Exploring Various Ownership and Management Structures in Real Estate

Freehold Ownership:

This is the most common and comprehensive form of real estate ownership in British Columbia. With freehold ownership, you have full control and ownership of the property, including the land and any buildings or structures on it, subject to any governmental or municipal restrictions and regulations.

Advantages:

• Complete ownership: With freehold ownership, you have full control and ownership of the property, including the land and any buildings or structures on it, giving you the freedom to make decisions about the property's use and improvements.

• Long-term appreciation: Freehold properties often have greater potential for long-term appreciation and higher resale value compared to leasehold properties.

• No lease restrictions: Freehold property owners are not subject to lease restrictions or renegotiation of lease terms, providing more stability and predictability.

• Easier financing: It is generally easier to secure financing for a freehold property compared to a leasehold property, as lenders are more likely to provide mortgages for properties with full ownership rights.

Disadvantages:

• Higher initial cost: Freehold properties tend to have higher purchase prices compared to leasehold properties due to the ownership of the land.

• Full responsibility: Freehold owners are solely responsible for all maintenance, repairs, taxes, and insurance related to the property, which can be time-consuming and costly.

  
  

Leasehold Ownership:

Leasehold ownership is a type of real estate ownership where you have the right to use and occupy a property for a specific period, as outlined in a lease agreement with the freehold owner. Leasehold properties are usually found on First Nations reserves, government-owned land, or properties owned by institutions like universities. Lease terms can vary, but they are typically 50, 75, or 99 years in length.

Advantages:

• Lower initial cost: Leasehold properties typically have lower purchase prices compared to freehold properties, making them more affordable for some buyers.

• Access to desirable locations: Leasehold properties can provide access to desirable locations, such as waterfront properties or properties on government-owned land, where freehold ownership may not be possible.

• Limited responsibility for land: Leasehold owners are generally not responsible for the land itself, as this remains the responsibility of the freehold owner.
  

Disadvantages:

• Limited ownership duration: Leasehold ownership is limited to the term of the lease agreement, which can vary but is typically 50, 75, or 99 years. As the lease term nears its end, the property value may decrease, and renewing the lease or purchasing the freehold may be costly or challenging.

• Lease restrictions: Lease agreements may have restrictions on property use, modifications, or transfers, which can limit the owner's ability to fully enjoy or control the property.

• Lease renegotiation: Lease agreements must be renegotiated or extended at the end of the term, which can be uncertain and potentially costly.

• Financing challenges: Securing financing for leasehold properties can be more challenging than for freehold properties, as lenders may have stricter requirements for the remaining lease term and other factors.

  
  

Strata Ownership:

Also known as condominium ownership, strata ownership involves owning an individual unit within a larger complex or building. Strata owners have title to their specific unit and share common areas and facilities with other unit owners. Strata ownership is governed by the Strata Property Act of British Columbia, which establishes rules and regulations for strata corporations, including bylaws and the management of common property.

Unique Strata characteristics:

• Residential Strata: These are the most common types of strata properties and include apartment-style condominiums, townhouses, and duplexes. In a residential strata, individual owners hold title to their specific units and share ownership and responsibility for common areas and facilities.

• Mixed-Use Strata: Mixed-use strata developments combine residential and commercial units within the same complex. These properties might include a combination of apartment units, retail spaces, offices, and other commercial spaces. Owners share common areas and facilities, and the strata corporation is responsible for managing both residential and commercial aspects of the property.

• Commercial Strata: Commercial strata properties consist entirely of commercial units, such as office buildings, retail spaces, or industrial complexes. Like residential strata properties, commercial strata owners share ownership and responsibility for common areas and facilities.

• Bare Land Strata: A bare land strata property is a type of strata development where individual owners own a specific parcel of land within the development rather than a constructed unit. Owners can build their own detached home or other structure on their lot, subject to the bylaws and regulations of the strata corporation. Bare land strata properties are unique because they provide the benefits of strata living while also allowing for more customization and individual property control.

