1. What are you actually buying?
2. Understanding strata ownership
3. Small strata vs. large strata
4. The strata documents
5. Form B
6. Minutes and following the paper trail
7. Depreciation reports
8. Strata finances and the contingency reserve fund
9. Strata fees
10. Special Levies
11. Major building components
12. Wood frame, concrete and rainscreen construction
13. Engineering reports
14. Parking and storage
15. Insurance
16. Bylaws and lifestyle
17. Renovations by previous owners
18. Home inspections
19. Views, future development and construction noise
20. Red flags
21. Buyer document checklist
22. Buying a pre-sale

When you purchase a strata property, you’re buying more than the space inside your home.

You own your individual strata lot, but you also share an interest in the strata corporation’s common property and common assets.

Depending upon the development, those shared assets may include:

• Roof
• Exterior walls
• Hallways and lobby
• Elevators
• Parkade
• Plumbing systems
• Boilers and mechanical systems
• Electrical systems
• Landscaping
• Recreational facilities
• Other shared areas and equipment

All of the strata owners together make up the strata corporation. Owners elect a strata council to handle much of the corporation’s business, often with the assistance of a professional property management company.

In practical terms, you’re joining a small community with:

Shared property + shared expenses + shared decisions.

That’s why I believe buyers should investigate the building with almost as much care as they investigate the individual home.

These distinctions can affect both your rights and your financial responsibilities.

Your strata lot is the property you individually own as shown on the registered strata plan.

Common property is property shared by the strata owners.

Limited common property, or LCP, is common property designated for the exclusive use of one or more particular strata lots.

A balcony, patio, yard or parking stall may, for example, be limited common property.

But exclusive use doesn’t necessarily mean ownership.

That distinction can become important when determining who is responsible for maintaining, repairing or replacing something.

Never assume that because something is attached to your home—or because you’re the only person who uses it—it necessarily belongs to your strata lot.

The strata plan and bylaws matter.

Townhouses create another common misunderstanding.

You may have your own entrance, patio, yard and attached garage. It can feel much more like owning a detached home than a condominium.

But don’t assume you’re responsible for everything associated with your townhouse—or that you have the same freedom to alter it that you would have with a detached house.

Depending upon the strata plan and bylaws, responsibility for the following may fall to either the strata corporation or individual owner:

• Roof
• Exterior walls
• Windows
• Doors
• Fences
• Decks
• Landscaping
• Driveways
• Underground services

The lesson is simple:

Don’t determine responsibility by looking at the property. Check the strata plan and bylaws.

The Form B is one of the first documents I want to examine.

Think of it as an important current snapshot of the strata corporation and the particular strata lot you’re considering.

Among other things, it can provide information concerning:

• Current strata fees
• Amounts owing to the strata corporation
• Approved special levies
• Contingency reserve fund
• Parking
• Storage lockers
• Certain legal proceedings
• Insurance
• Other required information and attachments

It is extremely useful.

But a snapshot doesn’t tell us the entire story.

For that we need to look backwards—and forwards.

Minutes are among the most useful documents available to a prospective buyer.

I’m particularly interested in patterns.

One reference to a leaking pipe doesn’t necessarily concern me.

But imagine reading the following progression:

Leak reported → another leak → plumber retained → engineer recommends investigation → quotations requested → project postponed → another leak occurs.

Now we have something worth investigating.

When reviewing minutes, I’m watching for recurring references to:

• Water ingress
• Plumbing failures
• Roof leaks
• Elevator problems
• Building-envelope concerns
• Parkade leaks
• Insurance claims
• Increasing insurance deductibles
• Engineering investigations
• Legal disputes
• Owner disputes
• Security problems
• Major projects
• Projects repeatedly postponed
• Possible special levies
• Unexpected expenses

AGM and Special General Meeting minutes can be particularly revealing because major expenditures and significant decisions are often put before the ownership at these meetings.

This is one of the most important pieces of advice I can give a strata buyer:

Don’t read the documents in isolation.

If the depreciation report refers to a plumbing assessment, let’s find the plumbing assessment.

If council minutes say an engineer is investigating water ingress, let’s find the engineering report.

