Why You Should Read Strata Documents
I have a lot of Buyers who are discouraged by Strata Documents. They think they won’t be able to understand the docs, don’t need to know the information they contain, or want to lean too much on me, their realtor.
If you’re buying a property – whether you have an accepted offer on a space, are looking to submit a subject free offer or need more information on a building before submitting an offer – it’s my duty to help you deconstruct these documents so you know the most important pieces of information, and how you will be affected as an owner. The key word in that sentence is help. It’s your job to read these documents as well, and I promise, they’re far less daunting than the look (frankly, they’re pretty dry sometimes).
The strata documents consist of a few key parts:
- Strata Council Meeting Minutes
- Depreciation Report and Engineer’s Reports
- Financials and Budget
- Bylaws and Rules
- Form B
I promise, reading the documents won’t take you nearly as long as you’d think. Make notes of any questions, concerns or “huh” moments, and go over them with your realtor (me!). We read these documents all the time, so we’ve developed the knowledge needed to read between the lines, to ensure that you know what you’re buying.
Strata Council Meeting Minutes
These minutes detail everything the strata council (the small group of elected owners who oversee the management of the building) discusses at their regular meetings. Meetings can be once a month (typical) to once a year (for very small buildings). You will learn how the building is run, what owners in the building complain about, whether or not people are breaking bylaws/rules, what is being maintained and what will need maintenance, neighbourhood news that affects the building, and more. It won’t take you long to read through these documents.
Tangent: I once read strata documents that called the elevator the “vertical transportation system”. That made my night.
Depreciation Report and Engineer’s Reports
Depreciation Reports are a new and welcome addition to the world of Strata Documents. These documents detail every component of the building (windows, balconies, roof, hot water tanks, pipes, hallways, exterior, parkade, elevator, etc) and state how old each system is, when it will need to be replaced and how much it will cost. The document uses industry standards to calculate this information, so it isn’t necessarily specific to exactly how the building components are performing, but it does offer the owners a great guideline for future maintenance and future costs. Remember, as a part owner of a strata building, you are responsible to pay your share of any maintenance and operational costs of the building. The Depreciation Report lays it all out, often with photos and graphs to drive the point home. You’ll definitely want to read this report.
Engineer’s Reports are reports that were previously done on a certain aspect of the building. Has the exterior of the building had issues with water ingress? The Engineer’s Report will dive into the issues and suggest the proper maintenance. These reports offer a deeper look into the construction of the building and why the building needs a particular kind of maintenance. A great read for detail oriented people.
Financials and Budget
The financials and budget stipulate how the building is run from an accounting perspective. Ever wonder why the monthly strata fees are the number they are? Ever wonder what regular services the strata pays for? Ever wonder what kind of regular maintenance the building has done? Ever wonder how much money the strata has in the “Contingency Fund”? Ever wonder how much the Strata has left of the large special assessment you paid for the re-piping? Read the financials and budget.
Even if you’re not savvy with numbers, the financials and budget detail what the strata is expecting to pay for this year.
Bylaws and Rules
Do you have a pet? Do you want to rent the unit to a tenant? Are you looking to renovate? Do you smoke? Are you planning on using the amenities for something different than expected? Do you want to store your bike in your unit? Are you hoping to do maintenance on your car in the garage? Do you like to BBQ? Do you play loud music at night?
You need to read the bylaws and rules. You can be fined if you don’t follow these rules.
The Form B is a document specific to each unit. It is approved and distributed by the Property Manager, and indicates how much the owner of the unit owes to Strata (for unpaid special levies, bylaw fines, etc), their parking and storage locker numbers, the number of rentals in the building, the official monthly strata fee, and more. Very important document that will take you a minute to look through.
For more on Strata Properties, read my previous post: Strata Documents.