Difference between revisions of "Buying a Condominium"

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{{DEMOWARNING}}
{{REVIEWEDPLS | reviewer = [https://www.lawsonlundell.com/team-Lisa-Frey Lisa Frey], Lawson Lundell LLP, and [http://sabeyrule.ca/taeya-fitzpatrick/ Taeya Fitzpatrick], Sabey Rule|date= July 2018}} {{Dial-A-Law TOC|expanded = home}}
{{Dial-A-Law Blurb}}
Buying a condominium is a lot like buying a house. But there are also important differences. Learn the key things to consider before making an offer to buy a condo.


This script provides general information about buying a condominium unit (or strata lot). This script assumes that you have already reviewed script [[Buying a House (Script 406)|406]] “Buying a House”, and the general provisions about buying property in that script.
==What you should know==


For information on owning a strata lot, check script [[Owning a Condominium (Script 401)|401]], called “Owning a Condominium”.
===In BC, a condominium is called a strata===
The term '''condominium''' means a building or complex of buildings containing a number of individually owned units or houses. In British Columbia, the term is used informally. The legal term for a condominium in BC is '''strata'''. In strata housing, the owners own their individual '''strata lots''' and together own the common property as a '''strata corporation'''.


==What is a condominium?==
====More than high-rise condos====
The word Condominium is used in other provinces to refer to a building or complex of buildings containing some number of individually owner apartments or houses. In British Columbia the word condominium is used informally.
Strata housing is more than just high-rise condos. Strata housing can also include duplexes, townhouses, fractional vacation properties — even single-family homes in bare land strata corporations (called '''strata subdivisions''').


In British Columbia, a condominium unit is called a “strata lot”, and can be an apartment, townhouse, commercial space, a freestanding house, a duplex unit, a bare lot of land containing a home, or some other configuration provided that the strata lot is shown as a strata lot on a properly registered strata plan.  
It’s not the size or shape of a development that makes it a strata. Instead, it’s the legal structure used. If a development is legally created by a '''strata plan''', it’s a strata — whether it’s a 300-unit high-rise apartment or a two-unit strata duplex.


In British Columbia, a condominium complex or development is called a Strata Corporation. A Strata Corporation allows for individual ownership of strata lots in a single parcel of land, and is created by a strata plan which is a series of drawings and notations registered in the Land Title Office. That strata plan is the document which shows the boundaries of each strata lot and the common property.
====The law that applies====
In BC, [https://www.canlii.org/en/bc/laws/stat/sbc-1998-c-43/latest/sbc-1998-c-43.html the ''Strata Property Act'' is the main law governing stratas]. Under this law, a '''strata corporation''' is created when a '''strata plan''' is registered in the land title office. A strata plan is a series of drawings and notations, and shows the boundaries of each strata lot and the common property.


Owners of the strata lots are members of the Strata Corporation, and collectively own the common property, pay for the common expenses of the Strata Corporation, and vote on matters of common interest.
'''Owners''' of the individual strata lots are members of the strata corporation. Together, they own the common property, pay for the common expenses of the strata corporation, and vote on matters of common interest.


Bare land Strata Corporations are unique in that the strata plans show only a top down view of the property parcel, and each strata lot, which is a bare lot of land usually containing a home which belongs entirely to the strata lot owner.
===Not all condo complexes are stratas===
Some condominium complexes in BC are not set up as strata corporations. Some apartments, townhouses and duplexes operate under various other legal structures, such as housing co-operatives or privately-owned rental buildings. This also occurs on First Nations reserve lands, where provincial property laws don’t apply the way they do elsewhere.


More typical forms of strata corporations are conventional apartment buildings and townhouse complexes.
{| class="wikitable"
|align="left"|'''Tip'''
If you’re looking to buy a unit in a housing development, getting legal advice will help you understand what legal structure is in play, and what that means for you if you make an offer.
|}
===A strata development can be freehold or leasehold===
Strata developments can be either freehold or leasehold. In a '''freehold development''', people hold '''fee simple title''' to their strata lots. That means they own their strata lots.


It’s not the size or shape of a development that makes it a condominium project. Instead, it’s the legal nature of it. If the development is legally created by a strata plan, it’s a strata corporation—whether it’s a 300-unit high-rise apartment, a 50-lot bare land strata recreational development, or a 2-unit strata duplex.
In a '''leasehold''' development, the landlord owns the property, and people hold a '''leasehold interest''' in their strata lots, for a specific term. These long-term tenants are registered on title, and are treated as owners under strata property law. They must pay the monthly strata fees and any other contributions, and can sell their leasehold interest in the strata lot to the next leasehold buyer.