If an AGM resolution to fund a project was defeated, let’s find out what happened afterwards.

If a problem suddenly disappears from the minutes, was it actually fixed—or did people simply stop talking about it?

Sometimes what hasn’t been done is just as important as what has.

A strata corporation can commission an excellent engineering or depreciation report and still be poorly prepared if the owners continually postpone the work and funding recommended in it.

Sean’s Tip: A good strata review isn’t about finding one document that says “everything is fine.” It’s about seeing whether the documents tell a consistent story.

A depreciation report is one of the most important long-term planning documents for a strata corporation.

It is not a building inspection.

Nor is it a guarantee that a roof, boiler, piping system or elevator will last until a particular year.

The report examines major common-property components, considers their anticipated maintenance and replacement requirements and develops financial projections to help the strata plan for future expenses.

Depending upon the property, a depreciation report may consider:

• Roof
• Building envelope
• Windows
• Plumbing
• Boilers and mechanical equipment
• Elevators
• Electrical systems
• Fire-protection systems
• Parkade
• Balconies
• Exterior cladding
• Landscaping
• Roads and other common assets

The important question isn’t simply:

“Does this building have a depreciation report?”

It’s:

“What does it say—and what has the strata done about it?”

A building can look beautiful and still have financial problems.

That’s why I want to understand not only the physical condition of the property but also how the strata corporation manages money.

Operating Fund

The operating fund pays for expenses that occur regularly.

These might include:

• Insurance
• Management
• Cleaning
• Landscaping
• Utilities
• Routine maintenance
• Elevator servicing
• Garbage collection
• Other recurring expenses

Contingency Reserve Fund

The contingency reserve fund, commonly called the CRF, is intended for expenses that occur less frequently.

I sometimes describe it as the building’s long-term savings account.

That’s a useful analogy, but it’s important not to misunderstand its purpose.

There’s another side to having money available.

A healthy reserve can make it tempting to continually draw money from the CRF instead of confronting whether strata fees and annual operating budgets are appropriate.

So I don’t simply ask:

How much is in the fund?

I also want to know:

How much is going in?

How much is coming out?

What has it been spent on?

What major expenses are approaching?

How does that compare with the depreciation report?

A $1,000,000 contingency fund may sound impressive.

Whether it’s adequate depends entirely upon the building it’s supporting and the expenses coming down the road.

The number by itself tells us very little.

Strata fees can cover a wide variety of costs.

Depending upon the property, these may include:

• Property management
• Building insurance
• Cleaning and caretaking
• Landscaping
• Garbage and recycling
• Elevator servicing
• Mechanical maintenance
• Fire-system inspections
• Security
• Common-area electricity
• Heat
• Hot water
• Natural gas
• Amenities
• Contributions to the contingency reserve fund

That’s why comparing strata fees purely on the monthly amount can be misleading.

A building with two elevators, concierge service, a swimming pool and extensive landscaping will naturally cost more to operate than a simple townhouse development.

Likewise, a building where heat and hot water are included cannot be fairly compared with one where owners pay those expenses individually.

Low strata fees look attractive.

But I always want to know why they’re low.

If owners have kept fees down by minimizing long-term contributions or repeatedly postponing maintenance, today’s inexpensive strata fee may become tomorrow’s special levy.

I’d rather see a building collecting an appropriate amount of money and maintaining itself properly than one that appears inexpensive because it’s pushing expenses into the future.

The objective shouldn’t necessarily be to find the lowest strata fee.

It should be to determine whether the fee is appropriate for that particular building.

The annual budget tells us what the strata expects to spend.

The financial statements help tell us what actually happened.

I like to compare them.

Questions might include:

• Did insurance cost substantially more than expected?
• Are plumbing expenses increasing?
• Was repair and maintenance spending unusually high?
• Is the strata repeatedly running an operating deficit?
• Are significant amounts owing to the corporation?
• Are costs regularly being underestimated?
• Are there unusual transfers or loans between funds?

A single unexpected expense isn’t necessarily concerning.

Buildings have surprises just as homeowners do.

But a pattern deserves attention.

If minutes repeatedly discuss plumbing problems and the financial statements show plumbing costs increasing every year, the two pieces of information reinforce one another.

