Strata Tip of the Week - Should I Buy This Condo?

One of the most common questions buyers ask us when getting a strata documents review is, "Should I buy this condo?", or some variation of it. It is a fair question, but the answer is not as straightforward as many hope.

There is no such thing as a condo that is objectively good or bad. The decision to buy into a particular strata corporation depends on individual wants and needs, risk tolerance, and long-term plans. What works well for one buyer may not be the right fit for another.

1. There Is No One-Size-Fits-All Answer

Buying a strata-titled property can feel overwhelming, especially when faced with hundreds of pages of financial documents, depreciation reports, strata meeting minutes and more. If you’ve purchased property before or helped others through the process, you probably wished that someone, whether a friend, family member, home inspector, or Realtor, could simply tell you whether the property is a good purchase.

But that’s not how it works. While trusted advisors can highlight important factors and information to consider, the final decision rests with you, the buyer. It is up to buyers to determine what fits their needs and what risks they are comfortable with.

Strata document reviews work the same way. The goal isn’t to label a building as “good” or “bad”, but rather to provide a clear and organized summary of the available documents so buyers can make informed decisions based on their own priorities.

At Condo Clear, we don’t just summarize the documents. We also provide access to an experienced Review Advisor by phone or email to help answer questions, contextualize findings, and provide insights into how different factors may impact buyers if they decide to move forward with a purchase.

2. Let’s Look at Some Examples

a) Future Special Levies Are High. Is This a Red Flag or Just Part of the Plan?

It depends. Understanding how much buyers may face in future special levies is an important consideration, as it allows them to:

• Factor additional costs into the purchase price

• Potentially negotiate a better price with the sellers

• Ensure they are financially prepared for upcoming levies

At Condo Clear, we provide a custom projection of the amount of special levies buyers are likely to face over the next ten years based on the strata’s current contingency reserve fund (CRF) savings, the amount they are adding to the CRF annually, and the anticipated future expenses listed in the strata’s latest depreciation report.

We’ve done reviews where buyers were likely to face over $200,000 in special levies over the next 10 years, but because they factored these costs into their purchase price and were comfortable with the strata’s upcoming capital projects, they still felt the purchase was right for them.

b) High Strata Fees. Financial Mismanagement or a Sign of a Well-Maintained Property?

Some buyers avoid buildings with higher strata fees, assuming they mean higher costs or poor financial management. However, higher fees can also indicate a healthier CRF, which may reduce the likelihood of future special levies. They can also reflect a proactive approach to ongoing building maintenance, while very low strata fees may indicate the opposite.

The key is to review all available information to understand what the numbers truly mean.

c) Ongoing Legal Disputes. What Should Buyers Consider

Seeing that a strata is involved in a legal dispute can be concerning, but legal matters are not uncommon in strata corporations and don’t always present the same level of risk.

A well-managed strata will:

• Handle disputes transparently

• Engage the right professionals to help them through the legal process

• Budget appropriately for legal expenses

Some buyers may be comfortable proceeding if legal disputes appear well-managed, while others may prefer to avoid any potential risks. The key is to review the available information and understand how the strata is handling the issue.

When considering purchasing a unit in a strata corporation with ongoing legal disputes, it is always advisable to seek legal advice from a qualified lawyer, as they are best suited to assess the potential risks.

3. Final Thoughts

There is no universal answer to whether a condo is “worth buying into” or whether it’s the “right or wrong choice”. The best approach is for buyers to gather the facts, review the documents, and assess their comfort level with what they find.

Working with real estate professionals, such as Realtors, home inspectors, lawyers, and strata document review providers, can help buyers navigate the process with greater clarity and confidence.

That’s it for this week. If you have any suggestions for other topics you’d like us to cover, please let us know at info@condoclear.ca.