• Sectioned Strata: In a sectioned strata, different sections within the strata property have their own separate bylaws, budgets, and governance structures. This type of ownership is often found in mixed-use developments or properties with distinct components, such as a high-rise tower and a townhouse complex. Each section operates somewhat independently while still being part of the larger strata corporation.

• Air Space Parcel Strata: An air space parcel strata is a more complex form of strata ownership where the land and buildings are divided into separate air space parcels, each with its own strata plan. These parcels may be stacked vertically or horizontally and can include different types of strata properties, such as residential, commercial, and institutional spaces. Air space parcel stratas allow for the independent ownership and management of separate parts of a development while still sharing certain common areas and facilities.

Each type of strata ownership has its unique features and characteristics, but all strata properties in British Columbia are governed by the Strata Property Act, which establishes the rules and regulations for strata corporations, including bylaws, management of common property, and the responsibilities of owners and tenants.

Self-Managed Strata Properties:

In a self-managed strata property, the owners collectively take on the responsibilities of managing the property without the assistance of a professional strata management company. This approach typically involves the establishment of a strata council made up of volunteer owners who handle the day-to-day operations, decision-making, and financial management of the strata property.

Advantages:

• Cost Savings: Self-management can lead to cost savings, as owners do not have to pay for the services of a professional strata management company.

• Direct Control: Owners have direct control over the decision-making process, which can result in more responsive and efficient management.

• Community Engagement: Self-management can foster a sense of community among owners, as they work together to maintain and manage the property.
  

Disadvantages:

• Time and Effort: Self-management can be time-consuming and labor-intensive, as owners must handle all administrative, financial, and maintenance tasks.

• Limited Expertise: Owners may lack the necessary expertise in property management, legal, or financial matters, which could lead to potential issues or conflicts.

• Inconsistent Management: Self-management can result in inconsistent management practices, as the volunteer strata council may change frequently, leading to varying levels of effectiveness and commitment.
  

Strata Manager-Managed Properties:

In a strata manager-managed property, the owners hire a professional strata management company to handle the day-to-day operations, decision-making, and financial management of the property. The strata manager acts on behalf of the owners and follows the directions of the strata council.

Advantages:

• Professional Expertise: Strata management companies bring professional expertise in property management, legal, and financial matters, which can result in more effective and efficient management.

• Time Savings: Hiring a strata manager can save time for the owners, as they do not have to handle the administrative, financial, and maintenance tasks themselves.

• Consistent Management: Strata managers can provide consistent management practices, reducing the potential for fluctuations in effectiveness or commitment that may occur with a volunteer strata council.
  

Disadvantages:

• Cost: Hiring a professional strata management company can be more expensive compared to self-management, which may result in higher strata fees for the owners.

• Less Direct Control: Owners may have less direct control over the decision-making process, as the strata manager is responsible for implementing the strata council's directions.

• Potential for Miscommunication: There can be potential for miscommunication or disagreements between the strata manager and the owners, which could impact the overall management of the property.

A potential owner should consider factors such as the size and complexity of the strata property, the level of involvement they are willing to commit to, and their preference for professional expertise versus direct control when making a decision. Consulting with a real estate professional can provide valuable insights and guidance.

Co-operative Ownership:

In a co-operative ownership arrangement, individuals own shares in a corporation that owns the real estate property. Shareholders have the right to occupy a specific unit within the co-operative complex but do not have direct ownership of the real estate. Co-operatives are governed by their own set of bylaws, and the shareholders elect a board of directors to manage the property.

Fractional Ownership:

Fractional ownership is a type of shared ownership in a property, where several individuals or entities own a portion of the property, typically in the form of shares or percentages. This type of ownership is common in vacation properties, where the owners can use the property for a certain amount of time each year based on their ownership share.

Tenancy in Common:

Tenancy in common is a form of shared ownership where multiple parties hold an undivided interest in a property. Each owner has a separate and distinct title to their share of the property, and they can sell or transfer their interest without the consent of the other owners. Upon the death of an owner, their share in the property passes to their heirs or beneficiaries.