Once again:

Follow the paper trail.

Not every owner necessarily pays an equal share of strata expenses.

In strata corporations, contributions are typically allocated according to unit entitlement, subject to the applicable legislation and the particular expense.

This means a larger strata lot may pay a larger share than a smaller one.

Unit entitlement can affect:

• Monthly strata fees
• Contingency contributions
• Some special levies
• Certain shared expenses

That’s why you should not simply take the cost of a project, divide it by the number of homes and assume that’s your share.

Sometimes a strata corporation needs money beyond what’s available through its normal funding.

Owners may then be asked to approve a special levy.

A special levy isn’t automatically a red flag.

In fact, a well-managed 30-year-old building that has just collected funds to replace its roof and plumbing may present less future financial uncertainty than another 30-year-old building with low fees that hasn’t addressed either.

I want to understand:

• What work is being funded?
• Why is it required?
• What is the total cost?
• How is the owner’s share calculated?
• Has the levy been approved?
• When is it payable?
• Has the current owner paid it?
• Is the project fully funded?
• Are further levies anticipated?

And don’t look only for special levies that have already been approved.

A major project being discussed in council or AGM minutes may be tomorrow’s special levy even though it doesn’t appear as an approved levy today.

Sean’s Tip: A special levy may actually be evidence that owners are dealing with a problem rather than ignoring it.

How old is it?

What kind of roof is it?

Has it been repaired or inspected?

When does the depreciation report anticipate replacement?

A roof approaching the end of its expected life isn’t automatically a reason not to buy.

But we should understand the likely cost and funding plan.

Central boilers, pumps and other mechanical equipment have finite lives.

Regular servicing helps, but eventually major components require repair or replacement.

These can be significant expenditures.

Plumbing can become a significant expense in an older building.

I want to know:

• What type of piping is installed?
• How old is it?
• Is there a history of leaks?
• Are leaks becoming more frequent?
• Have sections been replaced?
• Has a consultant investigated the system?
• Is comprehensive replacement being discussed?

A pattern of increasing failures can sometimes tell us more than pipe age alone.

Elevators require regular servicing.

Eventually, older elevators may require substantial modernization.

A building with several elevators can face a significant capital expense.

Maintenance history, reliability and planning all matter.

Elevators require regular servicing.

Eventually, older elevators may require substantial modernization.

A building with several elevators can face a significant capital expense.

Maintenance history, reliability and planning all matter.

Parkade membrane projects can be surprisingly expensive.

The waterproof membrane over an underground parkade may sit beneath landscaping, patios, walkways or driveways.

Repairing it can require removing everything above the membrane, completing the waterproofing work and then rebuilding the surface.

That’s why an invisible component can result in a very visible special levy.

Windows, balcony membranes, railings, sealants and related components also deserve attention.

We want to know their age and condition, but also:

Who is responsible for maintaining and replacing them?

Don’t assume.

Vancouver’s climate makes water management particularly important.

The building envelope includes much more than the exterior wall.

It can involve:

• Cladding
• Windows
• Doors
• Balconies
• Flashings
• Membranes
• Sealants
• Roof interfaces
• Drainage systems

Some buildings have original face-sealed construction.

Others have been partially rainscreened.

Others have undergone comprehensive building-envelope rehabilitation.

The history matters.

And there is an important misconception worth addressing:

A concrete building is not automatically immune from “leaky condo” problems.

Concrete describes the structural system.

Water ingress is about how the building envelope manages water.

A concrete building can still experience problems involving windows, cladding, sealants, balconies, membranes and other exterior components.

Buyers often ask me which is better.

There isn’t a simple answer.

Concrete can offer advantages in areas such as sound transmission and allows taller buildings.

Wood-frame construction can provide different layouts, styles and price points.

But construction type by itself doesn’t tell us whether a building is good.

I’d rather ask:

How was it built?

How has it been maintained?

What problems has it experienced?

What work has already been completed?

What work is coming next?

A well-maintained wood-frame building can be a better purchase than a poorly maintained concrete one—and vice versa.

A depreciation report and an engineering report aren’t the same thing.

