Condo-living has become increasingly popular in Vancouver. It is not surprising when the price of a single, detached home is close to $1 million in the city.
If, like many, buying a condo is your only option, you need to look at more than the contents of the minutes when making a decision. In British Columbia, strata corporations are under no obligation to give more than 2 years of minutes to prospective buyers. In my (humble) opinion, this time frame is not enough to get a real sense of a building’s history.
For being a council member in my strata, I can also tell you a number of items never make their way into the minutes….
Here are a few financial pointers:
- Strata fees: low strata fees are never a good thing, including in newer buildings. They need to reflect the actual cost of maintaining the building, as well as future repairs. The fees should be around 30 cents per condo square feet outside of Downtown Vancouver, and around 45 cents Downtown and in North/West Vancouver.
- Strata fees, part 2: Each month, a portion of the strata fees is transferred into the Contingency Reserve Fund or CRF. The CRF is a savings account for bigger repairs such as replacing the roof. Check the amount that is transferred. If it is too low, it is a red flag. It means owners are not planning ahead.
- Financial statements-deficit or surplus: Strata financial statements are pretty basic, and you don’t need to be an Accountant to understand them. However, you need to look at the number at the bottom of the page, after all income and expenses have been entered. If it is negative, the strata is in deficit, meaning there were more expenses than income. Obviously not an ideal situation.
- Financial statements-Accounts Receivable: this account is what owners owe to the building. The amount needs to be as low as possible.
- Financial statements- CRF account: This account has 2 components, the trust accounts and the reserve. The trust accounts held monies collected for special projects and major repairs. The reserve is what you need to look at, as it indicates the available savings. The amount should be as high as possible. If it is not, check if major repairs have recently been done, or look for a major expenditure. If it is not the case, it is an indication of poor planning and management.
As an Accountant, I believe it is way more difficult to manipulate the numbers than it is to manipulate the minutes of a strata corporation. When it comes to condominium, numbers (usually) don’t lie.