stratas

What is a Strata?

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.

Kristi Holz FAQs

What are Special Levies for Condos?

The potential for special levies are an important consideration for any Strata buyer, and is something that should be considered when it comes to your expectations as a future owner as you’re reviewing the strata documents for any building. A special levy is defined by the BC Government here:

A special levy is money collected from strata lot owners for a specific purpose and for shared common expenses. It is money collected from the strata lot owner in addition to the monthly strata fee. A special levy must be approved by at least a 3/4 vote of the strata corporation owners. Sections can also have special levies. Strata lot owners must pay special levies when:

  • the expenditure has not been included in the annual budget because it was either not anticipated or because of the infrequency of the expense
  • there are insufficient funds in the contingency reserve fund (CRF) or a decision is made not to use money from the CRF

Special levies are used to pay for major or unexpected building maintenance in buildings, for instance, the roof, plumbing, exterior, windows, balconies, parkade membranes, elevators, etc.

No building has enough money in their Contingency Fund (CRF) to cover the entire cost of major projects. BC Strata Bylaws state the Strata has to maintain a certain amount in the CRF, so the building wouldn’t be allowed to deplete the fund too much anyways (without replacing the money ASAP).

The need for a Strata to charge a Special Levy to Owners is typically discussed in regular Strata Meetings, with the Strata Council doing research to determine what repair is needed, who will be hired to complete it and how much it’ll cost. The decision regarding the amount of the Special Levy and the timeline as to when it’s due is voted on an Annual General Meetings (AGMs) or Special General Meetings (SGMs) which are meetings where owners are given advance notice of the date and topics to be voted on. Owners can vote no to a Special Levy, though that isn’t positive for the maintenance building or the value of your investment. If too many people vote no (more than 25% of Owners voting), the Strata Council would have to reconfigure their plan and present different options to Buyers at a future AGM or SGM (this may mean getting further quotes or decreasing the size of the repair, which isn’t always a good thing). Special Levies are often due within a few months of being voted on, and can be split into multiple payments to reduce the burden on owners. Each owners share of the Special Levy is determined by the amount of sqft each owner owns in relation to the total building (otherwise known as Unit Entitlement – this amount is detailed in the AGM or SGM Notice).

Special Levies can be anything from a couple hundred dollars to over $100,000 (seriously!) depending on what needs to be done in the building.

What if you can’t afford a special levy?

Unfortunately, you’ll have to find a way to pay it. Whether that’s taking out a loan, borrowing from family, selling the unit or re-mortgaging, these funds are due. If the Strata doesn’t receive your levy funds, they can fine you and eventually force a sale to recover the funds.

Be prepared for special levies

Every building will see a Special Levy at some point, so you want to make sure that you’re prepared for it. I always tell my clients to keep a few thousand dollars set aside every year so that it’s not a shock to your bank account when a special levy is required. Some Strata’s are raising their monthly strata fees to help mitigate future Special Levies, but even then, you’ll have to be prepared for a higher monthly condo fee and the increased Strata fees won’t be enough to cover all major maintenance projects.

Check out my other post for more information about What to Look for in Strata Docs.

Kristi Holz FAQs

Ensure you have a Personal Insurance Policy

NOTE: This post is not a substitute for professional insurance or legal advice with regards to insurance polices and claims. Talk to the appropriate professional about your specific scenario and requirements.

One detail that is required but often overlooked is the importance of Owners having their own personal insurance policy. Of course, this is important for detached houses when you’re the sole owner, but is very important for Strata Owners to have a personal insurance policy in addition to the Strata insurance policy considering the changes to the Insurance Market across BC.

In 2019, Strata buildings started to see increased insurance deductibles for damage (for example, deductibles were commonly $10,000 before and now they’re often $100,000 or more), increased insurance costs overall, lack of 100% coverage and delayed approvals. The cost to repair any damages to your unit, other units and the building are far higher due to these insurance changes. Below is some information to know.

Say the deductible for water damage on the Strata’s insurance policy is $100,000 – you could be responsible for this amount if you cause a water damage issue or if the water damage issue originated in your unit. To protect your personal liability against claims or the risk of a  deductible, it is vital that you purchase a personal insurance policy to cover the strata deductibles and the cost of any damage you may or may not have caused.

In a Strata, who pays the costs with regards to an insurance claim depends on the level of damage, the Strata insurance policy and your personal policy. Here’s a helpful CHOA Article: Who Pays the Insurance Deductible and a follow up on this article, Clarification on Insurance Deductibles.

CHOA is the Condo Home Owners Association of BC, providing advice and resources to Strata’s and Strata Owners in BC. For more information: https://www.choa.bc.ca/. There are plenty more helpful articles to find in their “Resources” section.

Long story short, if you cause damage – and whether that is something you have done directly by leaving the bathtub running or a pipe/appliance in your unit bursting unexpectedly – you are responsible for the cost. If the cost of the damage is below the Strata water damage deductible, then you have to pay the cost of repairs, and any damage to your neighbours units may be your cost to repair as well. Your personal insurance policy should cover you for this amount. If the cost of the damage is above the Strata water damage deductible, then the Strata will pay the deductible (the cost will come out of the Contingency Fund, Operating Fund or may require a special levy from Owners) but the Strata can require that you reimburse them for the cost. Your personal insurance policy should cover you for this amount. If the issue was caused by the Strata (say a common pipe in the hallway explodes and damages your unit) then the repairs will be covered by the Strata, expect for any upgrades done in your unit. The Strata Insurance Policy will only cover the cost to replace original finishings, so if you replaced carpet with expensive hardwood, your insurance policy should cover you for the extra costs of your upgrades. The Strata Insurance Policy will likely not cover your costs to be relocated to a different unit during repairs, but your insurance policy should cover you for the cost of temporary relocation. Your personal insurance policy should also cover your for your personal belongings, liability in accidents, and more.

Insurance Policies are bland, yet complicated, with plenty of fine print that can really affect the use of your policy, so make sure you speak with an insurance advisor to understand the ins and outs of your policy and what would happen when there is significant damage.

Do your Due Diligence before Purchasing

Before purchasing your condo, get the Strata insurance summary from the Seller (who will get it from the property management company) and talk to a professional insurance agent. Send them a copy of the Strata Insurance Policy so they can help you understand the deductibles, how they are best covered, the extra coverage you may want and what it will cost you.

It is also valuable to review the date the policy will be renewed. If it’s in the next month or two, you may want to wait to find out what the new policy will be before making your purchase official as there could be some significant increases or changes to the policy.

Mortgage Lenders will require that the Strata has an active insurance policy and that you have a personal insurance policy in place before funding the mortgage on the Completion Date, so do your research prior to removing subjects to ensure you understand your options and the costs involved.

Kristi Holz FAQs

What to Look for when Reading Strata Docs

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.

Kristi Holz FAQs

A Quick Overview of Condo Building Maintenance

When you’re looking for a home, you need to find a unit you like, and one that’s also in a good building. My job is to help you avoid the bad buildings and make sense of the decent buildings. One of the most common details the Buyers, especially first time home buyers, don’t totally understand is building maintenance and what makes a worthwhile building. Below is a quick – and far from extensive – overview of some of the most common misunderstandings and considerations to make.

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