It is very important to realize that some condominium complexes in British Columbia are not Strata Corporations and are not governed by the ''Strata Property Act''. Some apartments, townhouses and duplexes are configured under various different legal frameworks such as housing societies, privately owned rental buildings or others. This also occurs on first nations reserve lands where provincial property law doesn’t apply normally. Legal Advice is strongly recommended to ensure that you know what you are offering to buy.
Most strata developments are freehold, where people own their strata lots.
{| class="wikitable"
|align="left"|'''Tip'''
Be cautious with leasehold developments. Make sure you understand what you are buying and that the leasehold is being valued correctly. The fair market value of a leasehold strata lot is usually much less than the value of a comparable freehold strata lot. Be sure you understand the remaining term of the head-lease, the term of your own leasehold, and what happens when the terms expire. If you are thinking of buying a leasehold strata lot, you should make any offer subject to reviewing the long-term lease and all related documents with a lawyer.
|}
==Key things to consider==


For more details on condominiums, check script [[Owning a Condominium (Script 401)|401]], called “Owning a Condominium”. It explains several topics including common property, limited common property, the strata plan, the strata corporation, the strata council and insurance.
===Considerations in any home purchase===
[[buying-a-home/|Our information on buying a home covers key factors to consider when buying any type of home]], whether it’s a strata, a house, or some other type of legal structure. It covers topics such as what to include in an offer to purchase, subject to clauses, counteroffers, financing, fraud risks, the taxes payable, the statement of adjustments, and more.


==What should you consider before making an offer to buy a condo?==
Here, we explain considerations specific to buying a unit in a strata complex.
Typically a prospective purchaser of a strata lot should expect to request and receive documents which will allow them to make an informed decision about whether or not to buy the strata lot. At a minimum, the purchaser should obtain and carefully review:


'''A. Form B Information Certificate''' which sets out prescribed facts about the current general status of the Strata Corporation and the strata lot being sold. The Form should include the financial obligations in relation to that strata lot, any parking and storage facilities assigned to the strata lot, and other useful facts. The Form B should have attached documents such as the current budget, rental disclosures statement (if any), rules and the depreciation report for the Strata Corporation (if any).
===The information certificate and related documents===
A prospective buyer of a strata lot should review documents that will help them make an informed decision about whether to buy the strata.


:The Form B Information Certificate also shows if the strata corporation has adopted any new bylaws which will take effect but haven’t yet been filed at the Land Title Office, and whether the strata corporation is involved in any lawsuits or arbitration.
[https://www.canlii.org/en/bc/laws/stat/sbc-1998-c-43/latest/sbc-1998-c-43.html#sec59_smooth Under the law in BC], a buyer can request the strata corporation provide an '''information certificate''' (in Form B). This certificate sets out facts about the current status of the strata corporation and the strata lot being sold. The form should include the financial obligations for that strata lot, any parking and storage facilities assigned to the strata lot, the monthly strata fee and any special levy payments outstanding, and other useful facts. The form should attach documents such as the current budget, rules, any rental disclosures statement, and any depreciation report for the strata corporation.


:You should always review a current Information Certificate before making an offer to buy a strata lot. Or you should make your offer subject to reviewing a current Information Certificate.
The information certificate also shows if the strata corporation has adopted any new bylaws which will take effect but haven’t yet been filed at the land title office, and whether the strata corporation is involved in any lawsuits or arbitration.


:The strata corporation may charge a fee plus the cost of photocopying or other reproduction for providing the Form B Information Certificate.
{| class="wikitable"
|align="left"|'''Tip'''
Always review a current '''information certificate''' before making an offer to buy a strata lot. Or you should make your offer subject to reviewing a current information certificate.
|}
===Legal documents for the strata===
It is also important to review the legal documents for the strata. The '''title''' to the strata lot lists any covenants, easements and other encumbrances on title. This can reveal limitations on the use of the strata lot or charges that may affect its value.


'''B. Depreciation Report'''—every strata corporation with 5 or more strata lots must obtain a depreciation report unless the owners have regularly voted by ¾ vote resolution to defer the report. If a depreciation report has been prepared, a copy of it must be attached to the Form B Information Certificate. The depreciation report must have financial forecasting and an inventory and evaluation of the common property and common assets and any other property that the strata corporation has a duty to maintain. A depreciation report helps the owners anticipate and budget for future common expenses and special assessments.
The '''strata plan''' shows the boundaries of the strata lot you are thinking of buying. It shows the '''unit entitlement''' of the lot, which determines the strata lot’s proportionate share of contributions, and the schedule of voting rights for the strata corporation. Compare your obligations to those of other strata lots to ensure they are proportionate.  


