Buying a strata property in Nanaimo is quite a bit different than buying a single-family home. In addition to reviewing the title to the property and reviewing the seller’s disclosure statement, a strata purchaser needs to get to know the strata corporation that runs the strata property.
There are several strata documents that your Buyer’s agent will request for you from the Seller’s agent. Generally, your Realtor, as well as yourself, will read through these documents carefully.
Here is a list of the strata documents you should review and what these documents can tell you about the strata development you are hoping to buy into:
Strata Plan is a document drawn by a surveyor and registered in the nearest Land Titles Office. The Strata plan is very important as it tells you the following: Whether the strata is a Bare Land Strata or a Building strata plan, whether there are any easements or rights-of-way that may affect the strata lot you are hoping to purchase, Does the strata lot number on the title and or MLS listing match the strata lot number on the strata plan?, Do the features such as patios, decks etc. match what is on the MLS listing?, are the features noted on the MLS listing as being part of the strata lot common property or limited common property?, How is the parking shown on the strata plan?, How are the storage lockers shown on the strata plan?, Are parking stalls and lockers limited common property or common property ?, What are the common areas and facilities, if any?
This document is very important as it details exactly what is included with the subject strata lot such as: the exact strata fee, the parking stalls and storage lockers, if any, that are included with that strata lot. It tells you whether the current owner owes any money to the strata. It will tell you how many, if any, of the strata lots are rented at that time. You can also find out if any resolutions to the Bylaws have been voted on. The Form B will give you a snapshot of the financials of the strata as of the date of the Form B. It notes the current amount in the contingency reserve fund and whether any special levies have been voted on and how much will be owing from the owner of the subject property.
Depreciation Reports – These reports are used to establish long-term planning for common property and common assets. A Depreciation Report helps determine what assets are owned by the Strata, the condition of these assets, when these assets need to be replaced, how much money is in the current contingency plan, what expectations are of what these repairs will cost in the future and three different cash flow models on how the strata can save for these expenses.
Engineering Reports (if any) -
An Engineering report will contain an analysis of one or more of the Strata corporations building components such as envelope, structure, mechanical, electrical systems or equipment. Strata meeting minutes for the past two years – The minutes from Strata minutes can tell you a lot about what’s going on within a Strata. I generally order the past two years worth of minutes to review. Some of the things to look for when reading the minutes are: Are all of the minutes there?, Do the minutes refer to any legal opinions or engineering reports you have not seen?, Are there any legal actions referred to in the minutes that are not disclosed on the Form B?, Is the subject Strata lot referred to in any of the minutes?, Do the minutes reveal any ‘ red flags’ about the strata? What can you learn about the Strata from reading the minutes? By reading the minutes you will learn about ongoing projects, repairs and issues going on within the strata. You will also learn how these issues have been handled. You will also get a feel for how the Strata deals with issues and how pro-active they are in dealing with repairs and complaints.
Financial statements –
These documents will show where the Strata Corporation obtains its money and how it is spent. It also shows how the Strata is allocating funds to build a solid contingency fund.
Bylaws & Rules -
It is important to read the Bylaws and Rules as they will indicate what you can and cannot do in your unit. The bylaws will let you know if there are any restrictions on pets, rentals, age, and any rules on how the unit can be used. Additionally, you can find out if there are any parking bylaws or any restrictions on how you can alter the unit such as adding hard surface floors, changing window treatments or adding an air conditioner or heat pump. The Bylaws also indicate who is responsible for the repair and maintenance of the strata lot.
Minutes from the past two AGM’s and SGM’s– Its important to read the AGM minutes as the AGM meetings review the strata’s operations and actions over the past year. They review the budget for the upcoming year and whether strata fees will need to be raised in order to pay for certain expenses. The AGM is also when discussion takes place as to whether there are any proposed changes to the bylaws & rules or if a special assessment is in the wind.
SGM minutes –
Sometimes a strata calls a Special General meeting if there is a special reason to get the strata owners together to discuss: a proposed assessment or levy to cover the cost of some repair or upgrade, an insurance claim and how the strata intends to deal with it.
“The Strata Property Act requires that the strata corporation obtain and maintain property insurance and liability insurance. This means all types of strata’s, including bare land strata corporations and duplexes must obtain insurance.The strata corporation’s property insurance is for common property, common assets, buildings shown on the strata plan and fixtures built or installed on a strata lot if built or installed by the owner developer as part of the original construction of the strata lot. The insurance must be for full replacement cost. The strata corporation must review the adequacy of the strata corporation’s insurance policy annually and report on the insurance coverage at each AGM (annual general meeting).
The strata corporation’s insurance is a common expense; it usually occurs annually and is part of the strata’s operating budget. Budgets are approved by majority vote at the AGM (annual general meeting).
It is helpful for strata corporations to explicitly let strata owners know what the insurance deductible is for the strata corporation. That way strata owners can purchase sufficient coverage for the strata corporation’s deductible.” (source 2.gov.bc.ca)
It’s important for you to review the policy and the deductible so that you can plan for your home insurance accordingly. Strata fees pay for the insurance for the strata corporation, but strata lot owners need to buy their own condo home-owner package.
If you’re considering buying or selling a strata property and are looking for a Realtor that specializes in these properties, please give me a call