A depreciation report provides broad long-term planning.

An engineering report generally investigates a particular issue.

Examples might include:

• Building-envelope investigation
• Plumbing assessment
• Parkade membrane report
• Roof assessment
• Structural report
• Balcony investigation

If the minutes repeatedly refer to an engineering report, I want to see it.

Then I want to know:

What did the strata do after receiving it?

The strata corporation maintains insurance, but that doesn’t eliminate the need for your own condominium insurance.

One thing I pay particular attention to is the strata corporation’s insurance deductibles.

Water-damage deductibles can be substantial.

Earthquake deductibles may also create significant potential exposure.

Buyers should provide the strata’s insurance information to their own insurance professional and make sure their individual coverage is appropriate for that particular building.

A beautiful renovation isn’t necessarily an approved renovation.

If a previous owner has:

• Moved walls
• Changed flooring
• Installed air conditioning
• Altered plumbing
• Changed exterior doors or windows
• Enclosed an area
• Modified a balcony or patio
• Altered common or limited common property

we may need to determine whether appropriate strata approval was obtained.

There may also be an alteration agreement or assumption-of-liability agreement affecting the property.

Just because work was completed years ago doesn’t necessarily mean it should be ignored.

Reviewing strata documents doesn’t replace inspecting the actual home.

The strata records can tell us an enormous amount about the building and corporation, but they aren’t a substitute for a qualified inspector examining the individual property.

An inspection may identify issues involving:

• Plumbing fixtures
• Electrical components
• Appliances
• Moisture
• Heating and cooling
• Windows and doors
• Interior alterations
• Other conditions within the home

Likewise, an inspection of the suite doesn’t replace reading the strata documents.

They answer different questions.

The inspection helps us understand the home.

The strata documents help us understand the building and corporation we’re buying into.

Ideally, we want both.

Whether you’re buying new or resale, don’t limit your investigation to the property itself.

Look around.

Consider:

• Current nearby developments
• Development applications
• Redevelopment potential
• Construction sites
• Major roads
• Transit and SkyTrain
• Restaurants and bars
• Loading areas
• Garbage collection
• Schools and playgrounds
• Fire halls and emergency services
• Commercial operations
• Traffic patterns
• Nighttime activity

When possible, visit the neighbourhood at different times.

A street at 2:00 on Tuesday afternoon can feel very different at 11:00 Friday night—or 7:30 Monday morning.

There is no single document or number that tells us whether a strata property is a good purchase.

Potential warning signs may include:

• Repeated water ingress
• Increasing plumbing failures
• Continually deferred maintenance
• Significant unfunded projects
• Engineering recommendations that haven’t been acted upon
• Chronic insurance claims
• Rapidly increasing insurance deductibles
• Significant litigation
• Repeated special levies
• Major projects continually postponed
• Persistent operating deficits

But context is extremely important.

An older building isn’t automatically a bad building.

A special levy isn’t automatically bad.

Higher strata fees aren’t automatically bad.

A low contingency fund isn’t automatically disastrous if several major projects have recently been completed.

A small strata isn’t automatically riskier than a large one.

A concrete building isn’t automatically safer from water ingress.

A new building isn’t automatically problem-free.

And a spectacular view isn’t necessarily permanent.

What we’re trying to determine is whether the:

Physical condition + Financial position + Maintenance history + Future obligations + Owners’ approach

all make sense together.

Property and Ownership

• Title
• Strata plan
• Unit entitlement
• Form B Information Certificate
• Parking allocation
• Storage locker allocation
• Common property
• Limited common property

Governance

• Current bylaws
• Rules
• Strata council minutes
• AGM minutes
• SGM minutes

Financial

• Current operating budget
• Financial statements
• Current strata fees
• Contingency reserve fund balance
• CRF contributions and withdrawals
• Approved special levies
• Proposed or discussed expenditures
• History of significant levies
• Unusual deficits or expenses

Building Condition

• Depreciation report
• Engineering reports
• Building-envelope reports
• Plumbing reports
• Roof reports
• Parkade reports
• Elevator information
• Other major maintenance reports

Insurance

• Strata insurance summary
• Deductibles
• Available claims information
• Personal insurance requirements

Your Individual Home

• Previous renovations
• Strata approvals
• Alteration or assumption-of-liability agreements
• Appliances and fixtures
• Warranty information where applicable
• Independent home inspection where appropriate

The Neighbourhood

• Current nearby development
• Known development applications
• Redevelopment potential
• Future construction impacts
• Traffic
• Noise
• Outlook
• Potential changes to views

Not every property requires exactly the same investigation.

