Common property
Buying into a strata is quite different from buying a single family home. Strata developments can vary significantly and it’s important to have a clear understanding of the characteristics and positioning of a strata before making the final decision on your new home.
When you purchase a strata unit, you and the other residents of the strata are collectively responsible for the common property. The common property includes everything outside of your specific unit, such as the hallways, walkways, parking garages, roof, etc.
Strata management
Many of the larger strata developments in Victoria are professionally managed to ensure the care and maintenance of the common property is well organized. In addition to the property managers, strata members will vote for a strata council and president composed of other residents in the building.
The strata council and president will periodically meet to discuss items members have brought to their attention, such as complaints or physical issues with the building. All of these meetings will be documented within the strata councils’ meeting minutes and will be available for other members and potential buyers to review.
Depreciation report
As part of the care and maintenance for the building, the strata will have a depreciation report done generally every seven years or so. This involves bringing in a third party engineering firm to evaluate the building’s assets, specifically their life span and replacement costs. Examples of an asset would be windows, roof, balconies, parking membrane, etc.
The depreciation report will include a timeline of the estimated yearly costs for the care and maintenance of assets, as well as recommended funding models. All the strata members will vote on their preferred funding model. The chosen funding model will determine the fee collection for strata budgeting.
Strata fees
When you own a strata unit, you’ll have monthly strata fees. These fees go towards the building’s contingency reserve fund and operating fund, which you can think of as the building’s saving and chequing accounts. A ‘light’ funding model (lower monthly fees), is not necessarily better. If there is not enough money in the contingency reserve fund for required maintenance, the strata will need to put out a special levy to each resident. A special levy makes up the remaining amount of an upcoming cost split among residents, and it could be in the thousands.
The costs of homeownership are inevitable, however, when buying into a strata, it is of the utmost importance that you have a strong understanding of the strata characteristics, management, and budgeting before making the final decision on your new home.
Strata documents
In order to ensure you have all the information you need, we’ll include “subject to strata document review” in an offer to purchase, which includes the most recent depreciation report, council meeting minutes, and any other documents relevant to the building and its management.
In addition to these documents, the ‘Form B: Information Certificate’ will include a snapshot summary of the building and the unit of interest, including any parking stalls, the schedule of unit entitlement (the unit’s proportionate interest in the common property, often used to calculate the owner’s share of expenses), the monthly strata fees associated with the unit, the exact amount in the contingency reserve fund to date, and more.
Strata documents can be lengthy and it is advised that you have your lawyer associated with the transaction or a professional strata document company review the documents for added peace of mind.
We’re here to help
There are a lot of fantastic strata developments in Victoria and new developments offering pre-sale opportunities. We hope you found this post informative! If you have any questions, please don’t hesitate to reach out.
We’re always happy to have a conversation and provide recommendations that fit your goals.
Call or text Alex at 1-250-634-2141, or email [email protected].
Thank you for being here,
Alex Hughes* and Ricki-Lee Jewell, Victoria, BC Real Estate Agents
*Personal Real Estate Corporation
