Strata fees in British Columbia

When looking for new strata properties (condos, townhouses, or strata duplexes) there are two common things that most purchasers are looking for. A complex with a healthy contingency fund and a complex with low strata fees. Unfortunately, in most cases these factors are at odds with each other. For example, most commonly strata duplexes are not managed according to the B.C. strata property act and do not have strata fees but also do not have a contingency fund. This does not mean there are no common expenses however. Common property such as the roof and the exterior of the building still must be maintained. The owners will have to fund the repairs as they are made. Sometimes, a complex with high strata fees will have a very healthy contingency fund. What is therefore most important is to consider the strata fees and contingency fund solely as pieces of information to use in evaluating the suitability of the condo complex for the buyer.

Buyers should establish how much it will probably cost them to purchase and maintain the strata property. A building inspection will give the buyer an idea of the condition of the property. The list price of the property may look cheap to the buyer but if the complex is likely to need major renovation or remediation in the foreseeable future, the property might not be a bargain. A healthy contingency fund may alleviate some of the expense but there may be uncertainty as to the final cost of the renovation/remediation. As well, buyers should consider their personality. If they like to keep their assets in top condition with regular maintenance, they would probably be happier in a strata property that keeps up a regular maintenance schedule. This strategy might mean more current expense but more time between major expenses. If the buyer prefers to delay maintenance until it is unavoidable, they might be happier with a strata property that minimizes upkeep and therefore has lower strata fees in the short term. The buyer would need to be prepared however to fund repairs as they occur.

The B.C. strata property act requires that each strata evaluate its contingency reserve fund every year and top it up if it falls below a certain level. Most established stratas will have at least 25% of the annual operating budget in their contingency reserve fund. However, the fund might have been depleted by recent large expenditures and this is not necessarily a bad thing if the complex is now in better condition and will require less annual upkeep. On the other hand, an unusually large contingency fund might mean that a large expense is expected in the foreseeable future which might even be larger than the fund.