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Difference between revisions of "Buying a Condominium"
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==What should you consider before making an offer to buy a condo?== | ==What should you consider before making an offer to buy a condo?== | ||
Typically, a prospective buyer of a strata lot should request and receive documents that will let them make an informed decision about whether to buy the strata lot. '''At a minimum, a buyer should obtain and carefully review the following''': | Typically, a prospective buyer of a strata lot should request and receive documents that will let them make an informed decision about whether to buy the strata lot. '''At a minimum, a buyer should obtain and carefully review the following''': | ||
:'''A. [http://www.bclaws.ca/Recon/document/ID/freeside/12_43_2000#FormBInformationCertificate Form B Information Certificate]'''—this sets out required 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, 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 there is one). | :'''A. [http://www.bclaws.ca/Recon/document/ID/freeside/12_43_2000#FormBInformationCertificate Form B Information Certificate]'''—this sets out required 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 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 there is one). | ||
: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. | :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. | ||
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:'''C. Title to the strata lot'''—this document lists 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 reduce the value or usability of the strata lot. | :'''C. Title to the strata lot'''—this document lists 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 reduce the value or usability of the strata lot. | ||
:'''D. The strata plan'''—it shows the boundaries of the strata lot you are thinking of buying. The strata plan, or associated schedules, show the unit entitlement 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 that they are proportionate. | :'''D. The strata plan'''—it shows the boundaries of the strata lot you are thinking of buying. The strata plan, or associated schedules, show the unit entitlement 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 that they are proportionate. | ||
:'''E. The bylaws of the strata corporation'''—these set out | :'''E. The bylaws of the strata corporation'''—these 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, and rental restrictions and whether they will be a problem for you. | ||
:'''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. | :'''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. | ||
:'''G.''' Several years of '''minutes of meetings''' of the strata council, and general meetings of the owners, including minutes of any section, can give you a sense of how active the strata council is, and recent issues the strata corporation has been dealing with. Ask for at least 2 years of minutes, and review them carefully | :'''G.''' Several years of '''minutes of meetings''' of the strata council, and general meetings of the owners, including minutes of any section, 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, expensive repairs coming up, and discussions about winding up the strata corporation. Ask for at least 2 years of minutes (ideally, more than that), and review them carefully. | ||
:'''H.''' For new developments, the owner-developer must give prospective first buyers 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 has marketing representations, as well as disclosure of legal encumbrances and other important information. | :'''H.''' For new developments, the owner-developer must give prospective first buyers 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 has marketing representations, as well as disclosure of legal encumbrances and other important information. | ||
:Although the disclosure statement itself doesn’t bind the strata corporation as a governing document, it includes 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. | :Although the disclosure statement itself doesn’t bind the strata corporation as a governing document, it includes 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. | ||
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==Pay attention to issues important to you, and to the following:== | ==Pay attention to issues important to you, and to the following:== | ||
# '''Financial obligations'''—make sure that you can afford to be an owner. | # '''Financial obligations'''—make sure that you can afford to be an owner in the strata you're considering. | ||
#:a. '''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 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. | #:a. '''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 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. | ||
#::i. 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. | #::i. 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. | ||
#::ii. If the strata fees seem low, consider whether the budget is adequate | #::ii. 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. | ||
#:b. '''Other assessments'''—strata lot owners may need to pay other expenses, including: | #:b. '''Other assessments'''—strata lot owners may need to pay other expenses, including: | ||
#::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 | #::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 | ||
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#::iv. '''Insurance deductibles'''—many strata corporations will charge an owner for insurance deductibles or other charges arising from sources of damage within a strata lot. | #::iv. '''Insurance deductibles'''—many strata corporations will charge an owner for insurance deductibles or other charges arising from sources of damage within a strata lot. | ||
#: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 and other accounts. Review what special levies and other funds have been assessed and spent on major expenses such as repairs. | #: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 and other accounts. Review what special levies and other funds have been assessed and spent 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 | # '''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 From B information certificate. | ||
#: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, plus 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. | #: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, plus 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 soon and for which no contingency reserve funds have been set aside. | #: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 soon and for which no contingency reserve funds have been set aside. | ||
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#: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. | #: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 cautious with leasehold developments—be sure 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 in 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. | #:Be cautious with leasehold developments—be sure 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 in 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. | ||
# '''Bylaws and rules''' | # '''Bylaws and rules''' | ||
#:As an owner of a strata lot, you must comply with the bylaws and rules of the strata corporation. The law assumes you know them. Read them carefully before you buy. | #:As an owner of a strata lot, you must comply with the bylaws and rules of the strata corporation. The law assumes you know them. Read them carefully before you buy. | ||
