buyers

What to Consider when Buying a Newer Unit

September 7, 2021

Just like older buildings, newer buildings have their pros and cons. Here are a few things to consider if you’re keen to buy a new(er) unit, or are considering the differences between older and newer buildings. In general I would consider a newer unit to be less than 10 years old, particularly less than 5 years old.

Keep in mind these aren’t reasons not to purchase a newer unit, just a reminder that new units aren’t as perfect as you may expect. Better to have your expectations in check so you aren’t surprised in the future.

Information, or lack thereof

A newer building, particularly one that is less than 2 years old, often doesn’t have much information to provide prospective purchasers. The strata will be in early stages of management and they won’t have had time to work out the kinks in the building, particularly for large buildings. In the first few years of a new building’s life the strata will be considering everything from what regular and irregular maintenance is needed, their property management relationship, appropriate budgets (and thus your strata fees) and bylaw changes so important details can change as the strata settles in. There also may not be very many meetings minutes to review if the strata hasn’t committed to a regular meeting schedule.

In addition, the strata typically doesn’t acquire any professional engineering reports commenting on the quality of building construction until the 4th year, and depreciation reports typically aren’t completed until a building is much older, so you may not have a professional engineer’s opinion on the quality of the building. You may expect a new building to be in great shape, but the building may discover some major warranty issues as they do their 5 year and 10 year warranty reviews.

Warranty Pros and Cons

There is a specific, provincial wide warranty attached to every new condo and most new houses (check out BC Housing’s New Home Registry to verify). This new home warranty is typically called the “2-5-10 year warranty” and coverage includes:

2 years on labour and materials (some limits apply)
5 years on the building envelope, including water penetration
10 years on the structure of the home
More information can be found at BCHousing.org

This 2-5-10 year home warranty offers some peace of mind as it can offer new owners protection in the case of defects, though you should know that warranties can be really hard to claim. Prior to the expiry of the 5 year envelope warranty and 10 year structural warranty the building will typically hire an engineering company to do a full warranty review, which the strata can then submit to the warranty provider if there are outstanding issues that should be covered under warranty (and thus fixed by the developer). Not only do warranty providers and developers typically fight back, but there can be some fine print that may render a warranty void (for example, did the building follow the maintenance plan provided by the developer?). If a strata files a major warranty claim, it can take years to be rectified and often ends up in a lawsuit. In the best case scenario the issue is rectified at no cost to the strata but in the worst case scenario the strata doesn’t receive any support to fix an issue.

In the last few years I’ve seen a lot of warranty claims on buildings between 5 to 10 years, so if you purchase in the building in it’s first few years you may realize the building has some major defects that will need to be rectified, one way or the other. The Developer’s reputation is a big factor to consider when purchasing a unit less than 5 years old – are they known for quality builds? is the style of construction something they’ve done before? are they building other complexes in the neighbourhood? Research the developer prior to purchasing.

Unknown neighbours

If the building is newer, you may find that the neighbouring units are still vacant and moreso, that the commercial units are still vacant. Neighbours and businesses can change anytime in a building of any age, but it’s nice to know what you can expect when you move in. In some cases, the new build may be the first in a future community, so it may be years before their promise of amenity spaces, grocery stores, transit, etc are in place for residents so consider that when thinking about your lifestyle.

Unauthorized Suites and Renovations done without Permits

November 26, 2020

If you have been looking for a detached house in Vancouver, I’m sure you’ve come across a variety of unauthorized work done in homes in addition to unauthorized basement suites. It’s all too common, especially for old detached homes, but there are still some risks involved. Ideally you want to buy a property that has all renovations done with proper permits, but, aside from new properties, they can be few and far between. There are a handful of considerations to make, and it all depends on your risk tolerance. Here are a few things to consider:

What was done without permits, and who did the work?

Does the Sellers have pristine records of the home before, during and after the renovation? Did the Seller use licensed trades, who renovated to current building code, with records of what was done? Was the work done recently or many years ago? Did the renovations significantly change the floor plan? Were you hoping to get permits for future renovations you’d like to do? If you had to remove the renovations, would you still like the property?

If the home already has work done without permits, you will want to think twice about getting permits for future work. If the City comes into the home and discovers the work done without permits, they will fine you and ask you to re-renovate to ensure the work is done to code. If the renovations had significantly changed the floor plan, it will be a lot more expensive for you to re-renovate and you might end up with a much different home than you thought you had, so consider how much you would like the home if it were similar to it’s original floor plan.