Joint Tenancy:

Joint tenancy is another form of shared ownership where two or more individuals own a property with equal rights and interests. Unlike tenancy in common, joint tenants have the right of survivorship, which means that if one joint tenant dies, their interest in the property automatically passes to the surviving joint tenant(s).

Duplex properties: 

Duplexes, as they are commonly referred to consist of two separate residential units within a single building, can have different ownership options and structures in British Columbia, Canada. The most common forms of ownership for duplex properties are:

1. Fee Simple (Freehold): In this scenario, one owner holds the title to the entire duplex property, including both units and the land. The owner may choose to live in one unit and rent out the other or rent out both units as an investment property. In this case, there is no division of ownership between the two units, and the owner is responsible for the maintenance and upkeep of the entire property.

2. Strata Title (Condominium Ownership): A duplex can be set up as a strata property, where each unit is individually owned, and the owners share the responsibility for the common elements, such as the roof, exterior walls, and shared outdoor spaces. The duplex would be governed by the Strata Property Act and managed by a strata corporation. Each owner holds title to their respective unit, and the strata corporation is responsible for maintaining and managing the common property, enforcing bylaws, and collecting strata fees for shared expenses.

3. Tenancy in Common: Tenancy in common is a form of shared ownership where two or more individuals hold an undivided interest in the duplex property. Each owner has a separate and distinct title to their share of the property (i.e., one unit in the duplex), and they can sell or transfer their interest without the consent of the other owner(s). Upon the death of an owner, their share in the property passes to their heirs or beneficiaries.

4. Joint Tenancy: Joint tenancy is another form of shared ownership where two or more individuals own the duplex property with equal rights and interests. Unlike tenancy in common, joint tenants have the right of survivorship, which means that if one joint tenant dies, their interest in the property automatically passes to the surviving joint tenant(s).

5. Co-ownership Agreement: In some cases, the owners of a duplex property may choose to create a co-ownership agreement, which outlines the rights and responsibilities of each owner, including property maintenance, expenses, and decision-making processes. This type of agreement can provide a more flexible ownership structure and can be customized to suit the specific needs and preferences of the property owners.

Each ownership option and structure for duplex properties has its unique features, benefits, and potential drawbacks.

Here are reasons why reviewing the TITLE SEARCH is important...

Describes How the Property is Registered: Ideally you are looking for “Fee Simple.”

Fee simple ownership, also known as freehold ownership, is the most complete form of property ownership, where the owner has absolute and indefinite ownership.

“Leasehold land” refers to a situation where the owner of the land grants a leasehold interest in the property to a tenant or lessee for a specific period of time, which is usually several decades. The lessee pays rent for the use of the land and has exclusive use of the property during the lease term.

To Verify Ownership: The title search ensures that the seller has clear ownership of the property and can legally transfer it to the buyer. This is important because if there are any disputes over ownership, it can delay or even prevent the sale from going through.

To Reveal Potential Issues with Financial Charges: The title search can reveal any liens or encumbrances that may affect the property's value or transferability. For example, there may be unpaid taxes or other liens that need to be cleared before the property can be transferred.

Mortgages are typical on a property title because when a person takes out a mortgage to buy a property, the lender places a lien on the property, which means that they have a legal claim to the property as collateral for the loan.

To Verify Other Chages & Potential Legal claims: Reviewing the title search can protect the buyer from legal claims against the property. For example, if there is an easement on the property, it may affect the buyer's use and enjoyment of the property.

Easements are more typical with strata properties (condos & townhomes), than with detached homes because of the shared ownership and use of common areas and facilities within the strata property, such as: parking areas, hallways, elevators, and recreational facilities. In order to provide access to these common areas and facilities, it is common for easements to be created in the strata plan, which allow each owner to use and access these areas.

On the other hand, detached homes typically do not have shared ownership or use of common areas with other properties, and therefore, do not typically require easements. The owner of a detached home generally has exclusive ownership and control of their property, including the land and any structures on it, and does not need to share access or use of these areas with anyone else.

