Buying strata can be scary

You’ve heard the horror stories: restrictions and petty disputes. If you follow these basic steps you can avoid common problems.

Step 1 – Read the Strata Bylaws

Stratas have rules that limit what you can do even inside your apartment. Rental restrictions, pet restrictions and age restrictions are the big ones. But bylaws can restrict your renovations and tell you what you can and cannot do – right down to the colour of your curtains. Carefully review the bylaws to make sure that they are right for you.

Step 2 – Read the Form B Information Certificate

The Form B Information Certificate will tell you what your monthly strata fees are, if there are any special levy payments owing, what parking stalls and/or storage lockers are yours, and whether the strata is involved in a court case.

Step 3 – Read the Strata Minutes

You should always get the last two years of Annual and Special General Meeting Minutes and Council Meeting Minutes. It is very important to review each set of minutes to get an idea of what the strata’s issues are. Are there any big ticket repair items: a new roof, a new elevator or hot water boiler? If there are, you may be looking at a huge payout. This also gives you an idea about how the strata corporation is run.

Step 4 – Read the Depreciation Report

A Depreciation Report gives you an idea of what repair and maintenance jobs are coming up. It will tell you if the strata has enough funds to cover those upcoming repairs. Remember, the engineers who do Depreciation reports can get into trouble if they undervalue upcoming repairs so they tend to price the repairs high. It is important to realize that an upcoming repair may not be as expensive as projected. The Depreciation Report helps strata corporations plan for the repair and replacement of common property components. Not all buildings have a Depreciation Reports, they are NOT mandatory. Banks like Depreciation Reports because it helps them assess mortgage risk.

Step 5 – Read the Financial Statements

How much is in the Contingency Reserve Fund? The smaller the Contingency Reserve Fund, the less the strata has for big ticket items or emergency repairs. Most stratas don’t have enough money in their contingency fund.  If you are buying into an older strata that hasn’t replaced its roof, doors, windows, or elevators in a long time, you will be paying for those repairs in the form of a special levy if there is not enough money in the Reserve Fund.

Step 6 – Get a good realtor