We often hear the word condominium shortened to condo. And for many it has become synonymous with Apartment style housing. In this post we will unpack what Condominium really means.
Terminology in Real Estate can sometimes be a bit confusing so when selling or purchasing a property you need to understand what it is you are buying or selling. Condominium is defined as per the Oxford dictionaries as:
a building or complex of buildings containing a number of individually owned apartments or houses.
In British Columbia it also means any property that is part of a strata titled group of properties. This can include; Apartment style, Townhome’s, Duplex’s, Bare Land Strata’s, Commercial Properties and Mixed use Properties. You may not even know what category you are buying!
In British Columbia, these types of properties used to be governed by the Condominium Act. This was replaced with the Strata Property Act and it is the governing authority. You will recall in my previous post we discussed different types of ownership. It was mentioned that strata ownership represents approximately 50% of all ownership types. This will vary depending on community but it is significant to note that a strata (condominium) transaction is typically the most complicated type of transaction you might ever enter into.
Every Condominium is subject to the strata title act which outlines the responsibilities of the owner as well as the strata corporation. Now the term strata corporation itself needs some defining.
By default, the owners of the condominium are also joint owners of any common property (Assets) of the development. This joint ownership is what is called the strata corporation. The strata corporation is managed by a strata council which acts for the benefit of the owners as whole. It is a common practise for the strata corporation to hire a Property Management company to assist them in ensuring the corporation is run correctly.
Key Areas of Condominium Ownership:
- ByLaws – Every Strata is governed by a set of bylaws. These bylaws are either established by the strata corporation or they are by default the bylaws specified within the Strata Property Act
A common error when buying bare land strata is not recognizing these still apply.
- Strata Plan – The strata plan shows you what type of strata you are involved in and what you actually own.
the ad said your unit came with 2 parking stalls. Do you really own them?
- Engineers Reports & Depreciation Reports – These reports, if available, can be key to making a good decision on whether or not you should buy a particular unit. They are also valuable tools for the Owners in making good decisions on managing their assets.
Knowing when a major asset like a roof or heating system needs replacing is key in budgeting for a strata. Also important as a buyer to know if something major is upcoming and how it will be paid for.
- Financial Statements – Gives you a clear picture of the Financial health of the development and where they are spending money.
A key thing to look for is whether or not the expenditures match the budget. If the maintenance budget is not being spent, are there going to be deferred maintenance issues?
- Minutes of Strata Meetings – These minutes are the records of any Strata Council, Annual General Meetings and Special Meetings. As a buyer you will want to see a minimum of the previous 2 years on record.
Reviewing these documents will help give you a sense of the management of the strata corporation. Does the council overstep their level of authority? Do they deal with things in a timely manner? Are their changes to the bylaws moving forward? Special assessments?
This brief explanation of a condominium and what it means is only meant to alert you to some of the key areas to look at. As mentioned earlier, it is a complicated transaction and you are best advised to seek expert advice.
As a real estate professional I am qualified through education and experience to help you in one of two ways.
- Buying or Selling a Condominium: Able to help you navigate the entire process as your agent.
- Strata Property Review service; A comprehensive evaluation of the key areas identified above. As a Buyer this is important before you make your deal firm. (If we are acting on your behalf as in option 1, this service is included).
Please feel free to contact me at any time should you need any help. And please feel free to comment or share this post.
Leave a Reply