:If a depreciation report has not been obtained, take especial care in evaluating the condition of the property as a whole.
{| class="wikitable"
|align="left"|'''Tip'''
Check the location, dimensions and area of your strata lot. Balconies, parking stalls, storage units and other non-residential areas you may expect to have access to are sometimes configured in odd ways legally. If the purchase of a strata lot includes the use of parking stalls or storage units, confirm the nature of your right to use these areas.
|}
 
====Bylaws, rules and minutes====
Strata lot owners must comply with the bylaws and rules of the strata corporation. Read them carefully before you buy.


'''C. Title to the strata lot'''—This document will list any covenants, easements and other encumbrances on title. With your lawyer review the documents registered against title, and confirm that there are no registered documents which are a problem, or which affect the value or usability of the strata lot.  
The '''bylaws''' of the strata corporation set out owners’ specific rights and obligations and give you a good sense of how rigidly the strata corporation controls owners. Look carefully for any pet, age, or rental restrictions and whether they will be a problem for you.


'''D. The Strata Plan''' which shows the boundaries of the strata lot you are thinking of purchasing. The Strata Plan, or associated schedules will show the unit entitlement which determines the strata lot’s proportionate share of contributions, and the schedule of voting rights which will show the voting rights for the strata corporation. Compare your obligations to those of other strata lots to ensure that they are as expected.
A strata corporation’s '''rules''' set out how common property and common assets can be used. Look for whether they restrict activities that might be important to you. For example, a rule may limit what size of vehicle can park in a common-property parkade, or restrict the hours when a common-property fitness centre is open.


'''E. The Bylaws of the Strata Corporation''', which will set out the specific rights and obligations which an owner has, and give you a good sense of how rigidly the Strata Corporation governs the owners.  
Past '''minutes of meetings''' of the strata council, and general meetings of the owners, can give you a sense of how active the strata council is, and recent issues the strata corporation has been dealing with, such as water leaks or expensive repairs coming up. Ask for at least two years of minutes (ideally, more than that), and review them carefully.


'''F.''' Obtain and review the '''Land Title Office’s''' '''''Strata Plan General Index''''' for other documents registered in the Land Title Office, such as limited common property designations, or other important documents, such as a rare unanimous section 100 resolution which changes the default division of expenses.
====For new strata developments====
For new developments, the owner-developer must give prospective first buyers a copy of an up-to-date '''disclosure statement'''. This document discloses the intentions of the owner-developer, and has marketing representations, as well as disclosure of legal encumbrances and other important information.


'''G.''' Several years of '''minutes of meetings''' of the Strata Council, and general meetings of the owners, including minutes of any section will give you a sense of how active the Strata Corporation’s government is, and what issues the Strata Corporation has been contending with in recent years. Request no less than two years of minutes, and review them carefully. Request minutes for a longer time period if possible.
===Financial obligations===
Make sure you can afford to be an owner in the strata you're considering. Review the financial statements and budget of the strata corporation to assess its financial situation, where money is being spent, and the balance of the '''contingency reserve fund''' (a fund to pay for infrequent or unexpected common expenses). Review what special levies and other funds have been assessed and spent on major expenses such as repairs.


'''H.''' For new developments, the Owner-Developer is obliged to provide prospective first purchasers a copy of the up-to-date '''Disclosure Statement''' including any amendments as filed with the Superintendent of Real Estate. That document discloses the intentions of the Owner-Developer, and contains marketing representations, as well as disclosure of legal encumbrances and other important information.
====Monthly strata fees====
All strata lot owners must pay a proportional part of the common expenses of the strata corporation by paying '''strata fees''' for their strata lot. The strata fees are typically based on the strata corporation’s annual budget, divided by the unit entitlement which sets out the share for each strata lot. Check the current budget and the information certificate for the current strata fees. Compare the strata fees to other similar developments.


:Although the Developer’s Disclosure Statement itself doesn’t bind the Strata Corporation as a governing document, it will include schedules which are binding, and it can indicate the Developer’s intentions for the development, and plans for future phases, which may be important to you.
If the strata fees seem high, check if there are expensive recreational facilities or other features, or budgeted items which you will have to help pay for — whether they benefit you or not.


:For older developments, it may be possible to obtain a copy from the vendor, or they can request a copy from the Strata Council.
If the strata fees seem low, consider whether the budget is adequate, and be realistic about likely strata fee increases and large special levies that may be needed for expensive repairs.


