faq

What is a Strata?

March 4, 2021

This is a great question, with a simple answer and a long answer!

The Simple Answer: a strata property is any property where at least 2 owners share common space/roofs/walls/etc. This includes any condo building, townhouse complex or duplex (or triplex, fourplex, etc).

The Long Answer: In legal terms, a strata property is a “lot” in a building that has multiple units available for ownership. Collectively, the owners own the common areas, including lobbies, elevators, hallways, walls, roofs, common rooms, etc. When you purchase a Strata Lot, you become part of the building’s Strata Corporation and thus have a say in the maintenance and happenings in the building.

For detailed information about Strata’s, check out BC’s Strata Property Act Guideline and Resources.

Here are some key words to know:

Strata Corporation (the Strata): All owners of a Strata building, collectively.

Strata Council: A group of 3-7 owners who oversee the building and manage the day to day tasks and decisions with regards to maintenance, financials, bylaws enforcement and planning. If you’re really invested in the health and management of your building, you want to be on your Strata Council so you know exactly what’s happening. The members of the Strata Council volunteer every year and are voted onto the Strata Council by the Owners.

Property Management Company: The Strata Council works closely with the Property Management Company, which is an outside company hired to guide the Strata Council and manage the intricacies of building maintenance and financials. The representative from the Property Management Company, the Property Manager, is present at all building meetings and acts as the head of the Council. Owners contact the Property Manager whenever they need anything from the strata (i.e. renovation approval, elevator bookings, etc).

Strata Documents: These are the records related to the Strata Corporation, which includes meeting minutes, bylaws (see below), rules, financial statements, budgets, Engineering Reports, etc detailing everything you need to know about how the building is being managed. At any time, Owners can request to view the Strata documents. Most Property Managers offer an online portal where owners can easily access this information. For more information: What to Look for when Reading Strata Docs.

Meetings: The Strata Council holds regular meetings to discuss ongoing issues and building updates. For example, some discussion topics may include ongoing maintenance, upcoming projects, bylaw violations and regular financial reviews. Some Strata’s have monthly meetings, some have only a few per year. Every Strata has an Annual General Meeting (AGM) where big decisions need are voted on by the Owners in attendance. Details discussed and voted on at the AGM are the annual budget, bylaw changes, major maintenance requiring special levies, etc.

Common Property: The areas of the Strata Building that are owned by all the owners together. These areas include (if applicable) the: roof, gardens, lobby, hallways, elevator, recreation areas, gyms, pools, parkade, common rooftop decks, etc. These areas are maintained by the Strata Corporation.

Limited Common Property: This is common property that is only for use by certain people, yet is maintained by the Strata Corporation (i.e. your balcony, etc.). For example, your ground floor patio is for your use only, but is called “Limited Common” because the Strata may have to come on your property to maintain it – they will give you notice prior to access.

Unit Entitlement: This is the percentage of ownership of common areas is divided between every owner (for financial and insurance reasons), which is typically based on square footage. If you own the biggest suite in the complex, you technically own the biggest percentage of “ownable” common property. This means your Strata fee is higher because you own and “maintain” a bigger area of the building. Your Unit Entitlement can usually be found on the Strata Plan.

Strata Fee: A monthly fee that you pay to the Strata Corporation, used to pay for common bills and maintenance as detailed in the yearly budget. The Strata Fee is determined by applying the % of the building that you own (your Unit Entitlement) to the yearly budget. You’ll be fined if you don’t pay your Strata Fees and would run into legal trouble if you don’t pay for a few months.

Contingency Fund: Think of it as your building’s emergency bank account. Funds are pulled from here to pay for unexpected building repairs and other big expenses. A portion of your monthly strata fees goes towards the Contingency Fund. A healthy contingency fund can help reduce future costs to owners.

Special Levy: If a building requires maintenance outside of what was planned in the yearly budget, they will need to charge each owner a “special levy” to pay the cost. Special levies can be as low as a couple hundred dollars per unit for a simple project to tens of thousands of dollars per unit if the building needs major maintenance – this is why you don’t want to spend every dollar you have on purchasing a property. For more information about Special Levies: What are Special Levies for Condos?

Rain Screen: Simply put, a rain screen is an exterior wall design that helps to keep buildings dry. A rain screen is the space between the exterior wall of a building and the interior wall of a building (also called an air cavity) that allows for rainwater and condensation to escape before seeping into the interior wall of a building, thus avoiding moisture and mould problems inside units. For photos and more information: What is a Rainscreen?

Depreciation Report: Many buildings in Vancouver have a document called a Depreciation Report. This report details all the components in the building as well as their current age, their expected lifespan, year of replacement, and how much it is expected to cost to maintain or replace the item. The Depreciation Report will discuss everything from the roof, exterior, windows, balconies, elevator, parkade, fire system, boilers, pipes, hallways, lighting, etc. The estimates in Depreciation Reports are based on industry standard for product life span so projects can happen sooner or later than indicated and can be more or less expensive than indicated (assume a lot more!!). Some Depreciation Reports are really detailed, and some are really vague – it just depends on the company that completed the report. Buildings are not required to follow the advice of a Depreciation Report, but it is used as a guide on what to expect over the coming years and how to budget for the upcoming costs. These reports make it a lot easier for potential Buyers to understand what to expect for future building maintenance.

Strata Bylaws: Every Strata Corporation has a set of rules that every owner needs to follow. The BC Strata Property Act stipulates a set of Standard Strata Property Act Bylaws but Strata Corporations are allowed to add new Bylaws if approved by the Owners. Strata Bylaws touch on everything from rental restrictions, pet restrictions, age restrictions, smoking, noise, BBQs, Strata Council rules, amenity usage, cleanliness, etc. The Bylaws is a REALLY important document for any potential owner.

