When buying a strata property, there are a number of things that you must review. These are different from when you purchase a single family home. The process can be much more time consuming and requires more attention to details. When buying a strata property you should receive 2-year’s worth of strata minutes. In addition there will be various other strata documents. It is important to carefully read them in order to understand if it is a good complex to buy into.
Documents to Review when Buying a Strata Property
Although there are many documents that must be reviewed when buying a strata property, the most important documents are:
Form B
The Form B is one of the most important documents you will receive. It will confirm your parking and storage locker numbers. It will also show you the balance of the contingency fund. If there are outstanding levies, and if there is any outstanding litigation against the complex.
Contingency Fund
This is essentially how much money the strata has in their savings account. A healthy contingency fund amount will depend on the size and age of the strata. Contingency funds are typically used to fund repairs and upgrades to the complex. There are minimum requirements on how much a strata must contribute to the contingency fund each year.
Special Levies
When a building needs major repairs or upgrades often special levies are passed to help cover the costs of the repairs. If a special levy has been approved, this will be noted on the Form B. The outstanding amount of the payment will also be outlined. Typically the seller is responsible for paying all levies that are approved while they own the property.
Although paying a special levy is never fun, having a strata that is proactive about maintaining the complex is important. Lack of repairs is a red flag and will decrease property values in the long run.
Litigation
Litigations will be noted on the Form B. The Legal Disclosures which outline the details of the litigation will be attached. Outstanding legal disputes, could signal underlying issues that could affect your investment and resale value.
Some litigations can be very concerning such as issue surrounding builders not completing deficiency work that is required under the warranty terms. Others can be less of an issue. Such as a single owner within the complex being used by the strata for obstructing a hose bib that is located outside their unit… yes this was a real legal case in a building we viewed.
Strata Minutes
The strata minutes for a complex provide a lot of insight into how the strata operates and the relationship between the individual owners.
Poor Governance
If the minutes show evidence of infighting, mismanagement, or lack of transparency among the strata council members, it could indicate a dysfunctional or uncooperative community. Lack of minutes or excessively vague minutes can be a concern and could be a sign that the complex is not being cared for or the strata is trying to cover up ongoing issues.
Neighbours
When buying into a complex you want to make sure you will like the community you live in. If the strata minutes indicate excessive complaints about small things, it may indicate what type of people live in the complex. For example if there are excessive complaints about shoes left in front of entry doors, pet bird noise, or how your nail trimmings are disposed of this may be an indication that the complex is not the right fit for you.
If you have any additional questions about purchasing a strata unit, feel free to contact Your Two Awesome Realtors.