Referring to those documents, a savvy purchaser or their lawyer should be able to get a reasonable and current sense of the strata corporation and the strata lot, and any other documents which should be reviewed. Particular attention should be given to issues of importance to you, and to the following:
====Other assessments====
Strata lot owners may need to pay other expenses, including:


#:'''Financial Obligations'''—Make sure that you can afford to be an owner.
* '''Special levies'''. A strata lot owner also needs to pay their share of any special levy for extraordinary expenditures assessed against all strata lot owners.
#:'''a. Monthly strata fees'''—all strata lot owners must pay towards the common expenses of the Strata Corporation by paying strata fees for their strata lot. The strata fees are normally based on the strata corporation’s annual budget divided by the unit entitlement which sets out the share for each strata lot. Check the current budget and the Form B Information Certificate for the current strata fees. Compare the strata fees to other similar developments.
* '''User fees'''. There may be user fees to use parking or other facilities.
#::i.If the strata fees seem high, consider whether there are expensive recreational facilities or other features, or budgeted items which you will have to help pay for—whether they benefit you or not.
* '''Insurance deductibles'''. Many strata corporations will charge an owner for insurance deductibles or other charges arising from sources of damage within a strata lot.
#::ii.If the strata fees seem low, consider whether the budget is adequate to sustain the Strata Corporation, and be realistic with respect to likely strata fee increases.
#:'''b. Other assessments'''—There are other payments that a strata lot owner may need to pay, including but not limited to:
#::i.'''Special Levies'''—A Strata Lot owner also needs to pay their share of any special levy for extraordinary expenditures which is assessed against all strata lot owners
#::ii.'''User Fees'''—there may be user fees to use parking or other facilities.
#::iii.'''Fines and costs of bylaw enforcement''' can be charged back to an owner who contravenes the bylaws or rules.
#::iv.'''Insurance Deductibles'''. Many Strata Corporations will charge an owner for insurance deductibles or other charges arising from sources of damage originating within a strata lot.
#:Consider reviewing the financial statements and budget of the strata corporation to assess the financial well-being of the Strata Corporation, where money is being spent, and the balance of the contingency reserve fund and other accounts. Review what special levies and other funds have been assessed and expended on major expenses such as repairs.
#:'''The physical condition of the project'''—The general rule is that every owner in a strata corporation must contribute to common expenses, such as repairs, unless an exception to the rule applies. If the development is in poor repair, you will have to pay your share of the cost to fix it, even if the repairs do not involve your strata lot or the part of the project where your unit is located. You may have to pay for special levies that have been previously approved, with future installments.
#:Review the minutes of meetings to see if any major repairs have recently been made or are planned. If the strata lot is part of something called a '''section''', you also need to check the minutes of general meetings of the section as well as minutes of the meetings of the section’s executive. In each case, ask for complete copies of the relevant minutes for at least the past 2 years.
#:Ask to see the Strata Corporation’s depreciation report, and carefully review it for expensive replacements, repairs or upgrades which have been recommended, particularly those which are likely to be costly, required in the near future and for which no contingency reserve funds have been set aside.
#'''3. Is the community right for you?'''—Review the minutes carefully for issues which might concern you. If you are on a fixed income, or borrowing heavily to purchase a strata lot, then watch for discussions which might indicate expenses, such as ongoing or threatened litigation, water ingress, building envelope, structural or major repair concerns.
#:A careful review of the minutes can tell a great deal about the Strata Corporation. You might note noise complaints relating to an adjacent strata lot, or very strict enforcement of the bylaws, recurring disputes, the existence of factions or similar trends which may or may not concern you. Are the minutes a well-organized and well written record which transparently records decisions, or do they resemble a gossip column? Is there a licensed strata manager involved in meetings? Do they appear to have difficulty electing a full strata council? Does the Council meet monthly or infrequently?
#'''4. The type of ownership: freehold or leasehold'''—our legal system distinguishes between freehold ownership and leasehold possession. In a lease, the landlord owns the property, but gives possession to the tenant for the term of the lease. In most condominium developments, people own their strata lots. These are called freehold developments—each owner holds “fee simple title”.
#:However, in a leasehold development, a landlord owns the entire property parcel, but grants a long-term lease to a developer (often, for 99 years) to build a strata development there. The developer is a long-term tenant who, with the landlord’s permission, creates a strata development on the landlord’s property, and then the developer sells leasehold interests in each strata lot to purchasers for a specified term.
#:If a person is registered on title as the long-term tenant under a long-term lease in a leasehold strata development, the Strata Property Act treats that person as an owner. The long-term tenant must pay the monthly strata fees and any other contributions, such as special levies, and can sell their leasehold interest in their strata lot to the next leasehold buyer.