This is just a start about the intricacies of strata living. I’ve read PLENTY of strata documents over the years, and I’ve been on Strata in my own building. I will tell all my clients to join their strata at least for a few years as it’s a great opportunity to understand your building and make a difference in the short and long terms goals of the Strata. It’s annoying (there are a lot of emails) but it’s worthwhile.

If you have any other questions feel free to contact me: kristi@realestatevancity.ca.

What are Co-op Properties?

January 2, 2021

Co-op properties can have two meanings: in one definition Co-ops are social/subsidized housing but the other definition refers to Co-operative Housing Corporations. In this post I’ll be talking about Co-operative Housing Corporations because this is the type of Co-op that you can buy and sell in the Vancouver real estate market.

What is a Co-op?

A Co-op is a Cooperative Housing Corporation that owns a building and the land. The building owners are shareholders in the Corporation who own shares associated with a particular unit. There are both Articles of the Corporation detailing the structure of the Corp and an Occupancy/Lease Agreement detailing the shareholders rights and regulations as residents. Annual and Special General Meetings are held where shareholders vote on various decisions pertaining to budget and financial matters, changes to the rules and regulations, building maintenance and the election of a Boards of Directors. The Board of Directors meet regularly to keep up with standard building management decisions. Co-ops can be self managed or they can also hire professional for property management, accounting, etc.

Where can you find a Co-op building?

Most Co-ops in Vancouver are found in the West End and Oakridge area, but you’ll also find a handful in other areas like Fairview, Kitsilano, Kerrisdale, etc.

Who should buy a Co-op?

The most ideal candidate for co-op properties are downsizers who are looking for a quiet, secure property to own for a cheaper cost than a Strata property, that doesn’t de-value like a Leasehold.

Co-op properties are also good for parents looking to purchase a more affordable housing option for a family member that – again – will not de-value over time like a Leasehold.

Difference Between Co-op and Strata Buildings

	Co-op	Strata
Land	Owners own shares in a company (Corporation) that owns the land and the building.	Owners own a percentage of the land and building
Rules and Regulations	Co-op buildings have Articles, Rules and Regulations and Lease Agreements which dictate how the building is managed and the rights of each resident. These buildings follow the Cooperative Association Act NOT the Standard Strata Property Act. Co-ops are generally very strict on rules regarding pets, rentals, age of owners, etc. Potential Owners have to go through an interview process with the Board of Directors to gain approval to transfer shares, so every Co-op purchase will be subject to receiving Board approval. Owners in Co-op buildings get to vote on new rules, financial matters, etc. If you fail to pay your dues, violate the occupancy agreement or act detrimentally to the Co-op, the Corporation can force the end of your membership.	Strata buildings must follow the Strata Property Act when it comes to how the building is managed. Strata’s are not allowed to interview potential Owners. Owners in Strata buildings get to vote on new rules, financial matters, etc. If you fail to pay your strata fees, the Strata can fine you and eventually put a lien on the title to recoup the funds.
Size	Because Co-op’s were popular in the 1950’s and 1960’s they are all generally small 3-4 storey wood frame buildings, though high rise concrete exceptions exist (see Ocean Towers at 1835 Morton in the West End and Oakmont Plaza and Mansion House near Oakridge)	Strata’s can be anything from a 2 unit complex to a high rise complex offering hundreds of units.
Style	Co-ops typically do not have balconies or in suite laundry, have limited parking and may or may not have elevators and amenities (both are common in high rise Co-ops). These design decisions are mostly due to the ~1960 construction year rather than the fact that it’s a Co-op.	Can be anything from townhouses to concrete high rises.
Mortgage Financing	Buyers typically need at least 35% down. Not every mortgage lender will finance Co-op purchases.	Generally easy to mortgage.
Costs	Co-ops are typically cheaper than comparable strata properties, but Lawyers Fees for the transfer of ownership are typically quite a bit more expensive (often double, if not more) due to the extra work required at closing.	The most expensive type of Ownership. Lawyers fees are standard.
Property Transfer Tax	Property Transfer Tax (PTT) may or may not be payable on Co-op purchases, depending on how the Corporation is structured.	Property Transfer Tax is always payable unless the Buyer qualifies for an exemption.
Yearly Property Tax	Applicable and paid by the Corporation, but funded through the monthly maintenance fee or a yearly special levy from Owners. Owners may still be eligible for City of Vancouver Home Owner Grants.	Applicable, and paid by the Owner. Owners can receive City of Vancouver Home Owner Grants, if the property qualifies.
City of Vancouver Empty Homes Tax	Not applicable if at least one unit in the building is occupied, though this information should be verified with a Tax Lawyer prior to purchasing the Co-op if you may be leaving it vacant for a period of time each year. For more information, see the City of Vancouver EHT Exemptions under “Properties with Multiple Dwellings”.	Applicable, unless the Owner qualifies for one of the exemptions.
BC Speculation and Vacancy Tax	Likely not applicable, but it’s unclear, and should be verified with a Tax Lawyer. For more information, see the BC Speculation and Vacancy Tax Exemptions for Individuals and Corporations.	Applicable, unless the Owner qualifies for one of the exemptions.

If you have any questions about Co-ops or are interested in purchasing a unit in a Co-op, please don’t hesitate to ask me: 778-387-7371 or kristi@realestatevancity.ca.

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.