When you purchase a Strata Lot (i.e. unit in a condo), you are investing in the building, and that investment requires proper due diligence so that you, as a potential new owner, understand where the building is at from a financial, mechanical, and management standpoint.
Considering again that the condo building is a corporation – with shareholders, bank accounts and documentation detailing every penny and conversation. This documentation is available to all owners, potential owners and real estate agents to understand if this is the right investment.
It is VERY common for Buyers to have a subject clause in their offer for purchase requesting the building’s documentation prior to officially purchasing the property. Therefore, the Buyer can have a good idea of what they’re buying, and otherwise can revoke their offer.
What are these documents? Read on..
All Strata Council Meeting Minutes
- Typically the last 2 years of minutes are requested; including the minutes from the regular meetings (typically meetings are held monthly, sometimes less often for smaller stratas), the Annual General Meeting (AGM), and Special General Meetings (SGMs) will detail the happenings within the building including move in/move outs, renovations, rule breakers, maintenance issues, and more.
The Condo Building’s Bylaws and Rules
These rules and bylaws dictate what you’re allowed to do in your unit and in the building. These rules can be change by the owners (through a vote at a meeting – you would read about something like that in the meeting minutes, and is also a good reason to attend meetings!). Breaking a rule usually results in a fine. Typical Building Bylaws include:
- Age restrictions: This isn’t very common, but some complexes only allow people over 40, or 55, etc. For instance, The O’Keefe in Arbutus Walk has a 55+ age restriction.
- Pet Restrictions: Some buildings don’t allow pets, only allow 1 or 2, only allow dogs under a certain weight and size, only allow cats or have no restrictions! If you have a pet, and you put an offer on a property that is advertised to allow pets, then you read the bylaws and discover that no pets are allowed, you can revoke your offer due to incorrect advertising. Typically this is checked prior to writing an offer.
- Rental Restrictions: These restrictions can be anything from a certain number of rental units allowed or % of units allowed to be rented at one time, it can prevent you from renting your unit until you’ve lived in the building for a certain number of years, it can enforce a minimum of a 1 year lease, or may have no restrictions whatsoever. If you’re buying an investment property to rent out – you MUST check this Bylaw.
- Noise Restrictions: Usually preventing loud music, construction, or other loud activities from occurring before or after a certain time of day.
- Other restrictions, which can include anything from the types of floors you’re allowed to install (hardwood sometimes isn’t allowed since it’s noisy for people below you), what type of blinds are allowed, whether barbeques are allowed, if you’re allowed to smoke on your own balcony (smokers take note – this is an actual rule) and more.
The Strata Plan
- This was filed in the land title office prior to the building being developed and details how the property is divided amongst the owners. This document will detail exactly what you own as part of your Strata Lot in the building.
Building Warranties, Depreciation Reports and Engineer’s Reports
- These documents detail work that has been done on the building, or work that may need to be done in the next few years, or how long work that has previously been down is under warranty (in case something goes awry). Think of it as the building’s maintenance plan.
Form B and Financials
- The Form B details a few common questions about the building, including the current contingency fund, the number of units currently rented out in the building, etc. The financials detail how money is budgeted and spent.
As your Kitsilano Real Estate Specialists, we will be reading these documents on your behalf (and informing you of specific issues and highlights). Considering the large investment you will be making, we HIGHLY suggest you to read them as well. This is a major purchase, and you should know what you’re getting into.
As the owner of a Strata Lot, you are allowed to request these documents at any time (sometimes for a small fee) from the Strata Corporation.
For any questions before then, please give us a shout.