#:Depending on the project, the developer may prepay all the rent due under the long-term lease, or ongoing head lease payments may form a part of the leasehold strata corporation’s budget payable as part of the strata fees.
#:Be sure that you understand the remaining term of the head-lease, the term of your own leasehold, and what happens when the terms expire. Normally, the long-term tenant must vacate, or leave, the strata lot, unless other arrangements are made. The landlord may have to pay an amount to the departing long-term tenant using a formula in the long-term lease or by government regulation. It is important to carefully read and fully understand the lease contracts and related documents. If you plan to buy the interest of a long-term tenant in a leasehold strata lot, you should make any offer subject to first reviewing the long-term lease and all related documents with your lawyer. Make sure that you understand what you are buying and that the leasehold is being valued correctly. The fair market value of a leasehold strata lot is usually much less than the value of a comparable freehold strata lot.
#'''5. Governing Bylaws and Rules'''
#:As an owner of a strata lot, you will be legally bound to comply with the bylaws and rules of the Strata Corporation, and you will be deemed to have knowledge of their requirements. Read them carefully before you buy.
#:Collectively bylaws and rules set out rights and responsibilities of owners, tenants, occupants and visitors, and also set out special restrictions on the use of each strata lot, common property and common facilities.
#:Bylaws in particular can very broadly restrict what people can do in the development, including but not limited to:
#:*Restricting or prohibiting rental of a residential strata lot by the owner to a tenant.
#:*Restricting or prohibiting pets as specified in the bylaw or generally.
#:*Restricting the permitted age of occupants.
#:*Restricting or prohibiting smoking.
#:*Restricting the use of parking stalls or vehicle size.
#:*Restricting or prohibiting changes to the strata lots and common property.
#:*Restricting other uses which can be made of a strata lot, common property or common facilities.
#:Reading the bylaws and rules, and especially comparing them to the standard bylaws can provide some insight into how restrictive the Strata Corporation intends to be, and also provides some assurance that the priorities of the Strata Corporation match your own. Consider how you might wish to use your strata lot, and don’t make any assumptions without carefully reviewing the bylaws and rules and satisfying yourself that you will be able to use the strata lot as you intend, and that your vehicle, pet, child and possessions will be able to move in with you.
#:Make sure that you also obtain a copy of any Rules. Although Rules apply only to the use and enjoyment of common property and common assets, they are not registered in the land title office, and can specifically restrict activities which might be important to you. For example, a rule may limit the size of vehicles that may park in a common-property parkade, or restrict the hours when a common-property fitness centre is open.
#:If you ask, a seller can obtain strata documents from the strata corporation for you to review, including a set of up-to-date, consolidated bylaws, as well as a complete copy of the rules.
#:Also, understand that the bylaws and rules can be changed, and some changes may dramatically affect how you can use your property.
#'''6. Other Restrictions'''—Bylaws are not the only documents which can restrict how you may use a strata lot. Covenants, easements and other documents registered against title may limit the use of the strata lot or affect its value. For example, in a bare land strata development, the title of your strata lot may be encumbered with a building scheme that limits the size or other details of any house you want to build on your strata lot, or may restrict your use of the strata lot.
#:Municipal Bylaws and Zoning may further restrict use of a strata lot.
#:With your lawyer, review the results of a current title search for the strata lot, and the other legal documents and circumstances.
#'''7. Confirm what you are buying'''—Check the location, dimensions and area of your strata lot.
#:Balconies, parking stalls, storage units and other non-residential areas you may expect to have access to are sometimes configured in odd ways legally. For example parking spaces can be common property, limited common property, or part of your strata lot.  Each of those configurations have differing legal implications and can change your repair obligations.
#:If the parking stall or storage locker currently assigned to the strata lot is designated as common property, then the bylaws may authorize the strata corporation to allocate or reallocate the use of a stall or locker, and you need to confirm whether you will keep that assignment. The strata corporation may also use a short-term exclusive use agreement or special privilege to give an individual owner or tenant the use of a stall or locker. Alternatively, the developer may have arranged for an affiliated corporation to hold a long-term lease over the common property parking or storage area. In that case, to use a particular stall or locker, the owner may need to negotiate an assignment of the right to use that stall or locker under the long-term lease.
#:If the purchase of a strata lot includes the use of one or more parking stalls or storage units, you should confirm the nature of your right to use the parking stalls or storage units. Verify that any limited common property features like balconies, parking lots, and storage units are assigned to your strata lot in the manner, size and location which matches your expectations, are correctly noted on the registered documents and match the representations made in the Form B Information Certificate, the real estate listing and any vendor representations.