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#: Bylaws can very broadly restrict what people can do in the development, including restricting or prohibiting: | #: Bylaws can very broadly restrict what people can do in the development, including restricting or prohibiting: | ||
#:*rental of a residential strata lot by the owner to a tenant. | #:*rental of a residential strata lot by the owner to a tenant. | ||
#:*pets as specified in the bylaw or generally | #:*pets as specified in the bylaw or generally | ||
#:*the permitted age of occupants | #:*the permitted age of occupants | ||
#:*smoking | #:*smoking | ||
#:*the use of parking stalls or vehicle size | #:*barbeques | ||
#:*changes to the strata lots and common property | #:*the color of window coverings or other things visible in windows | ||
#:*the use of parking stalls or vehicle size | |||
#:*changes to the strata lots and common property | |||
#:*other uses which can be made of a strata lot, common property or common facilities. | #:*other uses which can be made of a strata lot, common property or common facilities. | ||
#:Reading the bylaws and rules, and comparing them to the standard bylaws, can give you some idea about how restrictive the strata corporation is. It also provides some assurance that the priorities of the strata corporation match yours. Consider how you might want to use your strata lot. 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. | #:Reading the bylaws and rules, and comparing them to the standard bylaws, can give you some idea about how restrictive the strata corporation is. It also provides some assurance that the priorities of the strata corporation match yours. Consider how you might want to use your strata lot. 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. | ||
#:Get 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 can park in a common-property parkade, or restrict the hours when a common-property fitness centre is open. | #:Get 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 can park in a common-property parkade, or restrict the hours when a common-property fitness centre is open. | ||
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#:Municipal bylaws and zoning rules may further restrict use of a strata lot. | #:Municipal bylaws and zoning rules 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. | #:With your lawyer, review the results of a current title search for the strata lot, and the other legal documents and circumstances. | ||
# '''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. | # '''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 has different legal effects and can change your repair obligations and your rights to use them. | ||
#:If the parking stall or storage locker currently assigned to the strata lot is designated as common property, then the bylaws may allow 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 for up to one year. After that it must be renewed if they want the use to continue. Or 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 parking stall or storage locker currently assigned to the strata lot is designated as common property, then the bylaws may allow 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 for up to one year. After that it must be renewed if they want the use to continue. Or 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 in the Form B Information Certificate, the real estate listing and any seller representations. | #: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 in the Form B Information Certificate, the real estate listing and any seller representations. | ||
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* If you need financing, check script [[Mortgages and Financing a House Purchase (Script 408)|408]], called “Mortgages and Financing a House Purchase”. | * If you need financing, check script [[Mortgages and Financing a House Purchase (Script 408)|408]], called “Mortgages and Financing a House Purchase”. | ||
* Check the ''[http://www.bclaws.ca/civix/document/id/complete/statreg/98043_00 Strata Property Act]''. | * Check the ''[http://www.bclaws.ca/civix/document/id/complete/statreg/98043_00 Strata Property Act]''. | ||
* The BC Government’s [http://www.gov.bc.ca/strata strata housing website] has information for strata owners, strata residents and strata council members. This website provides basic information on: [http://www2.gov.bc.ca/gov/topic.page?id=4E77455DEFAB4D1DA118FEA737C6300F living in a strata], [http://www2.gov.bc.ca/gov/topic.page?id=4898D88A4F8649F59F7C84D9C496873E different kinds of strata], [http://www2.gov.bc.ca/gov/topic.page?id=5E860FC0848E48E98DFB08D0FBE3FC30 operating a strata] (roles and responsibilities, meetings and voting, bylaws & rules, finances & insurance, repairs & maintenance including depreciation reports) [http://www2.gov.bc.ca/gov/content/housing-tenancy/strata-housing/resolving-disputes/the-civil-resolution-tribunal resolving strata disputes], [http://www2.gov.bc.ca/gov/content/housing-tenancy/strata-housing/renting-buying-selling renting, buying and selling in a strata], the [ | * The BC Government’s [http://www.gov.bc.ca/strata strata housing website] has information for strata owners, strata residents and strata council members. This website provides basic information on: [http://www2.gov.bc.ca/gov/topic.page?id=4E77455DEFAB4D1DA118FEA737C6300F living in a strata], [http://www2.gov.bc.ca/gov/topic.page?id=4898D88A4F8649F59F7C84D9C496873E different kinds of strata], [http://www2.gov.bc.ca/gov/topic.page?id=5E860FC0848E48E98DFB08D0FBE3FC30 operating a strata] (roles and responsibilities, meetings and voting, bylaws & rules, finances & insurance, repairs & maintenance including depreciation reports) [http://www2.gov.bc.ca/gov/content/housing-tenancy/strata-housing/resolving-disputes/the-civil-resolution-tribunal resolving strata disputes], [http://www2.gov.bc.ca/gov/content/housing-tenancy/strata-housing/renting-buying-selling renting, buying and selling in a strata], the [https://www2.gov.bc.ca/gov/content/housing-tenancy/strata-housing/more-help-and-support/website-purpose?keyword=role&keyword=of&keyword=government&keyword=in&keyword=strata&keyword=housing#role purpose of the government’s strata housing website], including the role of government, [http://www2.gov.bc.ca/gov/topic.page?id=E9C78FD1A3C24148A8D6AE83A8CBF883 strata legislation], [http://www2.gov.bc.ca/gov/content/housing-tenancy/strata-housing/legislation-and-changes/changes-to-legislation changes to strata legislation], and [http://www2.gov.bc.ca/gov/content/housing-tenancy/strata-housing/more-help-and-support additional help and support]. | ||
* Check the Condominium Home Owners Association of BC [http://www.choa.bc.ca/ website]. | * Check the Condominium Home Owners Association of BC [http://www.choa.bc.ca/ website]. | ||
*Check the Vancouver | * Check the Canadian Condominium Institute, Vancouver chapter, [http://www.ccivancouver.ca/ website]. | ||
* ''[http://www.condomanual.ca/ The Condominium Manual]'' by Mike Mangan is available at public libraries. | * ''[http://www.condomanual.ca/ The Condominium Manual]'' by Mike Mangan is available online and at public libraries. | ||
[updated | [updated July 2018] | ||
'''The above was last reviewed for accuracy by Lisa Frey and Taeya Fitzpatrick, and edited by John Blois.''' | '''The above was last reviewed for accuracy by Lisa Frey and Taeya Fitzpatrick, and edited by John Blois.''' | ||