To verifty there is NO “Duplicate Indefeasible Title” - A Duplicate Indefeasible Title is a second copy of the original title that has the same legal weight as the original. This means that two people can hold a title to the same property, creating a situation where there are conflicting claims to ownership. This can lead to disputes, legal challenges, and potentially costly litigation. It is important to ensure that there is only one valid title for a property to avoid any confusion or legal issues.

In summary, reviewing the title search of a property is crucial to ensure that the buyer is getting a clear title, free of liens and encumbrances, and that there are no legal claims against the property. As a Realtor, it's your job to help your client understand the importance of the title search and guide them through the process of reviewing it.

So you can feel confident and knowledgeable throughout the Property Buying process, below are descriptions and explanations of the typical documents required for the purchase of a home or property.

Typical Documents include: 

• Disclosure of Representation In Trading Services

• Privacy & Consent

• FINTRAC ID Requirements

• Buyer Agency Acknowledgement

• Disclosure of Expected Remuneration

• The Contract Of Purchase & Sale

• Buyer’s Right of Rescission

• Removal of Subject Appointment of Conveyancer

• FINTRAC - Receipt of Funds

Go here for an Explanation Video of the Standard Forms from BC Real Estate Association

DOCUMENTS UPON SUBMITTING AN OFFER

DISCLOSURE OF REPRESENTATION IN TRADING SERVICES

This document explains the different types of relationships you can have with a real estate agent when buying, selling, or leasing property. If you disclose confidential information to an agent, you should understand what type of business relationship you have with them.

If you are a client of a real estate agent, they work on your behalf and have special legal duties to you. These include loyalty, full disclosure, avoiding conflicts of interest, and confidentiality. You may be asked to sign a written agreement setting out your and the agent's responsibilities.

If you are not a client of a real estate agent, they do not owe you special legal duties. They may represent a client with competing interests to yours and do not have to give you all relevant information. They must share any information you tell them with their clients in a transaction.

Whenever an agent works with you, whether you are their client or not, they have a responsibility to act honestly and with reasonable care and skill. The disclosure form in compliance with sections 54 of the Real Estate Services Rules, which is required by law, is included in the document. The agent must present this document along with the Your Relationship with a Real Estate Professional information page.

If you have any questions or concerns about the information presented, you can contact the BC Financial Services Authority (BCFSA). They are a regulatory agency that works to ensure real estate professionals have the skills and knowledge to provide you with a high standard of service.

Go here to view an Explanation Video from the BCFSA

The PRIVACY NOTICE AND CONSENT form is a legal document that explains how personal information is collected, used, and shared by real estate professionals in British Columbia when selling, buying, or leasing a property. Personal information includes details about you, such as your name, address, phone number, and financial information.

Your personal information may be collected by the real estate agent you work with, the real estate board they belong to, and other parties involved in the transaction. This information will be used to market your property, help you find a suitable property, facilitate the transaction, and conduct statistical analysis.

Your personal information may also be disclosed to third parties, such as photographers, appraisers, and other service providers, and to regulatory bodies, such as the British Columbia Financial Services Authority (BCFSA) and The Canadian Real Estate Association (CREA).

You have the option to opt out of secondary uses of your personal information, such as receiving communication from other real estate professionals or participating in surveys.

By signing the consent form, you acknowledge that you understand how your personal information will be collected, used, and shared. If you have any questions or concerns, you can contact the real estate agent you are working with or the British Columbia Real Estate Association (BCREA).

FINTRAC ID Requirements: 

SHORT: FINTRAC requires Canadian real estate professionals to comply with anti-money laundering regulations by providing government-issued identification during transactions to verify party identity. Non-compliance can lead to significant penalties, making compliance crucial for protecting both professionals and clients.

The Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) is a government agency that aims to combat money laundering and terrorist financing activities in Canada. As part of their efforts, FINTRAC requires that all real estate professionals, including real estate agents and brokers, comply with anti-money laundering regulations when dealing with real estate transactions.

This means that when buying or selling any interest in real estate, it is necessary to provide government-issued identification, such as a driver's license or passport, to verify the identity of the individuals involved in the transaction. This is done to ensure that the parties involved in the transaction are legitimate and not using real estate as a means to launder illicit funds.

