All You Ever Wanted to Know About Condos Buying Tips
You’re thinking of buying a condo. You love the idea of a virtually maintenance-free home, the sense of community, and all the wonderful amenities. What you don’t love is the uncertainty about condominium ownership. You don’t know how all these rules work. That’s a common anxiety shared by most first-time condo owners. Therefore, we are addressing all the questions you’ve ever wanted to know about condos but were afraid to ask.
What’s the difference between a townhouse and a condo?
Townhouses and condos share some similarities. Both are covered under the strata act, which protects the property and helps it hold value. However, a townhouse normally has a front street entrance directly into the home; a condo may or may not have its own street entrance.
- Do I need a home inspection to buy a condo?
- That’s a great question. You know the saying: Buyer beware!
We highly recommend that you do have a professional home inspection before you purchase any property, and a condo is no exception! While the exterior is maintained by the Strata Corporation, the interior is your responsibility.
Any reputable realtor will tell you that it is always a smart idea to complete the home inspection process before you buy. This process can uncover things that you can’t see: wiring and electrical issues that are hidden behind walls, plumbing nuisances or water damage that is under cabinets or flooring, safety concerns, and more.
How well do units sell in the community?
Ask your Realtor to check out recent sales in the building that you’re considering. He can pull a comparable sales history. This report will tell you how many units have turned, how quickly (or slowly!) they sold, and the type of price each unit commanded. Arming yourself with this important information can help you invest your money wisely. Of course, you want to spend your money on the condo that gets you the most value for your money. This data can help you and your Realtor construct a fair offer and negotiate to gain the best advantages.
What community amenities are available at the property?
Part of the charm of living in a condominium is the resort-like feeling you can get at many. Like all forms of housing, not all condos are created equally. While some have extraordinary features that make you feel like you are at a five-star resort, others are pared down to some essential, minimal expectations.
Some amenities you might have on your wish list are as follows:
If you have your heart set on a particular amenity, tour only those which meet that need. But bear in mind that the more amenities your community offers, the higher your monthly fees will be. This will all come down to you balancing your desires against your budget.
What is a Strata Corporation?
If you’re condo shopping, you’re probably hearing the term “Strata” bounced around quite a bit. Actually, the question “What’s a Strata?” is a commonly asked question that we get from most first-time condo owners. It’s a question that I answer in “legal-speak,” so bear with me on this one.
A Strata Corporation is a legal term given to a corporation who holds all the same powers of a person of full capacity. A Strata Corporation can sue, be sued, enter into legally binding contracts with other people or entities, and hire employees to work for the corporation.
The members of the Strata Corporation are the owners of strata lot units. This means that if a Strata Corporation is found liable for paying a judgment, each member (strata lot member) is personally liable to pay their fair share of the judgment, based proportionally on the size of their unit.
A Strata Corporation does not have limited liability like a company; it has the same liability as an individual. It is put into place to serve the best interests of the entire condo community and protect all assets.
What Does a Strata Corporation Do?
The Strata Corporation holds the big responsibility of managing and maintaining the common property and assets of the strata development for the benefit of every condo owner/member. The specific obligations of the Strata Corporation are normally executed by the strata council or the agents or employees which it hires. Additionally, the strata council will also perform its own obligations which are imposed by the Act and Regulations on the strata council and will benefit the Strata Corporation.
The specific obligations of the strata corporation which are set out in the Act and Regulations are as follows:
- Preparing, retaining and making accessible various records;
- holding general meetings, or obtaining the appropriate waiver of general meetings;
- giving notices of general meetings;
- preparing “Information Certificates” (Form B) and “Certificates of Payment” (Form F);
- ensuring that the strata corporation address is correct at the Land Title Office;
- maintaining and repairing common property, except any limited common property that the owners may have to maintain under the bylaws;
- complying with work orders which deal with common property;
- maintaining a contingency reserve fund which is accounted for separately from the operating fund;
- paying common expenses;
- determining the amount of contributions which owners must make to the operating fund and the contingency reserve fund;
- preparing annual budgets;
- informing owners of any changes to strata fees;
- obtaining adequate insurance coverage; and informing owners if the strata corporation is sued.
What are Strata Fees, and what do they cover?
Strata Fees are the monies used by the Strata Corporation to pay the expenses of the condominium development. Your fees go into a fund that’s used to cover all the shared expenses held by the community. These expenses can include:
- Building insurance
- Water fees
- Landscaping and parking lot maintenance
- Waste and recycling collection
- Upgrades to the physical property ie: roof repair or replacement or common area upgrades
- Property management fees
- Building maintenance costs
How are Strata Fees calculated?