In the case of an unauthorized basement suite, you may be required to remove the basement suite (i.e. the kitchen and perhaps the bathroom) thus losing the rental income you need to make your mortgage payments. Removing renovations, or re-renovating, can be costly and time consuming. It is possible to get permits for work that has already been completed, but it’s difficult, and should not be relied upon.

Are the renovations done in a Strata property?

Strata Bylaws require that renovations need both Strata Approval and proper City Permits. The Strata has to give you permission to do renovations before you get permits, so their approval is contingent on you following through with proper permits. If you do renovations without permits in a Strata property and the Strata finds out, the bylaws may allow the Strata to fine you and force you to remove the renovations or get the necessary permits.

I see a lot of condo renovations without permits. Everything from wall removal to open up kitchens, to the addition of in suite laundry, to added pot lights would require permits. Purchasing these units comes with risks because the renovations may not only affect your own unit, but can affect the common elements in the building. A few things to consider include when the work was done, if it was done to current building code, and if the Strata gave approval for the renovations. If the renovations don’t have strata approval on file then I would be concerned.

Is the basement suite unauthorized?

If I had to guess, most basement suites are unauthorized. In order to get permission from the city for a legal basement suite, your suite needs to confirm to appropriate exits, ceilings heights, plumbing, electrical, smoke alarms, doors and more. Here’s some information from the City of Vancouver about Secondary Suite Requirements. If a suite is currently unauthorized (as in, the City has not permitted the suite to exist) then it is either extremely unlikely that you’ll be able to renovate the suite to be legal or could be quite costly (think, raising the house to raise the ceilings, digging down to add another exit, etc).

If you’re purchasing a home with an unauthorized basement suite, you need to understand the risks involved, which include forced removal of the suite (and thus, loss of your rental income) or forced renovations of the suite by the City of Vancouver. I have heard horror stories of the City discovering suites and forcing the owners to comply with the Bylaws. How does the City find out about these suites? It could be an angry tenant or nosy neighbour – something out of your control.

Will this affect your home insurance?

Potentially. If there are any renovations done without permits and/or strata approval, make sure your home insurance policy will cover you in case these renovations end up causing a major issue. If you’re not insured for unauthorized renovations, your home insurance may not cover any damage caused because of these renovations. This could be especially costly if you live in a Strata – the Strata’s insurance may not cover damage caused by your un-permitted renovations, and the damage done in a Strata could be significant if it affects other units. Your home insurance may also not rebuild a an addition on your home in event of disaster if it was added without permits. Talk to a qualified insurance broker about these issues prior to purchasing the home so you understand what happens in the event of big or small problems.

Does the Seller have to disclose the unauthorized renovations?

Yes, the Seller has to disclose (to the best of their knowledge) all renovations done without permits as this information is considered a “Materiel Latent Defect”, which is something that you may not discover with an inspection. However, not every Seller knows they have to disclose these details so make sure you ask for details about any renovations.

Getting permits does take quite a bit of time (it can take a couple weeks to a couple months to approve your project) and adds a small cost to the renovation, but if you’re starting from an original condition unit, get the permits. They come with instant added value and give Buyers a lot more confidence in your home when it’s time to sell. Note that if the property already has renovations done without permits, you want to tread carefully with getting permits on any further renovations – if the City comes in to see the renovations done without permits (even if you’re getting their approval fro something else) then they may make you re-renovate or remove the existing renos.

Interested in finding out if a home has any work done with permits? Give the City of Vancouver a call. They can check their records and tell you what they have on file. The City of Vancouver also has a Permit Search tool, though it only goes back to 2016 or so. For any older renovations, you’ll want to call, email or chat with a representative on their website.

Buying and Selling at the Same Time

November 25, 2020

If you have to sell your property in order to buy your next one – do you Buy First or Sell First?

One of the biggest considerations to make when you’re thinking about selling your home is whether or not you should buy your new home before selling your current home – or – sell your current home before buying your new home? Both options come with pros and cons and both options still require you to arrange the closing dates properly if you want the move to be smooth.

The ideal scenario is to buy and sell at the same time, and to arrange to the dates so that you can purchase you new home and move into it before you have to be moved out of your current home, but there is some finesse and some luck involved in ensuring the dates are arranged appropriately. The finesse is ensuring that you have given yourself the best opportunity to accomplish this, and the luck is hoping the other parties in your transactions agree with the dates!

