When buying a property with a strata, there are several documents to read before your purchase. Buyers should read through these documents to determine the status of the strata and make an informed purchase decision. Today, we will run through how to review strata documents as a buyer and what you should look for in these documents!
How to Review Strata Documents as a Buyer
What strata documents do I need to read as a buyer? Well, here is a look at the strata documents you need to go through!
Current Form B
The Form B tells you exact details of the unit’s square footage, strata fees, parking spots, storage lockers and financials. This is an important document to read over. It lists the building’s contingency fund and shows if there are any outstanding fees that need to be paid by the current owner such as for special levies coming up.
A Form B is merely a snapshot of the strata corporation for that specific period of time and could change the next day. Reading an updated Form B means you ensure no significant changes have happened.
Strata insurance is the coverage provided for properties and liabilities within a strata and is a requirement for every strata corporation. The Insurance Certificate ensures the strata is fully insured or helps you determine if you’ll need any additional personal insurance. Make sure to check this document to find out if the strata is under-insured or has a high deductible which may require money out of your pocket.
It also serves as insight into damages within the strata! Read through to check for any red flags before buying into a strata.
Current Financial Statements
Having up-to-date financials provides a better picture of where the strata corporation is financially, especially in relation to their depreciation report. Most management companies do provide a copy of the most recent financial statement and balance sheet (if applicable). Some may only provide the year-end financials.
Proposed Annual Budget
This is a document entailing the proposed budget for the year. You see how the strata council has budgeted the finances.
Bylaws and Rules
Both these documents are useful in reporting the rules and restrictions in the strata. This is where you can check for pet restrictions, rental restrictions, parking rules, amenity rules, etc. They may also include specific rules like what kind of barbecues you are allowed on your patio. Also, any consequences for breaking the rules may be included. Check these documents to understand the rules and see if it matches what you are looking for.
Rental Disclosure Statement
This document outlines the number of strata units being rented and other details. It states when the rental leases are going to end and any limitations on rentals. If you plan on renting out your unit, this is an important document to check along with the bylaws and minutes.
Council Minutes (Including AGM, SGM and Notices)
Meeting minutes from the strata council minutes give you a fuller picture of how the strata operates and what has been going on. This is a great document to read for insight into any issues within units or the strata as a whole. You can see any complaints or issues that came up in the past and how the strata dealt with them.
Does the strata council act on important matters fast? Are they responsible with their budget practices and sourcing external services needed? Are there regular complaints about neighbours that are concerning? You can get a glimpse of these kinds of matters in the minutes.
The standard practice is to get 2 years worth of minutes. You may not always receive the notice packages, however you can request these documents as they may have information left out in the minutes. Generally, you get all the regular minutes, Annual General Meeting minutes and Special General Meeting minutes.
The Strata Plan is a legal document detailing the dimensions of the strata units and common areas. Double check the sizing of your strata unit to make sure the listing information is accurate.
Engineering Reports may contain material information affecting a buyer’s decision. The reports could relate to major building repairs or projects that are coming up, or have already been completed but in either case, it is one of the most important documents for a buyer to review.
The Depreciation Report is another document that assesses the condition of the building’s overall condition. This report is done by an external company and is done every few years.
Read over Strata Documents with an Experienced Realtor
The best way to ensure that you are making an informed decision when buying into a strata is to read the docs and work with an experienced realtor. While it may be overwhelming as a buyer to read through these documents, realtors are comfortable with this. They deal with these documents daily and have a good sense of what to look for. It’s important to get the opinion of a realtor with expertise.
Good realtors always go through these documents for you to make sure there are no compromising factors. And if there are any concerns, they work with the listing realtor to find out the details for you.