Buying a Strata? Essential Strata Documents To Review
Buying a strata/condo, whether a townhouse or an apartment, isn’t just about choosing the right home – it is also about understanding the strata corporation that comes with it.
The building’s financial health, governance, and long-term planning directly affect your investment. That is why a thorough strata document review is one of the most important steps in the purchase of a strata property.
Strata documents are important for a purchaser of a strata property as they give you a behind-the-scenes look at:
• How well the building is maintained
• The financial strength of the strata
• Whether major repairs are coming soon
• How the community operates, behaves and makes decisions
• Whether you will face unexpected costs or special levies
Strata documents may be thought of as the “home inspection” for the entire building, not just your unit.
Essential Strata Documents Every Buyer Should Review
1. Form B Information Certificate
Provides a snapshot of the strata’s overall health, including monthly fees paid by owners, upcoming special assessments, summary of insurance coverage, bylaw updates, ongoing legal proceedings, and parking and storage allocations.
2. The Strata Plan
Shows exactly what you are purchasing, and includes the layout of the building, common property, limited common property, and the size and boundaries of your unit.
3. Meeting Minutes
Perhaps the most revealing documents. Minutes highlight ongoing disputes, maintenance concerns, owner complaints, budget discussions, and upcoming projects. Buyers should obtain at least two years of meeting minutes to get a fulsome understanding of the strata.
4. Strata Bylaws and Rules
Outline how residents may use their property. Common topics include pets, rentals, renovations, noise, smoking, parking, and storage.
5. Depreciation Report
One of the most critical documents. It outlines the condition of major building components, estimated replacement timelines, projected repair costs, and long-term funding. This document helps buyers anticipate future special levies/assessments. A very negative report may affect mortgage eligibility.
6. Engineering and Consultant Reports
These reports dig deeper into structural and mechanical issues. Pay close attention to end-of-warranty reports, water ingress issues, envelope concerns, and mechanical system assessments. Problems arising in these reports may not yet be present in the strata’s meeting minutes.
7. Strata Insurance Documents
Review the strata’s deductibles, coverage limits, exclusions and claims history. High deductibles may result in significant out-of-pocket costs for owners. Obtaining your own insurance policy is essential to mitigate these deductible expenses.
8. Financial Statements
Assess the financial statements to ensure that the operating budget makes sense, the contingency reserve fund is adequately funded, and that expenses are not rising faster than fees. If the strata has low reserves, it may rely on frequent special levies.
9. Annual Operating Budget
Shows how your monthly fees are used and whether the strata is planning responsibly.
10. Disclosure Statement (if applicable)
A disclosure statement is applicable for new buildings. It is an important document for understanding parking and storage allocations, long-term contracts and shared facility arrangements. These details may impact your use and costs for years.
11. Long-Term Lease or License Agreements
Some parking stalls or storage lockers may be under special agreements and not owned in conjunction with your strata unit. Review the terms carefully.
12. Air Space Parcel Easement Agreements
If your building shares land or amenities, such as parking, with another development, this document explains the cost-sharing and responsibilities.
13. New Home Warranty Documents and Claims History
For newer buildings, review remaining warranty coverage, if any claims have been filed, and whether any issues remain unresolved. Warranty disputes may signal broader issues with the building.
14. Legal Proceedings
Any lawsuits involving the strata may lead to significant financial implications for owners.
Red Flags Buyers Should Watch For
When reviewing the above documents, buyers should be alert for:
• Compliance with the Strata Property Act (a lawyer can assist you in determining whether the strata is in compliance with the SPA)
• Low contingency reserves
• Repeated or escalating complaints
• Evidence of water leaks or building envelope problems
• A history of special levies
• Upcoming major repairs
• Conflicts within council or with owners