During the hunt for your perfect home one of the most crucial items to consider is strata and understanding how it will affect both your finances and day-to-day living down the road. When you buy a condo or townhome, you’re investing into a strata corporation and the shared interests and liabilities of all the owners and occupants of that community. To protect yourself from any surprises down the road, one of the most important things you can do is to look into the details of the home’s specific strata agreement.
Plan for the Future
When joining a strata, one of the most vital things to understand is the two separate funds your strata fees are contributing to. In BC, every strata corporation must maintain two funds: an Operating Fund, and a Contingency Reserve Fund (CRF). The Operating Fund manages regular up-keep costs that occur frequently during the year, such as building insurance, property manager fees, amenity upkeep, and garbage collection. In some stratas, this may even include your utility payments.
By contrast, the CRF is saved to pay for larger expenses in the future like necessary lobby upgrades, a new roof, or emergency repairs. Understanding how your strata handles their CRF will be able to give you a greater amount of security in your new investment. If buying resale, ensure that the existing CRF has a good amount of equity already built—not just a few thousand dollars. A low CRF should be a red flag, indicating that the strata may not be properly prepared for future unexpected repairs. Checking monthly strata meeting minutes prior to purchasing can warn you about any underlying problems with the property.
Lower isn’t always better
Strata fees in Metro Vancouver can vary greatly depending on location, building size and amenities, and utilities. While it may be tempting to be swayed by attractively low strata fees, keep in mind that low fees are not always in your best interest. Namely, if strata fees are purposely being kept low and there is no plan in place to help grow your CRF, be prepared to save on your own in case a large upgrade of the building is needed (sometimes suddenly). Reasonable strata fees may help curb this, by keeping the CRF healthy and splitting costs of large repairs between residents.
Finding your perfect fit
Beyond finances, some strata’s may be a better fit for you than others. It’s wise to do the work to understand the stipulations your particular strata has in place. Always ensure you’ve read the bylaws of a strata before purchasing, which might include limiting or prohibiting rentals, may have pre-established minimum age restrictions for occupancy, or require pets to be pre-approved and registered with the strata council. Be aware of the details then you can protect yourself from surprise payments and restrictions and ensure as a homeowner you are getting the best value from your new investment.
PHOTO // Dwell24 is a collection of spacious 3 and 4 bedroom townhomes skillfully designed to appeal to modern tastes. Built by Epix Development and The Circadian Group, homes at Dwell24 will be move-in ready Fall 2018.