Sometimes one document raises another question.

That’s why reviewing a strata isn’t simply a matter of checking boxes.

One traditional attraction of pre-sales is the opportunity to agree on a purchase price today for a property that won’t be completed for several years.

But that works both ways.

Nobody knows with certainty what Vancouver property values will be when the building is completed.

Nobody knows exactly where interest rates will be.

Mortgage qualification requirements can change.

Your employment, income or personal financial circumstances can change.

And the value determined by the lender when completion finally arrives may not equal the price in your contract.

We’ve seen how dramatically the economics can change when purchasers commit under one set of interest-rate and market conditions and complete under another.

That’s one reason I personally tend to be cautious about pre-sales.

A display suite is designed to showcase a development at its best.

Your actual home may feel different.

Room dimensions can feel different once they’re built.

Finishes and appliances may be subject to substitutions permitted under the purchase agreement and disclosure material.

And some things are difficult to appreciate from a floor plan.

You might finally receive your keys, look through the living-room window and discover a utility pole—with a transformer sitting directly in the view you had imagined.

Noise, privacy, neighbouring balconies, loading areas, garbage rooms, parkade entrances and mechanical equipment may all feel different once you’re standing inside the actual property.

With an existing condo, we can open the windows.

We can walk onto the balcony.

We can listen.

We can see the surroundings.

With a pre-sale, we’re trying to anticipate many of those things.

Ocean, mountain and city views can add significantly to both the appeal and price of a Vancouver condo.

But there is another question buyers should ask:

What can be built between me and that view?

Your building may only be Phase One of a larger development.

The same developer may already be planning additional buildings.

Neighbouring properties may also have redevelopment potential.

That spectacular view you enjoy when you receive your keys may look considerably different several years later.

When possible, we can investigate current zoning, known development applications and future phases of a project.

But Vancouver continues to change.

Unless something legally protects the view, I would never recommend purchasing on the assumption that today’s view—or a marketing rendering—is guaranteed forever.

Losing the view isn’t the only concern.

Before that future building appears, you might live beside its construction site for several years.

That can mean:

• Excavation
• Pile driving
• Concrete work
• Construction traffic
• Trucks
• Dust
• Noise

This can have a considerable impact on enjoyment of the property, particularly if you work from home or spend much of the day there.

Eventually construction ends.

But what replaces it may permanently alter your view, privacy, sunlight and overall feel of the home.

This isn’t only a pre-sale issue.

When looking at an existing condo, I like to look at the low-rise building, surface parking lot, old commercial property or vacant land across the street and ask:

“What could potentially be built there?”

I sometimes compare a brand-new building to a new pair of shoes.

It takes a little while to settle in.

During the first year or two:

• Deficiencies may be identified and corrected
• Mechanical systems are adjusted
• Owners are learning how the building operates
• The strata council begins functioning
• Actual expenses begin replacing estimates
• Bylaws may evolve
• Personalities and politics emerge

With a 20-year-old building, I may have years of records showing how the owners manage their property.

With a brand-new building, that history simply doesn’t exist.

The first year or two can also present security challenges.

Owners are moving in.

Furniture and appliance deliveries are arriving.

Tradespeople may be returning to deal with deficiencies.

Developer representatives and building personnel may require access.

Keys, access cards, garage remotes and security procedures are being established and refined.

That doesn’t mean every new building will have security problems.

It simply means that the early period may be very different from moving into an established building.

Strata fees for new developments are initially based upon budgets prepared before the building has developed a history of actual operating costs.

There are protections and requirements surrounding those budgets.

Nevertheless, an estimate remains an estimate.