#:Strata corporations are now obliged to disclose the designation of parking and storage lockers, and how they are allocated to a strata lot in the Form B Information Certificate.
===The physical condition of the project===
#:Put all your questions in writing and get written answers from the seller and, if possible, the strata council.
The general rule is that every owner in a strata corporation must contribute to common expenses, such as repairs, unless an exception to the rule applies. If the development is in poor repair, you will have to pay your share of the cost to fix it, even if the repairs do not involve your strata lot or the part of the project where your unit is located. You may have to pay for special levies that have been previously approved, with future installments. Future installments should be disclosed in the Form B information certificate.


==Using a lawyer is a good idea==
Review the minutes of strata meetings to see if any major repairs have recently been made or are planned. Ask for copies of minutes for at least the past two years.
Before making an offer to buy a condominium, have a lawyer review the critical documents, including the contract of purchase and sale, legal title to the strata lot, the strata plan and any amendments, limited common property designations and other resolutions affecting common property, the Form B Information Certificate, legal issues identified in the minutes, and the bylaws and rules.


If you can’t see a lawyer before you make an offer, then add a sentence to your offer saying it is subject to your lawyer’s review of the strata documents to confirm that no features reduce the use or value of the strata lot. Then take the offer to your lawyer before you remove any of the “subject to” clauses or the deadline for doing so expires. Strata lots are expensive and buying one is complicated. Mistakes can be costly. It makes sense to use a lawyer.
Ask to see the strata corporation’s depreciation report, and review it for any expensive replacements, repairs or upgrades which have been recommended.


Be especially careful about rent-to-own, time share and other non-standard forms of acquiring a strata lot, and do not enter into any such agreement without comprehensive legal advice.
===Whether the community is right for you===
Review the minutes of strata meetings carefully for issues which might concern you. If you are on a fixed income, or borrowing heavily to buy a strata lot, watch for discussions that might indicate expenses, such as ongoing or threatened litigation, water leaks, building envelope problems, or structural repair concerns.


==More information==
A careful review of the minutes can tell a lot about the strata. You might see noise complaints relating to an adjacent strata lot, or very strict enforcement of the bylaws, recurring disputes, the existence of factions or similar trends which may concern you. Is there a licensed strata manager involved in meetings? Do they appear to have difficulty electing a full strata council? Does the council meet monthly or infrequently?
*Check script [[Owning a Condominium (Script 401)|401]], called “Owning a Condominium”. Because buying a condo is very similar to buying a house, you should also check script [[Buying a House (Script 406)|406]], called “Buying a House”. It outlines many important topics not covered here, including “subject to” clauses, title searches, fraud risks, property inspections, the statement of adjustments, and more.
 
*If you need financing, check script [[Mortgages and Financing a House Purchase (Script 408)|408]], called “Mortgages and Financing a House Purchase”.
===Hiring a lawyer===
*Familiarize yourself with the ''Strata Property Act'' available at [http://www.bclaws.ca www.bclaws.ca]. Click on “Statutes and Regulations” and then on “S” in the alphabetical list; scroll down to the name of the Act and click on it. You can also get a copy of the Act from Crown Publications in Victoria at 250.387.6409 or toll free at 1.800.663.6105. Its website is [http://www.crownpub.bc.ca www.crownpub.bc.ca]. Some libraries also have copies of BC laws. Make sure you also get a copy of any amendments to the Act and the Regulations.
Before making an offer to buy a condominium, consider having a lawyer review the critical documents, including the contract of purchase and sale, legal title to the strata lot, the strata plan, the information certificate, strata meeting minutes, and the bylaws and rules.
*Study the bylaws and rules for any condo project you are interested in.
*The Financial Institutions Commission website [http://www.fic.gov.bc.ca www.fic.gov.bc.ca] has information on the Act: click on “Strata Property.” But this information is not always up to date.
*Check the website of the Condominium Home Owners Association of BC at [http://www.choa.bc.ca www.choa.bc.ca].
*The [http://www.condomanual.ca/ Condominium Manual] by Mike Mangan is available at public libraries.


If you can’t see a lawyer before you make an offer, consider adding a sentence to your offer saying it is subject to a lawyer’s review of the strata documents to confirm that no features reduce the use or value of the strata lot. Then take the offer to your lawyer before you remove any of the subject to clauses or the deadline for doing so expires. Buying a strata lot involves risks and pitfalls that a lawyer can help you avoid.


[updated November 2014]
{| class="wikitable"
|align="left"|'''Tip'''
Be very careful about rent-to-own, time share, and other non-standard ways of buying a strata lot — do not sign any agreement without legal advice.
|}
==Who can help==


===With more information===
The '''BC government'''’s strata housing website has extensive information for strata owners and strata council members.


----
[https://www2.gov.bc.ca/gov/content/housing-tenancy/strata-housing Visit website]
----


The '''Condominium Home Owners Association of BC''' promotes the understanding of strata property living and the interests of strata property owners.


