Strata Tip of the Week - What to Look Out for When It Comes to Special Levies

by Condo Clear

When purchasing a strata-titled property, it’s essential to consider potential costs beyond the purchase price. These additional expenses can significantly impact the affordability of the property for buyers.

One key consideration is special levies, which can sometimes arise unexpectedly and lead to substantial financial obligations for strata owners. Here's what you need to know:

 

1. What Are Special Levies?

Special levies are additional payments imposed on strata lot owners to cover expenses that are not funded by the strata corporation’s:

  • Annual operating budget, or

  • Contingency reserve fund (CRF)

These levies are typically used to pay for significant repairs, upgrades, or unforeseen expenses that the strata corporation needs to address.

When reviewing strata documents, it’s crucial to look for any indication of approved or potential special levies that could affect the buyer's financial responsibilities.

 

2. Identifying Past, Present or Future Special Levies

A. Approved Special Levies Not Yet Collected

  • Check whether any special levies have already been approved, but remain unpaid by the current owners.

  • Ensure the contract of purchase and sale clearly states that the sellers are responsible for paying any approved but unpaid special levies before the completion date. This protects the buyer from unexpected financial obligations.

B. Upcoming Special Levy Resolutions

  • Review whether the strata has issued notice of a general meeting to vote on a special levy resolution that has not yet been decided.

  • Clarify in the contract of purchase and sale who will be responsible for paying the special levy, if it is approved. The contract should also specify what happens if the resolution is defeated.

C. Potential Future Special Levies

  • Investigate whether the strata has expressed plans to propose a special levy resolution at a future general meeting, even if formal notice hasn’t been issued yet.

  • Discuss these potential future levies with your clients to ensure they understand the financial implications. Buyers can also consider negotiating with the sellers to adjust the purchase price to account for the likelihood of these additional costs.

 

3. Why This Matters

By proactively identifying approved or potential special levies, you can help your clients:

  • Make well-informed purchase decisions.

  • Negotiate better terms with sellers to account for additional costs.

  • Avoid unexpected financial obligations after purchasing the property.

Understanding special levies is just one piece of the puzzle when reviewing strata documents, but it’s a critical step in protecting your clients’ interests.

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.

Disclaimer: The information provided is for general purposes only. It is not intended to provide legal advice or opinions of any kind. No one should act, or refrain from acting, based solely upon the materials provided, any hypertext links or other general information without first seeking appropriate legal or other professional advice.


A little about Condo Clear:

They are a fully licensed brokerage under the BCFSA, and carry Errors and Omissions (E&O) insurance.

They have been in business since 2017 and have completed over 3,000 strata reviews to date province-wide.

Their Review Advisors have firsthand knowledge and experience. They’ve all been practicing strata managers.

 

A little about Condo Clear Services: 

FAQs: How do Condo Clear’s services work?

Pricing: How much do Condo Clear’s services cost?

 

Learn More: https://condoclear.ca/

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