01What is a special levy, and how big can one get?
It’s a bill every owner gets for work the building hasn’t saved enough to pay for, like windows, a roof or a rainscreen. Special levies can be six figures. A recent client of mine bought a one-bedroom after being told the rainscreen issue was not a big deal, and within a couple of years they had an $84,000 special levy.
Go deeperReading strata documents
02Are low strata fees a good sign?
No. Abnormally low strata fees are a red flag, and I’d avoid them. Strata fees are the lifeblood of the building, so you might save $100 or $200 a month for a year or two, and then it catches up with you when the windows or the roof come due. Low fees usually mean a reactive strata, and you want a proactive one.
Go deeperVancouver strata fees explained
03How do I check a depreciation report before I make an offer?
Do the subtraction. The Form B gives you the contingency reserve balance in one number, the depreciation report tells you the work coming up, and you subtract one from the other before you write any offer. If the gap is over $200,000 and the work is under three years out, you’re not buying a condo, you’re buying a special assessment with a unit attached to it.
Go deeperThe Red Flag Report
04What does that look like in real numbers?
Say a 60-unit building has $120,000 in the reserve, $800,000 of envelope work in year two and a $250,000 roof in year three. That’s a $930,000 gap, or roughly $15,500 a unit, on top of any fee increases. And if the strata can’t get owners to vote for the work, it gets deferred and you eventually face an even bigger assessment.
05How much should be in the contingency reserve fund?
Divide the fund by the number of units. A strong one is usually in the $3,000 to $5,000 range per unit, and if you’re well under that, be cautious. But read the minutes first, because a low fund makes sense if the strata just paid for a full rainscreen, a new roof and windows out of it.
FreeThe Red Flag ReportEverything I look for before a client buys, for a condo, townhouse, duplex or detached home.Get the Red Flag Report →06What is a rainscreen, and why do you keep asking about it?
Older stucco buildings were often face-sealed, with no rainscreen behind the plaster, and that’s what led to the leaky condo crisis. So on any stucco build I ask every single time: has this building been rainscreened? When you walk up, look for staining at the window heads, paint blistering at the soffit and stucco repair patches that don’t match.
Go deeperLeaky condos and rainscreen
07At what age does a building get risky?
The 20 to 30 year mark is the sensitive one. That’s when windows, roofs, patio membranes and siding start coming due, so check the minutes for whether the strata raised fees every year to prepare or usually funds work with special levies. An older wood-frame building that was properly rainscreened and already remediated can be lower risk than a newer one that hasn’t hit its first major envelope cycle.
08What should I look for in the strata minutes?
How the building votes. If the owners keep voting down routine maintenance, that’s a red flag however much you love the unit. A water damage deductible that doubled at the last renewal tells me to dig, because it can point to a history of water issues. And be careful with minutes that stop halfway through the year.
09Is a small strata riskier than a big one?
Not automatically, but you split the big costs with fewer people. In a complex of 11 owners under one roof line, a roof that nobody saved for is a big ticket item for you and your family. I’m not saying don’t buy small or don’t buy large. Just find out how the building funds its work.
10What if the strata is in a lawsuit?
Read the Form B, because it will disclose the litigation even when nobody brings it up at the open house. A lawsuit can make insurance unstable, shrink the pool of lenders for your unit when you go to sell, and bleed the operating budget in legal fees. You won’t feel it in year one. You’ll feel it in year three.
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