In British Columbia and across Canada, failure to comply with FINTRAC's requirements can result in severe penalties and fines.

Therefore, it is essential for real estate professionals to understand and comply with these regulations to protect themselves and their clients from potential legal consequences.

Go here for an Explantion Video from the BC Real Estate Association

BUYER AGENCY ACKNOWLEDGEMENT

This document is called the Buyer Agency Acknowledgement and it is a form that a real estate agent presents to a buyer who is looking for a property to purchase. The form acknowledges that the buyer is asking for assistance from the real estate agent, who is known as the Buyer's Brokerage.

The form designates an agent to act as the sole agent for the buyer and sets out the duties and obligations of the Buyer's Brokerage and the designated agent.

The form also outlines that the designated agent will not disclose any information obtained through the buyer's agency relationship to other licensees who represent other buyers or sellers, unless authorized by the buyer or required by law. It is important to note that the agency relationship only exists between the buyer and the designated agent, and not with the Buyer's Brokerage.

The form also sets out the obligations of the Buyer's Brokerage, such as supervising the designated agent, treating all parties impartially, and holding all monies received in trust.

The form outlines that the designated agent is not obligated to make the buyer aware of all properties that meet the buyer's requirements, and that the Buyer's Brokerage may terminate the agency relationship at any time.

The form also outlines the conflicts of interest that may arise and how they will be handled, such as if the designated agent represents both the buyer and the seller of a property. Finally, the form states that signing it does not obligate the buyer to pay any remuneration directly to the Buyer's Brokerage or the designated agent, unless otherwise agreed to by the parties.

DISCLOSURE OF EXPECTED REMUNERATION

This document explains that the real estate agent must disclose any commission or referral fee they will receive in connection with the transaction.

This includes any payments made directly or indirectly to the agent. The document is divided into four sections: Client Notice, Disclosure of Commission, Acknowledgement of Receipt, and Disclosure of Licensee. The Client Notice section explains that the agent is required to disclose any remuneration they receive.

The Disclosure of Commission section requires the agent to disclose the amount of remuneration they will receive, and who will pay it. The Acknowledgement of Receipt section requires the client to sign the document to acknowledge that they have received and understood the information.

The Disclosure of Licensee section requires the agent to disclose their license information and any other relevant information. The document is necessary to protect the client and ensure transparency in the transaction.

The Contract of Purchase and Sale (CPS) is a legal agreement outlining terms and conditions of real estate property sale in BC. Includes price, deposit, completion date, possession date, terms and conditions/subjects. The contract template was developed & set forth by the British Columbia Real Estate Association & the Canadian Bar Association (BC branch).

For a Quick Video explaining the CPS click here>>>

***Please Go Here >>>for a Detailed Explanation ***

DOCUMENTS BETWEEN AN ACCEPTED OFFER & CLOSING

DISCLOSURE: BUYER’S RIGHT OF RESCISSION

As a buyer of residential real property in British Columbia, you have the right to cancel your Contract of Purchase and Sale by serving a written notice on the seller within three business days after the date on which the acceptance of the offer was signed. This is called a rescission right and cannot be waived.

Your real estate agent is required to provide this disclosure to you when preparing or presenting an offer to purchase. They may also need to provide an updated disclosure if the purchase price is amended during negotiations.

If you exercise your rescission right, you must pay a rescission fee of 0.25% of the purchase price agreed to by the buyer and the seller. If you paid a deposit before cancelling the contract, the rescission fee will be paid to the seller from the deposit and the balance, if any, will be paid to you.

There are exemptions to the rescission right, including residential real property on leased land, leasehold interests, properties sold at auction or under court supervision, and properties purchased under the Real Estate Development Marketing Act.

Your real estate agent will provide you with the necessary disclosure, which requires your initials or signature, and will explain any parts that are unclear.

