Is strata right for me? This is a personal question and each strata is different. When you are buying into a strata you are buying into a community and you should carefully read through the Form B package, the rules, minutes, and bylaws to ensure that who your are matches the “personality” of the community. When in doubt don’t be afraid to call the strata council president.
The Strata Form B is a large stack of documents, should I get a lawyer to review? Most of these documents are strata rule and minute and are not written by lawyers, they are written by your strata council and should be easy to understand. Unfortunately legal review of these minute is not as effective as a your own personal review as it is most important that you (and not your lawyer) feel comfortable with the way the community if being run. This being said, I always encourage my clients to, after reading the minutes, give me a call when any specific items of concern they may wish to discuss.
What are some red flag in the strata Form B package and minutes? Things to watch out for include: discussion of future repairs, reoccurring problems and disputes, and dysfunctional or disinterested councils.
What is a property depreciation report and how can I tell if a strata contingency fund is “fully funded”? Each strata is required to commission a property depreciation report every three years. This report sets out models which detail how the building will require maintenance and upkeep over the next few decades and can assist in foreseeing the likelihood of special assessments. Each depreciation report sets out three funding models and by comparing the current state of the contingency reserve and the monthly CRF contribution to these models you can determine how closely the strata is following the reports recommendations.
Under the Strata Property Act, a Contingency Reserve Fund (CRF) is established to pay for extraordinary expenses, but under the Act, the amount in the CRF was established by a formula (which had NO relationship to the age of the building!) Furthermore, the amount of contribution to the CRF was CAPPED, unless an ¾ vote was obtained to had additional contributions (hard to plan for the future).
There were amendments to the Strata Property Act in 2009 for stratas to commission Strata Depreciation Reports on the policy basis that long term planning and maintenance will prolong the lifecycle of building systems and reduce premature failure.
Now in British Columbia, Strata Corporations (with 5 or more units) are required to commission a Strata Depreciation Report by DEC 13, 2013 or to pass a s.94(3) resolution (with ¾ vote) for an 18 month exemption to this new legislated requirement. Importantly, this does not create a “separate fund” for repairs, but educates the strata council if their current contingency fund is “in line” with expect future costs. Strata Councils are required to update reports every three years
A Strata Depreciation Report includes:
Physical Inventory of Assets
Evaluation based on on-site Inspection
Repair, Renewal and Maintenance Costs for a 30 year plan
Three Year Cash Flow Models
Reports Are a MANDATORY attachment to the Strata Form B with Kelowna Home Buyers receive from their Realtor.
This Form B now must also include:
The rules of the strata corporation;
The current budget of the strata corporation;
Any rental disclosure statement;
Current strata depreciation report
Parking Stall and Storage Locker information;
When reviewing the Strata Depreciation Report, Kelowna Home Buyers should ask:
Is the Form B complete (containing current Rules, Budget, Rental Disclosure, and Depreciation Report)
Does the Buyer understand the Report?
Has the strata deferred its Report obligations under s.94(3)?
Does the financial forecast in the Report and the strata budget align?
Should anything in the Report be reflected in the Purchase Price when analyzing comparators?