Your Strata Fee is calculated through simple math. The Corporation assesses the fees based on the overall expenses of the Corporation and dividing that number by the unit entitlement of your individual Strata lot. This means, of course, that smaller lots pay lower fees while larger lots pay more.
The fees vary greatly from complex to complex, depending on a number of factors. A couple of these factors include the type of amenities and the location of the property.
What are by-laws?
By-laws are the community rules, restrictions, and regulations of the Strata. Some by-laws to inquire about are:
- Are pets allowed?
- What kind of pets are permitted? Are there breed restrictions?
- Are there age restrictions in the community?
- Can I rent out my unit if I decide to move?
- Is the community a smoke-free property?
Ask your Realtor these questions before you start the search for your perfect a condo. This will help him find the best community to suit your lifestyle while steering you clear of those that are not a good match for you. For example, if you are an asthma sufferer, he can guide you to a smoke-free facility. Or, will the community you’re thinking about accept your precious pet?
Knowing the answers to these questions can potentially save you a lot of wasted time and energy!
Is there a professional building cleaning service for the common areas?
Find out who is responsible for keeping the common areas of the community clean. Is there a cleaning service? Keeping shared spaces clean and tidy will keep property values high and units on the market sell faster.
Take a good, long look in the mailbox room. It is a good indicator of the overall cleanliness. Are there flyers and trash lying about? Or is everything clean, tidy, and fresh-smelling? If you suspect that it’s not being professionally cleaned each week, ask before you make an offer!
What do I need to prepare for financially?
Like every house, you can expect to lay out a large sum of cash when you purchase a condo. Some of the expenses to prepare for include
- Closing costs
- Property purchase taxes
- Yearly taxes
- Move-in fees
- Utility deposits
These fees (and other unexpected fees!) can add up rather quickly, so work with your Realtor and mortgage broker to come up with a budget for these.
How do I know the Strata Corporation is sound?
Becoming a member of a Strata Corporation can sound a bit overwhelming. The truth is, there is a certain level of commitment and responsibility when you do become a Strata member. When it comes down to decision time, request two years of Strata council meeting minutes before you make an offer.
The information contained in the minutes will help you discern whether the Strata Corporation is functioning well or if you should run the other way!
- As you read through the Strata meeting minutes, be observant of the following items:
- What problems have arisen over the past two years?
- How have they addressed the problems, and were the problems resolved?
- What work has been done to maintain the building?
- In addition, what work is planned for the future?
- Are the units sound-proofed, or are there frequent noise complaints?
- How much money is in the Strata’s operating fund?
- What’s the total amount of money in the contingency fund? Is it enough to cover unexpected repairs, roof replacement, and other emergencies?
- Is the Strata building managed by a professional property management company, or is it self-managed?
- What does the insurance policy for the strata cover? What do you need to buy insurance for?
You need to have the find clear answers to all these questions and know in your mind that you are investing in a condominium in a Strata that runs like a well-oiled machine before you make that offer and invest in a home in the community.
What storage is available? Who owns it?
This is a two-part question because storage can become an issue in a condominium development.
In older buildings, your storage facility might be included in your Strata lot. In other words, you own it as part of your unit. In newer buildings, on the other hand, the storage units are considered limited common property. This means that each homeowner has the right to use an assigned storage unit.
This is extra space that you’ll need for storing your bicycle, off-season items, and any other large or bulky items that you can’t fit into your condo unit, so be sure to ascertain this information in advance.
Should I buy a new construction condo?
If you decide to purchase a new construction condo, you could save yourself the money and headaches of renovations. Work with your Realtor to be sure of what is and is not included in the sale. Be sure to know the guaranteed completion date and what happens to get occupancy.
Request, in writing, an inspection before the drywall is up as well as a thorough, final inspection before closing. Be clear that your inspector will look at electrical and wiring, HVAC systems, plumbing, and venting.
Do other condo owners like condo ownership?
This final question is one that you are probably wondering. Are the other homeowners of the Strata you are considering happy there? Fortunately, there’s an easy way to find out! Feel free to introduce yourself to a few of the unit owners. Ask open-ended questions to draw out honest responses. Listen carefully to their complaint and concerns as well as to the things that they love about living there.
Now that you know the answers to all the questions you wanted to know about condos, it’s time to start that search for your dream condominium. You are armed with the knowledge of how to find the answers to your questions. Remember, your Realtor is there to guide you throughout the process and is a valuable resource.
For more information go to CondosOfKelowna.com