Go here for an Explantion video from the BC Real Estate Association

REMOVAL OF SUBJECT APPOINTMENT OF CONVEYANCER

The Removal of "Subject to Clause" and Appointment of Conveyancer is a standard form used in British Columbia when buying or selling any interest in real estate. This form is used to remove the "subject to clause" that may have been included in the initial contract, which outlines specific conditions that must be met before the sale can be completed.

Once these conditions have been met, the "subject to clause" can be removed. Additionally, this form is used to appoint a conveyancer, who is a legal professional responsible for facilitating the transfer of ownership of the property.

The conveyancer will ensure that all legal documents are prepared and executed correctly, and that the transfer of ownership is completed smoothly. It is important to work with a qualified conveyancer who is experienced in real estate transactions in order to ensure that all aspects of the sale or purchase are handled properly.

FINTRAC-RECEIPT OF FUNDS

The FINTRAC-Receipt of Funds form is a document used by real estate professionals to comply with federal anti-money laundering regulations.

It requires the buyer and seller to provide information about the source of the funds used in the transaction, including any bank or wire transfer information, to ensure that the transaction is not connected to illegal activities.

It is an important form that helps prevent money laundering in real estate transactions.

For copies of the Buyer Documents (blank templates)

Please >>>Go here

Feel free to reach out if you have any questions, we are always happy to help.

Best Regards,

Solutions Real Estate Group

Keller Williams Elite Realty

As a buyer in BC, Canada, it is crucial to thoroughly read and understand the strata documents before making a purchase. Strata documents provide important information about the building and its management. These documents can reveal potential issues such as ongoing disputes, special levies, or upcoming repairs.

Being informed about the state of the strata will help buyers make a more informed decision and plan for expenses or problems down the road. Ultimately, taking the time to read and understand the strata documents can provide valuable insights and help buyers make a more informed decision about their investment in a property. Provided below is a compilation of commonly found strata documents.

What is a DEPRECIATION REPORT?

What depreciation reports are, is a way to assist strata properties project maintenance and replacement of common properties. The reports create projections over the next 30 years, while estimating costs, and how to finance these costs over that time period.

So in other words, is it estimates when components will wear out, how much it will cost to replace, and best way to pay for that cost.

DEPRECIATION REPORTS & EVERYTHING YOU NEED TO KNOW ABOUT THEM

Home Inspection 101 Inside The Inspectors Head
Featured Blog Post Written By Aaron Borsch from A Buyer’s Choice Home Inspections 

Finally into the warmer months! Last blog I spoke about other aspects of a strata building, now I wish to speak about depreciation reports, and what sort of information we can gather from them.

What is a Depreciation Report?

What depreciation reports are, is a way to assist strata properties project maintenance and replacement of common properties. The reports create projections over the next 30 years, while estimating costs, and how to finance these costs over that time period. 

So in other words, is it estimates when components will wear out, how much it will cost to replace, and best way to pay for that cost.

To understand why they are now the reality, lets take a small review how strata’s work. Any building will require maintenance and replacement of worn components some point of time in the future, which of course costs money. For strata spaces, the cost of these repairs and replacement is shared among all the owners. 

There are two main ways a strata pays for things. Either from money saved up from collecting strata fees, [which is then put in to the contingency reserve fund] or by everyone paying everything at once, or other words, special levy.

Now onto depreciation reports. Before these reports, it was very difficult for a strata property owner to determine what sort of costs would be coming up in the future. The result of that was unexpected special levies assessed to the owners. People generally don’t like to pay a large lump sum at once, and this made many people upset. So, the depreciation report is there – as mentioned previously – to help the strata estimate when components will wear out and how much it will cost to replace them. Ultimately, it helps the strata to budget and try to minimize the amount of special levies that will be put on to the owners.

How often are depreciation reports done?

Legislation came into play that required strata’s to obtain depreciation reports every 3 years, based on public pressure for a method to somehow assist current and future owners manage costs. However, a strata can vote to defer a report, but it requires a 3/4 vote of all the strata to do so. If an annual 3/4 vote is not passed, then strata corporation must obtain a depreciation report no later than 6 months after their AGM.