Until the property has operated for some time, nobody knows precisely what its:

• Insurance
• Utilities
• Cleaning
• Management
• Landscaping
• Mechanical servicing
• Security
• Maintenance

will cost in practice.

Buyers should not assume that the strata fee shown in the marketing material will necessarily remain at that level.

There are certainly positives.

There’s something exciting about being the first person to live in your home.

Nobody has used the dishwasher.

The flooring, appliances, kitchen and bathrooms are new.

Modern buildings may also provide:

• Contemporary layouts
• Better energy efficiency
• Modern building systems
• EV infrastructure
• New amenities
• Current construction standards

New construction also generally comes with B.C.’s 2-5-10 home warranty protection, providing specified coverage for labour and materials, building envelope and structural defects.

The actual warranty documents should always be reviewed to understand the coverage, commencement dates and exclusions.

Pre-sale purchasers receive a disclosure statement containing important information about the development.

It deserves careful review.

There is also a statutory 7 Day rescission period for qualifying pre-sale purchases.

This provides an important opportunity to review the purchase, examine the disclosure material and obtain professional advice before becoming fully committed.

A projected completion date is not necessarily a guaranteed move-in date.

Construction schedules can change.

That can become particularly important if you’re:

• Selling another property
• Giving notice to a landlord
• Arranging temporary accommodation
• Organizing financing
• Planning a move

The purchase agreement and disclosure documents need to be reviewed carefully so the buyer understands the developer’s rights concerning completion and extensions.

Some buyers enter a pre-sale contract believing:

“If my circumstances change, I’ll just sell the contract before completion.”

Don’t assume that.

Assignments may:

• Require developer approval
• Be subject to restrictions
• Involve substantial fees
• Depend upon finding another qualified buyer

My approach is straightforward:

Purchase a pre-sale on the assumption that you need to be financially willing and able to complete it yourself.

Pre-sales can work very well for some purchasers.

Personally, however, I tend to approach them cautiously.

With an existing condo, we can walk through the actual home.

We can see the view.

We can hear the traffic.

We can examine the building.

We can read years of minutes.

We can look at the financial statements.

We can examine the depreciation report and engineering reports.

We can see how the owners have responded when problems arose.

With a pre-sale, we’re making considerably more assumptions.

We’re making assumptions about the finished home.

We’re making assumptions about the building.

We’re making assumptions about the future strata corporation.

And we’re making assumptions about what the market, interest rates and our own financial circumstances will look like several years from now.

That doesn’t make buying a pre-sale wrong.

It simply means those additional risks need to be recognized.

For me, the most important question isn’t:

“Will this property be worth more when it’s finished?”

It’s:

“If the market, interest rates and my circumstances don’t turn out the way I expect, will I still be comfortable—and able—to complete this purchase?”

Buying a condo or townhome is about much more than choosing the individual home.

With a strata property, you’re also buying into the financial health, physical condition, maintenance history, rules and future obligations of the strata corporation.

No single document gives us the answer.

The Form B, minutes, financial statements, budget, depreciation report, engineering reports, insurance information, bylaws and strata plan each provide another piece of the puzzle.

The important part is understanding how those pieces fit together.

A low strata fee isn’t necessarily good.

A special levy isn’t necessarily bad.

An older building isn’t necessarily risky.

A new building isn’t necessarily safer.

A small building isn’t necessarily less expensive.

A concrete building isn’t immune from water problems.

And that wonderful view isn’t necessarily permanent.

The objective isn’t to find a building that will never require another dollar to be spent on it.

That building doesn’t exist.

Roofs wear out.

Boilers need replacing.

Elevators need modernization.

Pipes age.

Buildings need maintenance.

The more important questions are whether the building has been maintained responsibly, whether the owners understand what’s coming and whether there’s a sensible plan for dealing with future expenses.

When I’m helping a client purchase a condo or townhome, my job isn’t simply to help them find the right suite.

It’s to help them understand what they’re buying into, identify the questions that need to be answered and gather enough information to make an informed decision.

Where the documents raise legal, engineering, insurance, accounting or other specialized questions, I’ll encourage my clients to obtain advice from the appropriate professional before proceeding.

After all, the best time to understand a building isn’t after you’ve moved in.

It’s before you buy.