every month (typical for large buildings) to only once per year (typical for small buildings). Every Strata should also hold an Annual General Meeting (AGM) each year where the Owners vote on the new budget, vote on any changes to the Bylaws and vote on any special levies (funds needs in addition to the Strata Fees for building repairs).
The minutes of these meetings are recorded and made available to all Owners in the building so they can follow along with that the Strata Council is discussing.
The minutes will detail everything from a current financial update, completed maintenance, planned maintenance, bylaw infractions, letters from Owners, planning for major projects and more.
Read the minutes from oldest to newest. AGMs are especially important as that’s when decisions are made, bylaws are changed, and special assessments are voted on, though the regular council minutes give you a sense of what the Council is talking about, and how the Council responds to various building issues. Do they take a long time to come to decisions? Do they get multiple quotes for building maintenance? Do they always choose the cheapest quote? If they hear of a break in in the building, do they talk about re-enforcing the locks or adding some extra security? Do they follow through regarding Bylaw infractions?
Budget and Financials
The Strata Council decides on the yearly budget but the Owners need to approve the yearly budget at the AGM. The budget determines your monthly strata fees, and details the amount of money the Strata has dedicated to spend on various line items, including repair and maintenance, insurance, property management, pest control, gardening, engineering reports, gas, electricity, contribution to the Contingency Fund, etc. You can to review the budget to try to understand how your monthly strata fees are allocated. For example, is the repair and maintenance line item really low? If so, you can imagine that the Strata will postpone some repairs once they’ve maxed out the yearly budget. Is the gardening budget really high? Perhaps the Strata is spending too much money on beautifying the exterior rather than on needed repairs.
Review the current financials to find out if they are running a deficit for the current (and why) and to understand what issues the Strata has been dealing with in the last year. The financials may also detail if the Strata has other funds set aside for upcoming major projects. Sometimes the Contingency Fund might seem a bit low, but then you’ll realize it’s because they have been funnelling money into a Roof Replacement Fund and an Elevator Replacement Fund so when those projects come up, they’ll be prepared.
The Financials and Budget make a lot more sense to those who are financially inclined (I’m looking at you accountants) but you’ll still want to review to understand what the Strata spends money on.
Strata Plan
The Strata Plan is the official building plan created by the original Developer and filed in the Land Title Office. The Strata plan dictates what space is yours to use and what space is common property; this distinction then details who is responsible for its maintenance and repair, as per the Bylaws.
Check the Strata Plan to determine how much of your patio space is actually limited common property (yours to use), if you parking spot is limited common property or common property and if the storage locker is limited common property or common property.
The Strata Plan also details, via the Unit Entitlement, what percentage of the building you own. This percentage is then applied to the yearly budget to determine your share of strata fees, and to any special levy to determine your share of the cost.
Any Engineering Reports, including Depreciation Report
If the Strata has been considering a major project, for instance exterior renewal, parkade membrane work, balcony replacement, then there is a good chance they procured a report from an Engineer detailing the project and potential costs. You’ll want to ensure that you review all Reports available to get a sense of what work the building might be doing over the next few years.
Strata’s may have also procured a Depreciation Report, which details the current age of every component in the building along with the expected year of replacement and the current cost. The Strata is not obligated to follow any of the suggestions in the report, but it can be used as a planning tool by the Strata. If the Strata decides to pursue a major project they will have to bring in a professional company to give a more exact opinion and quote. The cost estimates are all based on industry standards, so it’s only a suggestion for the Strata, and you’ll find that final costs are often much more expensive than what the cost indicates. The projects listed in the report can happen sooner or later than indicated. Some Depreciation Reports are also missing certain components.. this will be hard for you to notice but I have an idea of what needs to be in it. Reading the first few pages of the Depreciation Report explaining what the report is and how they came to their conclusions can be really useful in understanding the purpose of the report.
This is a really helpful document to any Owner and potential Buyer, so many sure you review it to understand the building you’re about to buy into.
Current Insurance Policy
Insurance is a big issue in some buildings these days thanks to recent changes to Strata Insurance policies. Every Strata is required to have a Strata Insurance Policy which dictates the deductibles that Owners are required to pay in the event of a building issue. Make sure you review your building’s policy to determine the cost of the deductibles and when the policy was last updated. See my other post for more information on the Recent Changes to Strata Insurance Policies.
As a future owner in the building, make sure you continue to follow what’s happening in the building so you understand the short and long term future of the Strata, any current issues and the overall mood of the building. I always encourage my clients to get on Strata so they can have a better understanding of how the building is managed and so they can influence the direction of the building.