Understanding Strata Properties
A Strata is a type of property ownership structure, where a person owns their individual unit, which is part of a larger building or collective. There are a few different types of strata, but for simplicity we will stick to the most common type: multi-unit housing.
Townhouses or semi-detached houses are sometimes (but not always) part of a strata. For example: if you have a town home with a roof that covers only your unit, you may be solely responsible for that roof. The only way to know for sure is to read through the strata documents for that property.
What You Own (and What You Don't)
Strata properties use a concept called common property, which means that it is shared by everyone. Often these buildings will have one roof that covers all the units. When that roof wears out and needs to be replaced, everyone has to share that cost. Most of the time, you own just your unit or suite, and any equipment in it, such as a water heater or electric baseboards.
The foundation, exterior (including walls, siding, and windows) and roof are most often considered common property and are owned and managed by the strata. Other mechanical systems such as boilers for hot water may also be common property. These tend to be located in utility rooms elsewhere in the building (instead of inside your unit).
Fees and Levies
A strata will charge its residents "Strata Fees". These are for the maintenance, repair, and eventual replacement of common property. A well-managed strata might collect regular fees for maintenance, and set aside a portion to cover a new roof 20 years from now. Ideally, when the roof needs to be replaced, the strata has a large enough savings to cover it.
Every strata is run differently, and many are governed by councils made up mostly of residents. Unfortunately, this means that not every strata is well run. Many do not have large enough contingency funds to cover new a new roof, siding, or foundation work. In these cases, residents will often be required to pay special levies to cover the difference. Depending on the work being done, and how much money is in the strata, these levies could be in the tens of thousands of dollars.
Supporting Documents
There are many documents that can make up what is often collectively referred to as the "Strata Documents". Here are a few of the most common types:
Strata Plan
Describes precisely where the boundaries are between a strata unit (sometimes called a "lot") and common property. This is how you figure out exactly what you own, and what you don't.
Council Minutes
Strata councils should have regular meetings and record notes or "minutes". These meetings can cover anything from snow removal, to parking, to adding a foosball table to the lounge, to replacing all the windows in the building.
Depreciation Report
A depreciation report is a document that lists all the systems and equipment in the building, and what their expected lifespan and replacement cost is. A comprehensive depreciation report will cover all common property including heating and cooling equipment, plumbing and electrical systems, exterior and building envelope, parking and other exterior structures, and the roof. It should specify what type of system was installed, how long it is expected to last, how much it will cost to replace, and when it will need to be replaced.
Engineering or PCA Reports
As part of a regular maintenance schedule, many strata have engineering reports or Property Condition Assessment (PCA) prepared on a regular basis. These typically involve an inspection by a consultant to report on the present condition of the property, and to identify any problem areas that may require repair. Think of this like a regular checkup.
Bylaws and Covenants
These documents are essentially local rules for the building. They can be wide-ranging and varied, covering anything from the color you can paint your unit, to the quiet hours for the building, to if you are allowed to have pets, to the type of fuel that you can use in your barbecue.
What We Inspect (and What We Don't)
The HIABC Scope of Inspection document outlines what is included in an inspection, and what is not.
This scope states that we are not required to:
Inspect common areas in multi-unit housing
Review third-party reports including (but not limited to) depreciation reports and engineering reports
We strongly recommend obtaining copies of all strata documents and thoroughly reviewing them in order to fully understand the present condition of the building and its systems, and to be aware of any upcoming expenses for replacement, maintenance, or repairs.
Limitations
What do we mean by limitations? Although an item or system might normally be within the scope, some parts of a system may not be visible, or may be common property. For example, we can inspect the plumbing within the unit, but if there is a boiler supplying hot water for the entire building, that boiler would be considered outside of the scope.
Key Points
A Strata is a property ownership structure where your unit is part of a larger collective.
These are most common on multi-unit housing, such as townhouses or condos.
Owners of these units share costs of maintaining and replacing major systems (such as the roof) by paying monthly fees.
Sometimes owners can be on the hook for large fees if the strata doesn't have enough money saved up to cover an expense.
Common property is not part of a Home Inspection, since it is not directly owned or controlled by the occupant.
Always review strata documents carefully so you know what costs might be coming up!