Home Buyers FAQ: What are special levies or special assessments?
As defined by the BC Government:
A special levy is money collected from strata lot owners for a specific purpose and for shared common expenses. It is money collected from the strata lot owner in addition to the monthly strata fee. A special levy must be approved by at least a 3/4 [“yes”] vote of the strata corporation owners.
The funds collected from Special Levies to owners are needed to pay for expensive building maintenance (which is often the roof, plumbing, exterior, elevators, etc). Most buildings in the city don’t have enough money in their Contingency Fund (CRF) to cover the entire cost of these projects. BC Strata Bylaws state the Strata has to maintain a certain amount in the CRF, so the building wouldn’t be allowed to deplete the fund too much anyways (without replacing the money ASAP).
The need for a Special Levy is typically discussed in regular Strata Meetings, with the Strata doing research to determine what repair is needed, who will be hired to complete it and how much it’ll cost. The decision regarding the amount of the Special Levy and the timeline as to when it’s due is voted on an Annual General Meetings (AGMs) or Special General Meetings (SGMs) which are meetings where owners are given advance notice of the date and topics to be voted on.
Owners can vote no to a Special Levy, though that isn’t positive for the building itself or the value of your investment. If too many people vote no, the strata have to reconfigure their plan to the point where owners are okay with the amount (this may mean getting further quotes or decreasing the size of the repair, which isn’t always a good thing).
Special Levies are often due within a few months of being voted on, and can be split into multiple payments to reduce the burden on owners. Each owner share of the Special Levy is determined by the amount of sqft each owner owns in relation to the total building.
What if you can’t afford a special levy?
Unfortunately, you’ll have to find a way to pay it. Whether that’s taking out a loan, borrowing from family, selling the unit or re-mortgaging, these funds are due. If the Strata doesn’t receive your levy funds, they can force a sale to recover the funds (in extreme scenarios).
Be prepared for special levies
Every building will see a Special Levy at some point, so you want to make sure that you’re prepared for it. I always tell my clients to keep a few thousand dollars set aside every year so that it’s not a shock to your bank account when a special levy is required.
Some Stratas are raising their monthly strata fees to help mitigate future Special Levies, but even then, you’ll have to be prepared for a higher monthly condo fee.
Contact us for any further questions, about this or other FAQs about the buying process or condo ownership.
