When buying a strata take the time to understand the basics and the rules governing the many aspects of strata properties.
This article focuses on what to look for to ensure you are buying a solid strata, including the Strata Property Disclosure Statement, the maintenance program, the contingency fund, the warranty program, and more.
Review strata council minutes
Look at minutes for the past 24 months or more, along with by-laws, financial statements, Annual General meeting minutes, and engineering reports that may have been completed. Look for past problems, previous repairs, special assessments, and upcoming expenditures.
Depreciation reports
As of February 28, 2013, strata corporations are required to obtain strata depreciation reports every three years unless they hold an annual 3/4 (three quarter) vote to exempt, or there are four, or fewer strata lots.
There are different timing requirements for the first depreciation report depending on when the strata corporation was formed.
A depreciation report helps strata corporations plan for the repair, maintenance and replacement of common property, limited common property and common assets.
The report must contain:
- A physical inventory of the common property and assets
- Anticipated maintenance, repair and replacement costs for common expenses projected over 30 years.
- A financial forecasting section with at least three cash flow funding models.
Depreciation reports helps strata corporations, including bare-land stratas, plan for the repair, maintenance and replacement of common property, limited common property and common assets over a 30-year period.
Depreciation reports provide useful information to strata lot owners, prospective purchasers, mortgage providers and insurance companies.
Ensure a maintenance program
Talk to the strata property manager to determine whether the building has a solid preventative maintenance program in place.
Check the contingency fund
Since a portion of strata owners’ monthly maintenance fees must go into a ‘contingency fund’ to pay for extraordinary repairs, such as a new roof or exterior painting, it pays to know if the contingency fund is large enough to cover any upcoming expenses.
Review the Strata Property Condition Disclosure Statement
Sellers are strongly encouraged to complete this disclosure statement. It is a checklist about the property’s condition. Buyers should carefully review it for any defects or potential problems. The Statement can be legally incorporated into the Contract for Purchase and Sale.
Investigate the warranty program and builder’s background
Regardless of whether the condo is new or resale, your REALTOR® can find out what type of warranty the building carries, noting the limits and duration of coverage. They may also be able to help you obtain background information about the builder/ developer of the project.
Hire a professional home inspector
Make sure the home inspector has proper accreditation and carries errors and omissions insurance. Have them inspect the condition of the suite, common areas, and the overall building structure.
Many REALTORS® specialize in condominium sales.