The ideal arrangement of dates for a purchase and sale would go as follows:

Day 1: Completion Date of your Current Home. This is the date you receive the profit from your sale.
Day 2: Completion Date of your New Home. This is the day you purchase your next home. You will use the profit from your sale in addition to your new mortgage and extra down payment to buy your new home.
Day 3: Possession Date of your New Home. This is the day you get the keys to your new home and *must* move.
Day 4: Possession Date of your Old Home. This is the day the Buyer gets the keys to your current home and will be moving in. Typically, you’ll arrange cleaners for this morning so the property will be clean and ready for the Buyers around Noon.

Below I’ll go through the details of the potential scenarios. Which scenario you choose depends on your risk tolerance, the property you currently own, the property you want to buy and the market in general. When we’re chatting about your potential sale, I can give you an idea of how marketable and in demand your current home is, and how common your ideal next home is to help you decide if you want to buy or sell first. This post is a generalization of the process, so if you’d like specific advice, give me a call.

Sell First

By selling your current home before you buy your new home, you will know precisely how much money you have to work with on your next purchase. With a concrete price range, you’ll be able to narrow the pool of options before you begin looking, and negotiate accordingly. This will grant further negotiating leverage as Sellers tend to take offers without financing subjects more seriously, which is a lot easier to offer if you have sold your current property.

The flip side of this scenario is that if you don’t find the right property before the completion date of the property you’ve already sold, you may have to look for temporary housing until you find your next home. Not only do you have to find a rental (which is harder than you’d think) but you may have to move twice (ugh). There is the possibility to rent a furnished apartment and put your belongings into storage for the time being, but it would still be a hassle. Ask yourself how you would cope with living in a transitional home for an undetermined period of time. This is often harder for families with kids.

One other potential issue with selling first is timing the market incorrectly. If your sell your property first, and the market continues to increase in price, you may find it harder to close the gap in price between your current and new home, and could be priced out of your ideal market.

If the market is slow, you’d likely be better off selling first in case it takes longer than expected to unload your current home. A slow market means you should have an easier time buying your next home.

If you decide to sell first, you’ll want to give yourself a long Completion Date to give yourself a few months to find your next home. In addition, it would be helpful to ask the Buyers if they would be willing to give you some date flexibility. We would accomplish this by including a term in the contract that would allow you to change the Completion and Possession Date of your sale to a new date of your choosing (i.e. anytime between March 15th and April 15th). This clause typically requires you to give the Buyers a certain amount of notice (say 3 weeks before they would have to move). The Buyers give up a lot of control with this clause, so it’s not guaranteed that they will agree.

In general, you’re better off starting this process at the beginning of a new market (i.e. early Spring or early Fall). The real estate market generally slows down in July/August and December/January, so you don’t want to sell your property just before everything slows down because there will be less inventory to consider and nothing good to buy!

Buy First

Buying a new home without having sold your current home may occur if you come across a home you absolutely love or if the market to buy is competitive and uncertain. While buying first can often be more convenient (you won’t be homeless!) beware of the risks. If you buy another property and aren’t able to sell your current home in time, you could end up having to pay two mortgages and shoulder the extra debt until you sell. This can get really expensive, and frankly, this isn’t possible for everyone based on their financials. Make sure you check in with your mortgage broker to understand if this is possible from a mortgage approval perspective and to find out how much it’ll cost you.

Since the selling price of your current home is unknown, jumping into a purchase could be a gamble, particularly if your budget is tight. You may time the market wrong and end up buying your property at a high point and selling after a market drop, so make sure you have a lot of give in the eventual sale price of your current home. Familiarize yourself with all the financial risks this scenario would create before you move forward.

If you purchase your new home first, you can ask for date flexibility from the Sellers of your new home. Again, it’s not a guarantee that the Seller of your new home will agree since they would give up a lot of control, but it’s worth asking. If not, ensure the Completion Date is months away so you have time to sell.

You may end up taking a lower offer on your current home in order to get it sold in time and with the best possible dates. You’ll know the specific dates you need the Buyer of your current home to agree so you’ll have to hope interested Buyers agree with your dates.

I often suggest to my clients that we prepare your home for sale and get photos done ahead of time so that we can list the property quickly if necessary.