[https://www.choa.bc.ca/ Visit website]
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Latest revision as of 04:44, 16 October 2020

This information applies to British Columbia, Canada. Last reviewed for legal accuracy by Lisa Frey, Lawson Lundell LLP, and Taeya Fitzpatrick, Sabey Rule in July 2018.
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Buying a condominium is a lot like buying a house. But there are also important differences. Learn the key things to consider before making an offer to buy a condo.

What you should know

In BC, a condominium is called a strata

The term condominium means a building or complex of buildings containing a number of individually owned units or houses. In British Columbia, the term is used informally. The legal term for a condominium in BC is strata. In strata housing, the owners own their individual strata lots and together own the common property as a strata corporation.

More than high-rise condos

Strata housing is more than just high-rise condos. Strata housing can also include duplexes, townhouses, fractional vacation properties — even single-family homes in bare land strata corporations (called strata subdivisions).

It’s not the size or shape of a development that makes it a strata. Instead, it’s the legal structure used. If a development is legally created by a strata plan, it’s a strata — whether it’s a 300-unit high-rise apartment or a two-unit strata duplex.

The law that applies

In BC, the Strata Property Act is the main law governing stratas. Under this law, a strata corporation is created when a strata plan is registered in the land title office. A strata plan is a series of drawings and notations, and shows the boundaries of each strata lot and the common property.

Owners of the individual strata lots are members of the strata corporation. Together, they own the common property, pay for the common expenses of the strata corporation, and vote on matters of common interest.

Not all condo complexes are stratas

Some condominium complexes in BC are not set up as strata corporations. Some apartments, townhouses and duplexes operate under various other legal structures, such as housing co-operatives or privately-owned rental buildings. This also occurs on First Nations reserve lands, where provincial property laws don’t apply the way they do elsewhere.

Tip

If you’re looking to buy a unit in a housing development, getting legal advice will help you understand what legal structure is in play, and what that means for you if you make an offer.

A strata development can be freehold or leasehold

Strata developments can be either freehold or leasehold. In a freehold development, people hold fee simple title to their strata lots. That means they own their strata lots.

In a leasehold development, the landlord owns the property, and people hold a leasehold interest in their strata lots, for a specific term. These long-term tenants are registered on title, and are treated as owners under strata property law. They must pay the monthly strata fees and any other contributions, and can sell their leasehold interest in the strata lot to the next leasehold buyer.

Most strata developments are freehold, where people own their strata lots.

Tip

Be cautious with leasehold developments. Make sure you understand what you are buying and that the leasehold is being valued correctly. The fair market value of a leasehold strata lot is usually much less than the value of a comparable freehold strata lot. Be sure you understand the remaining term of the head-lease, the term of your own leasehold, and what happens when the terms expire. If you are thinking of buying a leasehold strata lot, you should make any offer subject to reviewing the long-term lease and all related documents with a lawyer.

Key things to consider

Considerations in any home purchase

Our information on buying a home covers key factors to consider when buying any type of home, whether it’s a strata, a house, or some other type of legal structure. It covers topics such as what to include in an offer to purchase, subject to clauses, counteroffers, financing, fraud risks, the taxes payable, the statement of adjustments, and more.

Here, we explain considerations specific to buying a unit in a strata complex.

The information certificate and related documents

A prospective buyer of a strata lot should review documents that will help them make an informed decision about whether to buy the strata.

Under the law in BC, a buyer can request the strata corporation provide an information certificate (in Form B). This certificate sets out facts about the current status of the strata corporation and the strata lot being sold. The form should include the financial obligations for that strata lot, any parking and storage facilities assigned to the strata lot, the monthly strata fee and any special levy payments outstanding, and other useful facts. The form should attach documents such as the current budget, rules, any rental disclosures statement, and any depreciation report for the strata corporation.

The information certificate also shows if the strata corporation has adopted any new bylaws which will take effect but haven’t yet been filed at the land title office, and whether the strata corporation is involved in any lawsuits or arbitration.

Tip

Always review a current information certificate before making an offer to buy a strata lot. Or you should make your offer subject to reviewing a current information certificate.

Legal documents for the strata

It is also important to review the legal documents for the strata. The title to the strata lot lists any covenants, easements and other encumbrances on title. This can reveal limitations on the use of the strata lot or charges that may affect its value.

The strata plan shows the boundaries of the strata lot you are thinking of buying. It shows the unit entitlement of the lot, which determines the strata lot’s proportionate share of contributions, and the schedule of voting rights for the strata corporation. Compare your obligations to those of other strata lots to ensure they are proportionate.

Tip

Check the location, dimensions and area of your strata lot. Balconies, parking stalls, storage units and other non-residential areas you may expect to have access to are sometimes configured in odd ways legally. If the purchase of a strata lot includes the use of parking stalls or storage units, confirm the nature of your right to use these areas.