Now while it is a requirement for a strata to obtain these reports, there are ways to circumvent this. If you have 4 units or less, you are not required to get a depreciation report.

What is included in the Depreciation Report?

There are a few requirements that a depreciation report must have. They are as follows:

• A physical inventory of the common property and assets
• Summary of maintenance and repair work to be done
• Anticipated maintenance and replacement over the next 30 years
• Financial forecast for 3 different funding models
• Current contingency balance and how its funded
• A strata’s errors and omission coverage
• If any one individual owners are to maintain certain components

Note that there is no standard qualification for the author of the report.

Typically companies that prepare these reports are either engineering companies, or appraisal companies.

What to Look for in a Depreciation Report

The information in the report can be fairly daunting. When I read these reports, I typically try and focus on a few items. Here are some tips

Look at the remaining life of some major components. These components are the roof, cladding systems, elevator, parking membrane, windows, large boiler systems, and decks.

The summary will provide a quick description if there are items that should be of concern

Depreciation reports assume 100% replacement cost, but it doesn’t mean 100% replacement needs to happen. For example, it may say decks need to be replaced in 15 years. In reality, what will happen is in 15 years, the decks will be assessed, and determined if they really do need to be replaced as a whole, or if only some need to be replaced.

Just because its on the depreciation report, doesn’t mean it has to be done

Depreciation reports are not required to be followed, it is only information. At the end of the day, strata votes decides what happens. And while not every single item has to be done on a depreciation report, its important to vote on the items you believe need to be done. The strata also votes on how its to be paid. If a strata votes to increase strata fees, or do a special levy.

Common life spans of components of strata buildings

Here are some common life spans of some of the major components of a strata

• Roof: 20-25 years
• Windows: 30-40 years
• Balconies: 10-15 years
• Water lines: 30-40 years
• Cladding (assuming not requiring rainscreen): 25-40 years
• Elevators: 25-35 years
• Underground Parking Membrane: 20-25 years
• Standard Large Boilers: 20-25 years
• Commercial Water Heaters: 8 to 10 years

Why is FORM B important to read?

Moreover, it outlines the strata's financial aspects, specifying the amount in the contingency reserve fund and any special levies/assessments that the building's owners must pay.

For those considering investing, this document also indicates information about any associated rental restrictions.

Strata Fees, Levies and Special Assessments explained.

Regular strata fees are the monthly or annual fees paid by all owners in the strata to cover the ongoing maintenance and operation of the common property. These fees typically cover things like management fees, utility fees for common areas, strata insurance, janitorial, landscaping, snow removal, etc.

Levies and special assessments, on the other hand, are additional fees that are assessed by the strata council to cover specific, one-time projects or expenses. These may include things like repairs to the building's exterior, repairs of the parkade, upgrades to common areas, or the installation of new amenities.

It's important for potential buyers to understand that levies and special assessments are not the same as regular strata fees, and can have a significant impact on the overall cost of ownership. They can also vary greatly from property to property.

When buying a strata property, it is important to review the Annual General Meetings (AGM’s), Special General Meetings (SGM's), and recent Depreciation Report to find information about levies and special assessments. Additionally, buyers should also find out what their unit entitlement is. This information can be generally be found at the end of the AGM in the PROPOSED STRATA FEE SCHEDULE section. You can get an idea of the buyer's % share of levies & special assessments by dividing the unit entitlement by the total entitlement.

When it comes to voting, it's important to note that strata boards make decisions on how to spend the money collected from strata fees and levies, and voting is completed in Annual General Meetings (AGM's) and Special General Meetings (SGM's) and not on a monthly basis. It is important for buyers to understand the voting process and how it can impact the planning for spending on their strata property.

Assumption of Liability for Renos

Once your application has been reviewed and approved, you will need to ensure that all work is carried out in accordance with the approved plans and specifications. This means that you will be responsible for ensuring that all work is done by licensed and insured contractors, and that all necessary permits and approvals are obtained.

