• Vancouver First Realty

Due diligence is crucial when buying a condo

Buyers should request, obtain and read all relevant documents before they remove subjects to their offer to buy a condo

For many first-time buyers in Vancouver’s high-priced property market, a condo is their only option, while for some empty nesters rattling around a large family home, it’s a preferred choice.

But regardless of the reason for considering a condo, knowing what you are buying into is as important as the unit itself. Condo living is communal living in every sense of the word. A strata council elected by the owners draws up and amends bylaws and rules that govern how the strata complex is managed and what individual owners can and cannot do. In that sense, owners have less freedom to do as they please than would be the case in a single-family home.

Therefore, it’s important to fully understand the bylaws and rules before committing to a purchase. And while most buyers of resale condos are likely to have a satisfactory home inspection as a subject to their offer (the inspection would include a report on the complex as a whole, as well as the individual unit), it is also advisable to examine the strata council’s minutes going back at least 12 months to identify potential red flags, such as upcoming high-cost maintenance and repairs, which could include a special levy on owners.

Tony Gioventu, executive director of British Columbia’s Condominium Home Owners’ Association(COHA), a consumer-based non-profit association that promotes the understanding of strata property living and the interests of strata property owners, says buyers should request, obtain and read all relevant documents before they remove subjects to their offer to buy a condo.

“A Form B Information Certificate is the first place to start,” he adds. “They can only rely on anything they question if they have it confirmed in writing from a party who is authorized to provide that information.”

For example, if an owner discloses that they have two allocated parking spaces and a storage locker, Form B will identify them and will give the buyer recourse if the information is incorrect.

If a seller or strata corporation fails to or refuses to provide documents, it’s an indication of a serious risk associated with the property.

The strata corporation’s insurance certificate is also a good indicator of potential problems and should be examined, says Gioventu. Excessively high deductibles or unusual exclusions of coverage could indicate past issues with the building. Engineering documents and environmental reports may provide similar information.

The property’s most recent depreciation report may reveal red flags as well, but it needs to be seen in context, Gioventu says.

“The depreciation report’s recommendations need to be viewed in conjunction with the strata council’s financial planning. The contingency fund balances and future major repairs need to be compared, and you need to try to figure out what the owners may have to pay for in the next 10 years and how that is going to happen. Have they been saving and planning or will it need special levies,” he adds.

Requests for documents are made to the strata corporation, which has an official obligation to provide the information and buyers typically ask their realtor to take on that task.

“If a seller or strata corporation fails to or refuses to provide documents, it’s an indication of a serious risk associated with the property. It may be operational, governance, legal or administrative, but whatever it is, the buyer should proceed with caution and consult their lawyer,” Gioventu says.

Buyers of condos in buildings that have not yet been constructed have a seven-day cooling off period after signing up. It’s a good idea to immediately consult a lawyer to review what they will be purchasing and any risks or costs they have exposed themselves to, he says.

The bottom line, says Gioventu, is buyers should follow two rules:

  1. Put all communications in writing. If it’s not in writing it may not be true;

  2. Read all the documents. Obtaining documents prior to a purchase is only worthwhile if you read them. If there is anything you don’t understand consult your realtor or lawyer.

Original Article by Kathleen Freimond - Vancouver Sun

  • Vancouver First Realty Facebook
  • Vancouver First Realty Twitter
  • Vancouver First Realty Instagram
  • Vancouver First Realty Youtube
  • Vancouver First Realty LinkedIn
Wix MLS IDX Integration

Copyright 2018 by the Real Estate Board of Greater Vancouver, Fraser Valley Real Estate Board, Chilliwack and District Real Estate Board, and BC Northern Real Estate Board. All Rights Reserved. The data relating to real estate on this website comes in part from the MLS® Reciprocity program of either the Real Estate Board of Greater Vancouver (REBGV), the Fraser Valley Real Estate Board (FVREB) or the Chilliwack and District Real Estate Board (CADREB). Real estate listings held by participating real estate firms are marked with the MLS® logo and detailed information about the listing includes the name of the listing agent. This representation is based in whole or part on data generated by either the REBGV, the FVREB or the CADREB which assumes no responsibility for its accuracy. The materials contained on this page may not be reproduced without the express written consent of either the REBGV, the FVREB or the CADREB.