Buying and Selling Concurrently

The most secure way, though one that isn’t particularly easy, is to buy and sell concurrently. With this strategy we will list your home for sale and then you can start offering on properties to buy “subject to sale of your current home”. This means that you would not be obligated to purchase your next home if your current home doesn’t sell. This strategy is tough because there are many home sellers that don’t take offers “subject to sale” seriously, especially if their property is in high demand. You lose all of your negotiating power, so it can be hard to get an accepted offer on your next property with this clause in the contract. In competitive Vancouver Markets, this clause is very rarely used because Sellers typically have plenty of interest from Buyers.

“Subject to sale” clauses often have a time period involved. For example, if the Seller receives another offer, they could give you 72 hours to either remove subjects to make the purchase official or terminate your offer so they can accept the new offer. Is this time clause is added to your “subject to sale”, then you want to make sure that you have a “subject to purchase” clause in any accepted offer for your current home. The reason being you don’t want to officially sell your current place if you can’t officially buy your new place. Sound complicated? It can be. Make sure you understand all scenarios and are protected contractually and financially.

If you have any questions, or want to chat through your particular scenario, contact me: kristi@realestatevancity.ca or 778-387-7371.

Purchase & Home Ownership Costs

May 13, 2020

Every purchase will have some one time costs and then ongoing monthly costs to consider. All of these costs should be considered prior to purchasing so you know what’s expected of you and can feel comfortable going forward. I have a simple but useful spreadsheet that you can use to calculate your monthly costs if you’re interested in using a simple calculator.

Keep in mind, I am not an accountant, nor is this list comprehensive and/or correct for every situation. If you’re looking for exact numbers, please contact the professional offering the service for a quote. Also, always ensure you’re in communication with your accountant and financial advisor if you plan on buying or selling, especially with investment properties.

One Time Purchase Costs

Home Inspection: ~$450 to $1000 – I’ll always suggestion a home inspection, whether it’s for old properties or brand new builds, so you can have a professional run through the big and little items you need to know about the current state of the house and how to properly maintain it in the future. It’s worthwhile to spend a few hundred dollars in order to avoid a bill for a few thousand later on.
Appraisal: ~$300 – Your mortgage lender may require a third party review of the property to ascertain value before they approve the loan. Some mortgager brokers or banks cover this cost.
Survey: ~$1500 – Similar to an appraisal, a survey is only necessary for detached homes, and may or may not be required by your mortgage lender.
Legal Fees: ~$2000 to $2500 – Every purchase requires a Lawyer or Notary to complete the official transfer of ownership at the Land Title Office. The lawyer will prepare a statement indicating the final total of what you owe the Seller (this would include the purchase price, any adjustments for property tax, etc). Lawyer’s Fees are likely $1500 + $500 land title fees + any document costs + any adjustments for property tax and strata fees (you’ll pay a pro-rated amount of property tax and strata fees, calculated to start on your possession date).
Title Insurance: ~$225 to $500 – Every detached buyer should purchase title insurance. This one time cost protects against fraud and a number of other potential issues you may learn about after a purchase. Let your Lawyer know that you would like to purchase title insurance. For strata buyers, do some research and chat with your lawyer about if it’s necessary.
Property Transfer Tax (PTT): just under 2% of the purchase price – The BC Government imposes a tax called Property Transfer Tax, paid on the Completion Date. First-time buyers may be exempt if they will be living in the property, are a Canadian Citizen or Resident, and purchase property under $500,000. For more information about Property Transfer Tax: https://www2.gov.bc.ca/gov/content/taxes/property-taxes/property-transfer-tax. The tax is calculated as follows:

1% of the Purchase Price on the first $200,000;
2% of the Purchase Price that exceeds $200,000 but does not exceed $2,000,000;
3% of the Purchase Price that exceeds $2,000,000 but does not exceed $3,000,000;
5% of the Purchase Price that exceeds $3,000,000; plus
plus an additional amount equal to 20% of the Purchase Price if the Buyer is not a Canadian Citizen or Resident

Goods & Services Tax (GST): 5%, on newly constructed homes and substantially renovated homes – The Government charges an extra 5% GST on all new homes, payable on the Completion Date. What constitutes as “new” is a bit of a grey area but generally anything you’re purchasing directly from the Developer or anything that has not been lived in or barely been lived in.
Move In Fees, typically ~$100 for strata properties – Some condo buildings charge move in fees to cover for potential damage or work required by the Property Management Company change ownership information.
Real Estate Fees – Typically, Buyers don’t have to pay anything as the Seller pays the real estate commission. There are rare occasions where properties are being sold off market or by the Seller themselves with no commission involved, so your agent will negotiate with you an appropriate commission.
Other Costs – Some other costs to consider include moving costs, which can vary significantly, renovation or upgrade costs, connection fees (for new TV/Internet connections, etc) and of course, the costs to buy new furniture and host your house warming party!

