As a prospective or current homeowner of a multi-unit complex, it's vital to understand the concept of stratas. In this post, we'll explore what stratas are, the fees collected and expenses they cover, and the significance of strata documents. This knowledge is key to making informed decisions in the realm of real estate.

What is a Strata?

A strata corporation refers to the collective ownership and management of a property divided into multiple units. It is formed automatically when a strata plan is filed with the Land Title Office. Buying a strata lot means owning your unit, typically a condo or townhouse, and a share of the common property.

Strata corporations are governed by a strata council, elected by the unit owners, which handles decision-making for maintenance of common property. The strata council is also responsible for managing the finances, including collecting strata fees from unit owners and creating an annual budget that dictates the operational expenses and a contingency reserve fund contributions.

What are Strata Fees?

Strata fees are not a one-size-fits-all expense. They are calculated based on unit entitlement, meaning the size of your unit relative to others in the complex. Generally, the larger your unit, the more you contribute to the common expenses.

These fees are usually paid on a monthly basis. A key aspect of strata fees is how they're split. A portion of the fees goes towards the operational budget, covering day-to-day expenses such as maintenance and utilities. The rest is allocated to the Contingency Reserve Fund (CRF), a savings pot for future, larger-scale expenses.

As of November 2023, stratas in British Columbia are mandated to deposit an amount equal to at least 10% of their annual budget into the CRF. This regulation ensures better financial preparedness for future repairs and maintenance, safeguarding the property's value and residents' investments. For more information on this new legislation and how it may affect you, click here.

What is a Special Levy?

Beyond regular fees, strata corporations can levy additional charges for unforeseen or unaccounted-for expenses. These special levies are often one-time charges to cover emergencies or significant repairs, like renewing the roof or the exterior of a building, that are not included in the annual budget or when there is not sufficient funds in the CRF.

Special levies are imposed following a 3/4 (75%) positive vote among the owners at an Annual General Meeting (AGM) or Special General Meeting (SGM), and the amount each owner pays can vary - based on an owner’s unit entitlement - similar to regular strata fees.

An SGM is an extraordinary meeting of the members of a strata corporation, convened to discuss and decide on urgent or important matters that cannot wait until the AGM. They can be called either by a resolution of the strata council or by a petition signed by at least 20% of the strata corporation's members.

The Critical Role of Strata Documents

Understanding the strata plan, bylaws, and financial documents of a complex is crucial before purchasing a unit in one. These documents provide insight into the financial health and operational history of the strata corporation.

Strata minutes are a treasure trove of information. They record the discussions and decisions made during strata council meetings, including maintenance plans, upcoming projects, past and proposed expenditures, and any issues or disputes within the complex. Regularly reviewing these minutes can provide a clear picture of the strata's operational health and any potential issues on the horizon.

Every strata operates under a set of bylaws and rules, which cover aspects such as noise control, pet ownership, parking, and alterations to units. These bylaws are designed to ensure the smooth functioning of the strata community and can be amended by a vote of the strata members.

Grasping the fundamentals of stratas, from fees to documentation, is essential for anyone involved in strata living. While strata fees represent an additional cost, they are vital for the property’s long-term value and livability. Always review strata documents thoroughly to understand your commitments and the strata’s financial health. For further real estate insights, stay tuned to our blog, and don’t hesitate to contact us for personalized advice. Happy property exploring!