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{{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}} | {{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}} | ||
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 | ===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'''. | 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==== | ====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 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. | 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==== | ====The law that applies==== | ||
In BC, | 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 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. | '''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=== | ===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. | 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. | ||
{| class="wikitable" | {| class="wikitable" | ||
|align="left"|'''Tip''' | |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. | 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=== | ===A strata development can be freehold or leasehold=== | ||
Strata developments can be either freehold or leasehold. In a '''freehold''' | 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 | 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. | Most strata developments are freehold, where people own their strata lots. | ||
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===Considerations in any home purchase=== | ===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. | |||
Here, we explain considerations specific to buying a unit in a strata complex. | Here, we explain considerations specific to buying a unit in a strata complex. | ||
===The information certificate and related documents=== | ===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. | A prospective buyer of a strata lot should review documents that will help them make an informed decision about whether to buy the strata. | ||
[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. | |||
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 | 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. | ||
{| class="wikitable" | {| class="wikitable" | ||
|align="left"|'''Tip''' | |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. | 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=== | ===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. | 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 | 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. | ||
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====Bylaws, rules and minutes==== | ====Bylaws, rules and minutes==== | ||
Strata lot owners must comply with the bylaws and rules of the strata corporation. Read them carefully before you buy. | 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. | 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. | 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. | 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 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. | 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=== | ===Financial obligations=== | ||
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====Monthly strata fees==== | ====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. | 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 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. | 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==== | ====Other assessments==== | ||
Strata lot owners may need to pay other expenses, including: | 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. | * '''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. | ||
*'''Insurance deductibles'''. Many strata corporations will charge an owner for insurance deductibles or other charges arising from sources of damage within a strata lot. | * '''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 physical condition of the project=== | ||
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===Whether the community is right for you=== | ===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. | 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? | 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=== | ===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. | 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 | 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. | ||
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== | ==Who can help== | ||
===With more information=== | ===With more information=== | ||
The '''BC government'''’s strata housing website has extensive information for strata owners and strata council members. | 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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{{Dial-A-Law Copyright}} | {{Dial-A-Law Copyright}} | ||