Ongoing Home Ownership Costs

Home Insurance: varies, every year – Most mortgage lenders require Buyers to have a home insurance policy in place upon the Completion Date. Regardless, this is something that should be done to ensure you’re protected for unexpected issues or mistakes. Shop around for different quotes and ensure any upgrades to the home are covered by the insurance policy.
Mortgage Costs: varies, monthly – This will vary depending on your interest rate, amortization, terms and down payment.
Property Tax: varies – Every property owner pays property tax. The amount will change every year. Some mortgage lenders pay the property tax on your behalf and then include the amount in your monthly mortgage cost.
Extra Municipal Taxes, varies – Some municipalities, in addition to property taxes, charge a separate fee for Garbage, Recycling, Utilities, etc. These charges may be monthly or yearly, and can change every year. Visit the City website or call the municipality to verify. Some cities with these charges include Squamish, Burnaby, Port Moody. Note: these fees apply to owners in both houses and strata units.
Vancouver Empty Homes Tax – Every year you have to declare whether your property is occupied or has been vacant for a period of time. If your home is left empty for more than 6 months every year, you’ll be charged the Vancouver Empty Homes Tax. For more information: https://vancouver.ca/home-property-development/empty-homes-tax.aspx
BC Speculation and Vacancy Tax – Similar to the Vancouver Empty Homes Tax, this tax is levied on home owners who do not live in or rent out their home for a certain amount of time each year. Owners must declare the property status every year. For more information: https://www2.gov.bc.ca/gov/content/taxes/property-taxes/speculation-and-vacancy-tax
Strata Fees: varies, monthly – This is only required for strata properties, and typically covers strata insurance, hot water, heat (if it’s supplied via hot water heating), gardening, property management, city services, Strata insurance, and amenities.
BC Hydro: varies, bi-monthly – BC Hydro controls your electricity, which covers your lights and in many homes, your heat as well. You’ll need to set up an account with BC Hydro.
FortisBC: varies, bi-monthly – Not every property has a gas line, but if so, plan to set up an account with Fortis BC.
Internet/TV: varies, monthly – Internet is a must these days, and having cable is up to you. Shop around and see what kind of deals you can get from the different providers.
Personal Health Insurance: varies, monthly – Once your a property owner, it’s generally a good idea to increase the amount of personal insurance you have with regards to Disability, Critical Care and Life Insurance so that your living expenses and mortgage can be paid in the event of a personal emergency. Speak with a financial advisor about your options – this could add a few hundred dollars to your monthly costs, but there are great benefits to having insurance.

Don’t forget to include your other personal expenses when it comes to determining your monthly budget. Other expenses include costs relating to your cell phone, Spotify/Netflix/Crave/HBO/Amazon/etc accounts, groceries, vehicle costs, personal investments, travel, and more. If you’re moving to a different space, think about any potential new furniture or small upgrades you’d like in your home.

If you’re looking for a great tool to track your current spending habits to better understand your budget, check out Wave Accounting. This is a free website that allows you to connect all of your bank accounts and track your spending with categories. You can be really detailed with your categories (i.e. a “mani/pedi” category) or really broad (i.e. all things “beauty”). I use the website and find it really helpful!

What to Look for when Reading Strata Docs

May 6, 2020

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.

Recent Changes to Condo Insurance in Vancouver

February 10, 2020

NOTE: This column is not a substitute for professional insurance advice. Please speak with an insurance advisor to discuss your situation and options. Always make sure you have a current home owner, landlord or tenant insurance policy in place.

What is Strata Insurance?

As a homeowner, landlord or renter, you need to have home insurance in place to protect you in case of accidents, unexpected issues, theft, etc. Every condo building also has a “Strata Insurance Policy” that covers the owners in case of extensive damage that extends into multiple units and common Strata property.

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