The condominium market in both North and West Vancouver has been robust for several years. As many of my clients are selling detached homes and moving into condos, I thought it might be prudent to highlight a few items to consider prior to making a purchase.
Under the B.C Strata Property Act, strata corporations with 5 or more lots must have a depreciation report. These reports are important to review because they identify the projected maintenance, repair and replacement costs of common property within the strata. Most depreciation reports project 30 years into the future. Strata Councils must be fiscally prepared for expenditures such as new roofing, boilers, electrical and plumbing. Strata Councils may waive the requirement to obtain a depreciation report by passing an annual 3/4 vote against. However, for me, the lack of a depreciation report can be a “red flag”.
Contingency Reserve Find (CRF)
The CRF is the fund used to finance items identified in the depreciation report. A portion of each owner’s monthly strata fees goes towards the fund. The minimum level of CRF funding should be 25% of the annual operating fund. Most strata corporations will have significantly more than than this amount. An underfunded CRF should be cause for concern for any potential purchaser.
Strata Council Minutes
Elected Strata Council officials meet regularly to discuss issues concerning the strata. They discuss complaints, concerns and maintenance issues that unit owners bring to their attention. Minutes are taken at each meeting and are usually available to purchasers in advance of offering on an available unit. It’s always wise to review 2 years of strata council minutes to establish if there are any significant future expenditures planned by the council.
There are many excellent developers operating on the North Shore but there are also some with poor track records. When considering the purchase of a new development, work with your real estate agent. Developers often hire external marketing teams that can write a purchase agreement for you but are rarely available for after sale service. Remember, they work for the developer not the buyer. It doesn’t cost you anything to have your agent negotiate the purchase on your behalf to ensure you are well represented.