Bylaws, rules and minutes

Strata lot owners must comply with the bylaws and rules of the strata corporation. Read them carefully before you buy.

The bylaws of the strata corporation set out owners’ specific rights and obligations and give you a good sense of how rigidly the strata corporation controls owners. Look carefully for any pet, age, or rental restrictions and whether they will be a problem for you.

A strata corporation’s rules set out how common property and common assets can be used. Look for whether they restrict activities that might be important to you. For example, a rule may limit what size of vehicle can park in a common-property parkade, or restrict the hours when a common-property fitness centre is open.

Past minutes of meetings of the strata council, and general meetings of the owners, can give you a sense of how active the strata council is, and recent issues the strata corporation has been dealing with, such as water leaks or expensive repairs coming up. Ask for at least two years of minutes (ideally, more than that), and review them carefully.

For new strata developments

For new developments, the owner-developer must give prospective first buyers a copy of an up-to-date disclosure statement. This document discloses the intentions of the owner-developer, and has marketing representations, as well as disclosure of legal encumbrances and other important information.

Financial obligations

Make sure you can afford to be an owner in the strata you're considering. Review the financial statements and budget of the strata corporation to assess its financial situation, where money is being spent, and the balance of the contingency reserve fund (a fund to pay for infrequent or unexpected common expenses). Review what special levies and other funds have been assessed and spent on major expenses such as repairs.

Monthly strata fees

All strata lot owners must pay a proportional part of the common expenses of the strata corporation by paying strata fees for their strata lot. The strata fees are typically based on the strata corporation’s annual budget, divided by the unit entitlement which sets out the share for each strata lot. Check the current budget and the information certificate for the current strata fees. Compare the strata fees to other similar developments.

If the strata fees seem high, check if there are expensive recreational facilities or other features, or budgeted items which you will have to help pay for — whether they benefit you or not.

If the strata fees seem low, consider whether the budget is adequate, and be realistic about likely strata fee increases and large special levies that may be needed for expensive repairs.

Other assessments

Strata lot owners may need to pay other expenses, including:

  • Special levies. A strata lot owner also needs to pay their share of any special levy for extraordinary expenditures assessed against all strata lot owners.
  • User fees. There may be user fees to use parking or other facilities.
  • Insurance deductibles. Many strata corporations will charge an owner for insurance deductibles or other charges arising from sources of damage within a strata lot.

The physical condition of the project

The general rule is that every owner in a strata corporation must contribute to common expenses, such as repairs, unless an exception to the rule applies. If the development is in poor repair, you will have to pay your share of the cost to fix it, even if the repairs do not involve your strata lot or the part of the project where your unit is located. You may have to pay for special levies that have been previously approved, with future installments. Future installments should be disclosed in the Form B information certificate.

Review the minutes of strata meetings to see if any major repairs have recently been made or are planned. Ask for copies of minutes for at least the past two years.

Ask to see the strata corporation’s depreciation report, and review it for any expensive replacements, repairs or upgrades which have been recommended.

Whether the community is right for you

Review the minutes of strata meetings carefully for issues which might concern you. If you are on a fixed income, or borrowing heavily to buy a strata lot, watch for discussions that might indicate expenses, such as ongoing or threatened litigation, water leaks, building envelope problems, or structural repair concerns.

A careful review of the minutes can tell a lot about the strata. You might see noise complaints relating to an adjacent strata lot, or very strict enforcement of the bylaws, recurring disputes, the existence of factions or similar trends which may concern you. Is there a licensed strata manager involved in meetings? Do they appear to have difficulty electing a full strata council? Does the council meet monthly or infrequently?

Hiring a lawyer

Before making an offer to buy a condominium, consider having a lawyer review the critical documents, including the contract of purchase and sale, legal title to the strata lot, the strata plan, the information certificate, strata meeting minutes, and the bylaws and rules.

If you can’t see a lawyer before you make an offer, consider adding a sentence to your offer saying it is subject to a lawyer’s review of the strata documents to confirm that no features reduce the use or value of the strata lot. Then take the offer to your lawyer before you remove any of the subject to clauses or the deadline for doing so expires. Buying a strata lot involves risks and pitfalls that a lawyer can help you avoid.

Tip

Be very careful about rent-to-own, time share, and other non-standard ways of buying a strata lot — do not sign any agreement without legal advice.

Who can help

With more information

The BC government’s strata housing website has extensive information for strata owners and strata council members.

Visit website

The Condominium Home Owners Association of BC promotes the understanding of strata property living and the interests of strata property owners.

Visit website

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