In the event that you are purchasing a property that has already been renovated, it is important to understand that you will be assuming liability for any changes made by previous owners. This means that you will need to review any strata documentation or depreciation reports to ensure that all renovations were approved by the strata council and that any necessary permits or approvals were obtained.

It is also important to note that if any issues arise with the renovation work, you may be held liable for any costs associated with resolving those issues, including any legal fees. Therefore, it is essential that you thoroughly review all documentation and conduct a thorough inspection of the property prior to purchasing.

We hope this information is helpful as you navigate the process of purchasing a strata property. If you have any further questions or concerns, please don't hesitate to reach out to us.

Why are the ENGINEERING REPORTS important?

The engineering company hired will assess the building for any deficiencies, allowing the strata council to identify any issues that may need to be addressed within the warranty period. Thus, reading the Engineering Report is crucial to maintaining the structural integrity of the building and preserving its warranty coverage.

Why is it important to Review the STRATA INSURANCE POLICY SUMMARY ?

Some strata properties have experienced a big increase in their insurance costs. This has led to higher deductibles, more expensive strata fees, and owners being responsible for more costs if they make a claim. There are a few reasons why this is happening, such as rules in the Strata Property Act, the fact that properties in BC are expensive, and insurance companies thinking that there is a high risk of claims. Also, there aren't as many insurance companies to choose from.

While the narrative around this problem has focused predominantly on premium increases, the lesser mentioned factor is that some strata corporations are also seeing their deductible amounts skyrocketing to levels not covered by most personal insurance policies. Some water deductibles are as high as $500,000 ...and some even higher at $1,000,000!

For example, if a strata has a $500,000 water damage deductible and an owner can only get $100,000 of home insurance coverage, that owner could be on the hook for $400,000 if there is a loss from within their unit. This is a scary reality, so it’s important that consumers are made aware of these figures and advised to seek advice from a qualified insurance broker.

Why is it important to Review the MEETING MINUTES?

Strata minutes are the official record of meetings and decisions made by a strata council, which govern a strata corporation. They give an idea of current projects and issues in the building. Examples may include security upgrades, noise complaints, special levies, repairs and maintenance. Reading the minutes helps you understand how the council addresses these matters and how proactive they are and provide insight into the current state and future plans of the building they call home.

The council consists of elected or volunteer residents and a property manager who manages the building's finances.

Why are the Strata FINANCIAL STATEMENTS & APPROVED BUDGETS Important?

When considering purchasing a strata property, it's important for buyers to understand the financials of the building. This includes reviewing the strata's budget, expenses, and savings plan. The budget should outline the regular strata fees, as well as any levies or special assessments that may be charged to owners. It's important to understand the difference between these types of fees, as levies or special assessments may be charged for specific projects or repairs that the regular strata fees do not cover.

In addition to reviewing the budget, buyers should also look at the building's Contingency Reserve Fund. This fund is set aside for unexpected repairs or expenses, and is typically funded through a percentage of the strata fees. Understanding how the Contingency Reserve Fund is used and funded can give buyers an idea of the building's financial stability and preparedness for future expenses.

List of Common Strata Terms and Definitions:

Strata Corporation: A legal entity that is established to manage the common property and assets of a strata property.

Strata Council: A group of strata owners elected to govern the strata corporation.

Annual General Meeting (AGM): The most significant strata meeting where strata owners elect the strata council and vote on important matters.

Special General Meeting (SGM): A strata meeting called for a specific purpose, such as voting on a bylaw amendment.

Regular Council Meetings: Meetings where the strata council conducts its business, makes decisions, and implements its plans.

Bylaws: Rules and regulations established by the strata council to govern the strata corporation.

Strata Fees: Monthly fees paid by strata owners to cover the cost of maintenance and repair of common property and assets.

Special Assessments: Additional fees levied by the strata council to cover unexpected expenses.

Maintenance and Repairs: The upkeep and repair of common property and assets, covered by strata fees.

Common Property: Areas of the strata property that are shared by all owners, such as hallways, elevators, and recreation facilities.

Limited Common Property: Areas of the strata property that are for the exclusive use of one or more strata owners, such as balconies and parking stalls.